How to Invest in Individual Stocks as a Big Law Partner
How AM Law 100 Attorneys Benefit from Owning Individual Stocks (Even with Firm Restrictions)
Because their firms often represent publicly traded companies, partners typically cannot buy or sell individual equities directly. Even if they wanted to, they’d need pre-clearance on every trade—or worse, find certain stocks completely off-limits if they intersect with firm clients.
This creates a paradox. On the one hand, top attorneys have the income, sophistication, and long-term horizon to benefit from direct stock ownership. On the other hand, the very nature of their profession makes it nearly impossible to trade without triggering compliance headaches.
So why push for individual equities at all? Because, when structured the right way, the benefits are too compelling to ignore.
The Challenge with Funds Alone
Many attorneys default to mutual funds or ETFs for simplicity and compliance safety. While those vehicles work well for broad diversification, they also limit the ability to manage taxes proactively.
For example:
- With a fund, you can’t choose which positions to sell at a loss to offset gains elsewhere.
- Distributions are pushed onto you whether they fit your tax picture or not.
- You have little visibility or control over embedded gains inside the fund.
This means you’re often stuck with unnecessary tax leakage.
The Case for Individual Stocks
By contrast, owning a basket of individual equities—even if it’s managed on your behalf—opens the door to powerful strategies:
- Tax-loss harvesting: The ability to selectively realize losses in one stock to offset gains in another.
- Custom indexing: Instead of paying for an off-the-shelf index fund, you can replicate the market with hand-picked securities that fit your compliance constraints.
- Greater control: You avoid the fund manager’s capital-gains distributions and can better align your portfolio with your own tax planning calendar.
In essence, you’re creating your own “personalized index fund,” but one that works for your tax profile, not against it.
How Compliance Concerns Are Solved
The obvious challenge: attorneys are heavily restricted from directing trades themselves. That’s where a managed solution comes in.
In this approach, for example:
- You retain full visibility into the portfolio at all times.
- You do not direct trades, which keeps you fully protected from compliance violations.
- You don’t handle the day-to-day execution, ensuring you still capture the benefits of individual stock ownership—without the red tape of pre-clearance or exposure to insider-information risks.
This balance allows attorneys to own equities confidently, gain the tax and planning advantages, and remain in good standing with their firms.
The Final Verdict?
Big Law Partners are uniquely positioned: they earn enough to take full advantage of tax-aware investment strategies, yet firm rules often restrict their access to the very tools that could maximize wealth.
By structuring equity ownership through a managed, compliant framework, attorneys can unlock the advantages of tax harvesting, custom indexing, and smarter cash-flow management—all while sidestepping the compliance traps that come with trading on their own.
Are you potentially leaving money on the table—through unnecessary tax leakage—by relying solely on funds, when you could own a compliant, customized stock portfolio instead?
