The American Lawyer: Partner Pay Clawbacks Are on the Rise in Big Law
A recent piece in The American Lawyer by Samson Amore and Ryan Harroff examines the rise of partner pay clawbacks across Big Law, as firms increasingly seek to recoup multi-million-dollar sums from partners departing for competitors.
The article sets this trend against a backdrop of surging lateral movement, which rose more than 20% among AmLaw 200 firms over the past year and shows little sign of slowing. As pay packages grow, so do the sums firms are attempting to claw back when partners exit early - with some disputes now heading into litigation, as questions remain over whether these provisions are legally enforceable.
Macrae Partner Sarah Morris, based on the West Coast, comments in the piece on how firms are becoming more inventive in structuring compensation to discourage departures:
"There seems to be a trend [in which] firms are coming up with more creative ways to disincentivize partners from leaving or at least making it so that they are leaving significant money on the table if they do leave, especially at various points in the year. The acquiring firm is often forced to make the partner whole in order to compensate for the breakage."
The piece also explores how rising sign-on bonuses are amplifying the financial stakes on both sides of a lateral move, and how a lack of legal precedent means the enforceability of clawback clauses remains untested.
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