Law Firm Pyramids

Dan Solove characterizes the law firm partnership track as a pyramid scheme gone bad, in light of this new report about the slowdown in the growth of equity partners.

Does that slowdown surprise anyone? It shouldn’t. Law firms have been pyramids for decades and pyramid schemes ever since the first real salary wars took place in the mid-1980s. When I was a first-year summer clerk, twenty years ago, a friendly partner took me aside and explained the pyramidal essence of modern law firm economics. There’s only so much room at the top, and so long as firms keep hiring battalions of new associates, and so long as the folks at the top want to stay there, then there’s only so much room in the middle. In the standard account (and there are always law firm exceptions), everyone else gets shoved over the side. That’s not a pyramid scheme gone bad. That’s a pyramid scheme playing out as intended.

In a successful pyramid scheme, the promoter escapes with the money, leaving the investors to point fingers at one another. Only in The Princess Bride does the promoter appoint a successor promoter. There are few Dread Pirates Robert in the intergalactic law firm business. At the tops of the pyramids, senior partners aren’t stepping aside. They keep looking for new worlds to conquer. Further below, as a college acquaintance of mine put it shortly after resigning her partnership in an LA firm, “all the galley slaves must row together.”

That’s a terribly cynical view of the profession. But I think that even as metaphor, it’s not far from the truth.