Think Partnership Will Make You Wealthy? Think Again
Are you headed for BigLaw Valhalla?
Throughout their careers, BigLaw associates are told the legend of partnership, and generally accept the supposedly self-evident truth that elevation to partnership is the highest form of BigLaw achievement. Yes, getting to the Promised Land will involve unfathomable personal sacrifice. Everybody knows that. But after many years of all-nighters, gallons of caffeine and estranged relationships—much like the heroes in Norse mythology who, courageously slain in battle, are received in Valhalla to the tune of angels singing stories of their bravery and sacrifice—you will enter BigLaw Valhalla. While admission into BigLaw Valhalla doesn't exactly require you to pass from this realm, it does require you to pay a daily pound-of-flesh tax until, eventually, you attain something incredible. What exactly? Unclear. Mystery and intrigue abound. But many generations of young whipper-snappers have given up too much for too long to gain admission to this restricted fraternal order, and so the popular wisdom is that it is vastly superior to the alternative of not making partner. The payoff is assumed to be commensurate with the burden. Otherwise, what’s the point?
Ah, the life of a BigLaw partner! Surely it is a life fit for a king. Access to five-star luxuries the rest of us mere non-partner mortals can only dream of: Wagyu steak dinners paired with rare $500 Cabernets! Vacations to the world’s most exclusive destinations! Court-side season tickets where you high-five LeBron after he sinks a buzzer-beating three-pointer that sends the crowd into a frenzy! ‘How’s Bronny?,’ you ask, as you and LeBron laugh and chat like life-long pals.
With the promise of BigLaw Valhalla in front of us, as two high-achieving individuals in the early years of our BigLaw careers, partnership seemed to be the only logical pursuit. We had graduated from top universities and top law schools with honors. We weren’t in the habit of aiming low. That was not our constitution. Our parents would be proud, our friends would be jealous, our bank accounts would be swollen, and our legacy would be secured. It all made perfect sense.
Rhetoric versus reality
The reality of partnership sunk in years later, as we cruised the Galapagos Islands aboard a historic yacht that Grace Kelly and Prince Rainier of Monaco honeymooned on in 1956. It was the old-world voyage of our dreams: we were treated to five-star luxuries as we explored pristine, uninhabited (by humans) islands, tracked giant tortoises and blue-footed boobies, swam with marine iguanas, hammerheads and equatorial penguins, and learned about the islands’ evolutionary history while tracing Darwin’s footsteps. Before boarding, we speculated that at least one fancy BigLaw partner would be on the manifest as well, and we were right. But only 13 of the 14 ticketed passengers showed up. The last passenger—a senior equity partner at a prominent international law firm—had to cancel last minute, his wife told us, because of a high-stakes trial that was so important that the client wouldn’t accept a substitute partner. So he stayed home in Chicago defending the lawsuit while his wife joined us on the trip of a lifetime.
As we spent more time in BigLaw and paid closer attention to what partnership really entailed, we realized that what we witnessed in the Galapagos was hardly an outlier. Over the years, while we were able to structure our responsibilities in a way that permitted us to take regular, off-the-grid vacations to far-flung destinations like Cambodia and Kenya, partners were fortunate to work a slightly reduced schedule for a week each summer on Nantucket. While we were able to commit to trips to some of the most exclusive accommodations on earth—the kind that lie deep in the Asian jungle or African bush and book up a year or more in advance—partners had to see how their matters developed and play their Nantucket escape by ear. And while we zealously pursued highly coveted reservations at some of the world’s top restaurants and then scheduled whirlwind vacations around them, partners attended closing dinners at a steakhouse downtown.
The supposedly luxurious partnership lifestyle turned out to be a mirage, while the non-partner lifestyle afforded all manner of incredible opportunities. What gives?
As we looked closer, we realized that the partners’ seven-figure salaries were actually constricting their options rather than enabling them. What partners traded for their outsized salary was the leverage to say ‘no.’ They were in charge of legal decision-making on the matters where they had client relationships, but they weren’t in charge of their own time. The truth is, when you’re in the service industry asking clients to pay you $1000+ per hour, you don’t have a lot of leverage to put yourself first. Telling your clients you won’t be available to meet their every need while you’re off sailing the Galapagos is a non-starter.
