There has been the stigma that lawyers make lots of money and have great financial success. However, law school applications are soaring downward and you might wonder why.
As many law firms are facing economic pressures, they are changing their “arrangements” with employees and partners.
An attorney can be a full-equity partner in a firm where he shares the profits. However, if that firm has a downturn, they can lose their job or maybe even worse be demoted to a non-equity or “service” partner. Basically a service partner is nothing more than an employee who typically has no clients and does the work for the alpha male/female, high-flying “rainmaker”.
A prominent attorney, who dealt with clients and brought in business for the firm as well as feeding work to others, now is feeding from a “rainmaker”. This must be hard to swallow for that attorney. He may be the one staying late to write a motion or put together the details behind a case, where the partner gets the credit and monetary benefits of winning the case.
One such example is the silver-haired, distinguished-looking Gregory Owens who was a real “superstar” Wall Street lawyer.
Not only did Mr. Owens get demoted at his job but also went through a divorce which depleted his savings and resulted in a monthly payment to his wife of approximately $10,000 per month. Mr. Owens filed for bankruptcy on New Year’s Eve of 2013.
For the past forty years, the marketplace has changed for partners in law firms. You can’t just do good work, have a good working relationship in the firm, coast and ride out your career until you retire with a nice fat retirement. That is all gone.
The numbers of non-equity partners or service partners in law have grown. Even with landing a position as a service partner there may not be a long-term safety net. As the needs change in law, your specialties must be reinvented all the time.
The next time you think lawyers don’t go bankrupt, remember the story of Mr. Gregory M. Owens who is just one of many superstar attorneys who now have financial troubles, too. Bankruptcy can happen to anyone regardless of your income in the past years and employment history.