What Happens When Lateral Partners’ Guaranteed Compensation Ends?

With law firms hiring record numbers of lateral partners in recent years, many partners are now reaching a critical inflection point: the end of their guaranteed compensation period. In his latest piece for The American Lawyer, Dan Roe explores how firms and partners navigate this transition and what factors shape post-guarantee compensation discussions.

While some partners may return to the lateral market after their guarantee expires, many firms and partners find a way to realign expectations. As Jon Truster, a partner in our New York office, notes:

“I have seen situations where people have moved and they’ve had their compensation reduced slightly after the guarantee period, and the partners have understood and been fine with it because they felt bad because some of the stuff they thought was going to move with them didn’t.”

The key to a smooth transition lies in a holistic evaluation—factors like revenue generation, cultural fit, and firm citizenship all come into play. Firms that approach this moment with strategic flexibility are often able to retain and motivate their top lateral hires.

Read the full article by Dan Roe for The American Lawyer here.

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For more insights connect with Jon Truster or reach out to our team at Macrae.