That's when we realized that partners are trapped. Yes, they get a proverbial seat at the table, but they’re not allowed to leave the room.
What is your money worth?
Not every dollar is worth the same. And, no, we’re not talking about Canadian dollars. What we mean is that the value of your money depends, in part, on where you are allowed to spend it—and a major drawback of partnership is that the riches it comes with, for the most part, can only be spent on a small number of things. Owing to the intense restrictions on their time, partners are primarily able to spend their money on real estate and consumer goods rather than experiences. Given the immeasurable sacrifice it takes to make partner, and then the even greater sacrifice it takes to remain at the top of your game, you better be damn sure that cars, boats, designer goods and mortgages are going to spark all the joy you need because that may be all you’re getting.
What’s the alternative then? Being a non-partner multimillionaire who has the luxury of free time and the ability to spend their many on anything they please. As we wrote in our post on How To Become a BigLaw Millionaire Before You’re Up For Partner, just about any BigLaw associate—if they play their cards right and invest while they’re still young, giving their portfolio plenty of time to grow in the stock market—can accumulate a seven-figure net worth. Save $1 million by age 35 and invest it in low-cost index funds that track the U.S. stock market, and, based on historical returns, it will be worth around $4-7 million by the time you’re 55, even if you never add another dollar to your investments after 35. If you continue to invest past your first million, and if your spouse is also contributing to you family’s finances, you could be fabulously wealthy without having to take the quality-of-life hit that may come with partnership.
‘Sure, I won’t be poor, but I’ll never be as rich as a partner!,’ you might be thinking. Think again! Many folks in BigLaw make the false assumption that earning a lot of money equates to being wealthy. But as any personal finance textbook ever written will tell you, income is an ephemeral metric of well-being. Instead, wealth should be measured in net worth (or, more precisely, net worth as expressed in multiples of annual living expenses, i.e., the true measure of financial freedom—more on this later). Yes, you can build your net worth faster with a larger income, but very few actually start doing that while they're young.
Indeed, there are many partners who don't start saving meaningful chunks of money until after they've made partner, which is far too late and can be catastrophic to their ability to accumulate wealth. Not to mention, there are plenty of partners who live paycheck to paycheck, haven’t saved for college for their children and couldn’t be farther from a multimillion-dollar portfolio. Huge, multimillion-dollar investment portfolios are far from the norm.
Ask yourself: how many people would continue to sacrifice every waking minute of their life to their BigLaw job if they could afford to live without it (or could at least afford a more flexible schedule)? Some would—the prestige of BigLaw partnership is undeniable—but the reality is: most partners are not financially independent and therefore can't afford to stop working.
You can also find some interesting information online. For example, when California Senator Kamala Harris announced her bid for the presidency in 2019, her and her husband, a long-time partner at a top law firm, reported a net worth of $6 million (both were 54 at the time). Yes—that $1 million that you invest by age 35—even if you never invest another dollar—puts you on financial par with Senator Harris’ family!
That’s the time-value-of-money magic at play: start aggressively saving and investing early in your BigLaw career, and you’ll soon realize you’re financially better off than folks who have been in the BigLaw game for decades longer.
There are of course BigLaw partners whose portfolios are very impressive, but you’d be surprised at how many have a net worth that is entirely within reach even if you don’t sacrifice yourself at the partnership altar.
What to do then?
The fact of the matter is, at a certain point of income, the only thing that makes a difference and makes your life richer is time. Indeed, time spent doing the things you love is the ultimate luxury in life. This luxury is in short supply once you reach the partnership ranks.
Over time, we came to the conclusion that the life of adventure and freedom we envisioned for ourselves was thoroughly incompatible with partnership. Turns out, a non-partner multimillionaire can afford the same things as a partner, but also a lot more. Sure, you can buy that second home on Nantucket if that’s what your heart desires, and you can most certainly set up trust funds for your kids, but that’s not where your options and spending power end. You can also afford to work less (or not at all), dedicating time to the people and experiences that matter most to you; you can spend precious moments with your family and loved ones; you can travel the world and take once-in-a-lifetime trips not just once in a lifetime, but multiple times a year; you can choose to pursue passion projects or athletic feats, or discover hidden talents... all options are on the table.