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The partnership model is being redesigned by the world’s most prestigious firms. Australia still has time to “read the room”, but not indefinitely, writes Kim Wiegand.
The traditional law firm pyramid, built on the reliable promise that seniority leads to equity, is being deliberately dismantled. The most prestigious firms in the world have been announcing the shift publicly, one after another, since late 2023. Australia is roughly three to five years behind. That is not meant as a comfort, but rather a clear deadline.
There is a particular kind of institutional confidence that comes from never having been seriously disrupted. Australian BigLaw has worn that confidence well. The partnership model, broadly unchanged for decades, has delivered reliably. Partners made equity, equity paid well, and the whole elegant structure reproduced itself year after year, like a very profitable game of passing the parcel in which the parcel always arrived.
What the international data now tells us is that the parcel “pyramid” is flattening. And the people sitting in the middle of it are starting to notice.
This structural shift has a very public paper trail starting with Cravath, Swaine and Moore. The firm had operated as a lockstep since 1976. The Cravath system was not just a compensation model; it was a professional philosophy, replicated across the industry and referenced readily across law schools. In late 2023, Cravath created a salaried partner tier. The announcement landed like a starting gun.
Within 30 months, the list of firms that swore they would never do it, did it: Paul Weiss (March 2024), WilmerHale (August 2024), Cleary Gottlieb (October 2024), Skadden (February 2025), Debevoise (June 2025), Sullivan and Cromwell (January 2026), Freshfields (February 2026), and Sidley (March 2026). Davis Polk’s managing partner was direct when announcing their own shift: the old model was “simply not compatible with our strategic designs going forward”.
The financial results that followed are not subtle. Cravath grew profits per partner by more than 13 per cent in the first year after breaking lockstep. Davis Polk grew revenue by more than 25 per cent and profits per partner by approximately 26 per cent. Paul Weiss crossed $2 billion in revenue in the same year it announced its two-tier structure. These firms did not change because they were struggling. They changed because the old model was limiting what they could become.
By early 2025, non-equity partners were on track to outnumber equity partners at Am Law 100 firms, with 85 of the top 100 already running this structure. Not every firm went the same direction: A&O Shearman moved to an all-equity three-tier modified lockstep post-merger, labelling tiers “entry”, “core”, and “super” and cutting equity partner numbers by 10 per cent. Different architecture, same underlying pressure.
Understanding “the why” requires looking at what income partners actually contribute. The 2026 Citi Hildebrandt Client Advisory report, tracking nearly 200 US and UK firms, shows large firms grew income partner ranks at 6.4 per cent annually between 2019 and 2024, while equity partner cohorts grew at 0.7 per cent.
For every one new equity partner admitted, firms were adding roughly nine salaried partners. Despite billing at similar rates, the average income partner contributed US$351,000 to profitability in 2024, against US$552,000 for the average associate and US$696,000 for counsel. The most expensive middle layer in the leverage model is delivering the lowest return. Anyone else surprised?!
The response from firms that have restructured is to use the non-equity tier as a precision tool. Kirkland and Ellis reportedly bills its non-equity partners at nearly $2 million more annually than they are paid. The model is not generous. It is efficient.
The cultural data is even more uncomfortable than the financial data. The TBD Marketing Partner Survey, conducted across UK law firms and released in March 2026, asked partners to rate the fairness of how their contributions are measured. The average score was 2.6 out of 10. Sector and practice leads scored it at 1.3. No, not a rounding error – 1.3 out of 10. Salaried partners recorded a belonging score of +22 against +56 for equity partners, and nearly one in five salaried partners reported having had to change part of their identity to fit in, almost three times the rate of their equity counterparts.
Partnership is supposed to be the ultimate career destination. However, for a growing number of people who technically have the title, it still doesn’t feel like one. The Citi report flags that firms fear a “ballooning” of income partners expecting equity promotion, which will force hard decisions about who advances and who exits. The TBD survey finds 21 per cent of partners across all levels are unsure whether they will be at their firm in three years. In top 50 UK firms, 24.6 per cent. That signals an extremely mobile and markedly less loyal partner cohort to me.
Back in Australia, the shift is already underway, largely without the same level of scrutiny. The AFR Law Partnership Survey found that nearly two-thirds of new partners at top-tier Australian firms were appointed on a partial or full salary basis. In 2024, twenty-three of 25 new partners at Ashurst joined on a part-salary basis. All nine new appointees at Herbert Smith Freehills carried a fixed-wage component. Mills Oakley, HWL Ebsworth, and Colin Biggers & Paisley had already built salaried partnership into their growth models. The shift is not coming to Australia. It is already here, largely without the public debate that accompanied it elsewhere.
Thomson Reuters’ midyear FY2025–26 update adds a note beneath the strong headline numbers: non-equity partners have recorded three consecutive productivity declines. Associates are also slightly down. The hours gains are being carried by senior associates and equity partners. The leverage model is already beginning to reshape itself, before the governance decisions have been consciously made.
What this also raises, and what firms are not yet discussing openly, is how access to equity will be determined in this new model. If the equity pool is narrowing while the pathway broadens, the risk is not just structural inefficiency, but rather a question of who gets to participate in ownership at all. The criteria for equity admission become more consequential, more contested, and less transparent.
In a model where more partners sit outside equity for longer, the decisions about who crosses that line will shape not just firm economics, but influence, leadership and ultimately who holds power within the profession, if there is anyone still willing to invest in the equity transition as the older cohort look to transition out.
Australia sits behind the US and UK by roughly three to five years. That is an information advantage with a shelf life. The fracture in the pyramid model is visible here before it becomes structurally embedded. Australian firms that take seriously what these numbers say about contribution measurement, partner belonging, and succession pipeline have a genuine window to act. The “sharpening” is not coming. It has already arrived in the markets that lead us.
Kim Wiegand is the founder of Julip Advisory.
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