Gaining law firm equity requires dedication, drive, and strategy. Though the partnership track varies from firm to firm, demonstrating a value-add to the business can bolster an attorney’s equity opportunities.
Becoming an equity partner is both a career milestone and an investment. Equity partnership in a law firm can serve as a strong step toward building generational wealth. The supplementary benefits can include increased pay, profit dividends, seniority, and higher profile assignments.
In addition to a track record of exceptional work, newly appointed equity partners are often required to “buy in” in order to receive their shares. This cash contribution may be high-priced and require loan-based financing.
Power Forward Group offers financial planning for attorneys including consultation that can help you learn how to become an equity partner in a law firm. Each client is assigned a wealth management team dedicated to creating a financial strategy with individual goals and resources in mind.
Call our office directly at (646) 647-2150 or contact us online to schedule your free introductory call.
Path to Partnership
In larger firms, the jump from passing the bar to joining a legal group often starts with a summer associate position. From there, the progression is typically to associate, senior associate, and then to non-equity partner.
The final leap to equity partner can take seven years or more. It requires dedication, proven expertise, and strong relationships with clients and colleagues alike.
Initiative & Commitment
Accepting an invitation to become an equity partner in a law firm is a long-term commitment and a serious investment. Potential partners are associates who showcase ambition and take initiative.
Office politics and client success comes into play as well. Law firms are more likely to consider attorneys who are team players, open to new opportunities, and show an extra level of care for the firm’s goals and mission.
Relationships
Relationships are key to success in all industries and especially critical in the legal field. If you are following the equity partnership track at a law firm, consider pursuing a mentorship with a longstanding partner and developing strong relationships with other partners, fellow associates, and the administrative team.
Most firms want their partners to come in as shareholders with a full book of business. Acquiring new client accounts is crucial to being named as a partner, as is growing relationships with existing clients.
Be an Asset
Beyond producing successful outcomes and high-level work, law firm equity partners are selected because they add value to the organization. This can include retaining and upselling significant clients, earning a reputation as a Subject Matter Expert, or speaking at reputed legal conferences.
Capital Investment
Law firm equity partners are business owners. They receive profit shares, contribute enterprise strategy to develop the firm, and weigh in on significant financial decisions. This generally requires a significant introductory capital contribution.
As a Big Law Partner, how should I handle my capital contributions?
As it goes, the larger the firm, the more substantial you can expect the capital contribution to be. The buy-in amount can range from $10,000 to six figures. Power Forward’s consultants specialize in financial planning for business owners and equity partners.
Your capital contribution is a wealth-building cornerstone investment. It can be paid upfront, with cash on hand, or financed over time. From banking partnership loans with a monthly payment to home equity loans, we will guide you in choosing smart investments.
Tax Strategy
Legal professionals are already highly taxed, and an equity share in your law firm adds a new layer of complexity to the tax process. Equity partners move from a W-2 to a K-1, subjecting themselves to self-employment taxes, estimated quarterly tax payments, and potentially increased state taxes.
Interest paid on money borrowed for capital contributions is considered investment interest and can be deducted from your annual partnership income come tax time. Power Forward Group is well versed in federal and state tax laws with expertise in financial planning for lawyers.
As you make the move to partner, your personally assigned wealth managers will update your tax strategies to maximize deductions and optimize your financial portfolio.A Financial Partner
As you consider how to become an equity partner at your law firm, it is imperative to secure a team of financial advocates to update your tax strategies, maximize deductions, and optimize your financial portfolio. We provide long-term wealth strategy, partnership track guidance, and capital contribution investment planning for lawyers nationwide.
Call Power Forward Group today at (646) 647-2150 or reach out to us online to schedule an appointment for an introductory call.
