The Great De-Equitization Wave: How Partnership Profit Pressures Are Reshaping Law Firm Culture in 2025
A quiet revolution is reshaping the legal profession, and it’s happening in partnership meetings across America. De-equitizations—where partners are moved from equity to nonequity status or demoted to counsel—are becoming a more common tool for law firms managing profitability. The trend is expected to persist through 2025 as firms strive to maintain high profit-per-equity-partner (PEP) figures. For attorneys navigating their career paths, understanding this shift isn’t just about industry knowledge—it’s about protecting your professional future.
The Numbers Behind the Movement
Profits per equity partner (PEP) rose 12.3% to an average of $3.15 million across Am Law 100 firms in 2024, but this impressive growth came with a cost. For example, Polsinelli reported a 15% decline in its equity partner ranks in 2024, coinciding with a 31% rise in PEP. That was partly a result of “some de-equitizations and retirements” in the last year, according to the firm.
The mathematics are simple but brutal: the number of nonequity partners climbed by 10.1 percent in 2024—which means that there are now more nonequity partners in the Am Law 100 than equity partners, by a 51/49 percent ratio. I predicted last year that this would happen “in the next few years”; it actually took only one.
Why Firms Are Making the Cut
David Nicol, U.S. head of recruiting firm Marsden, described de-equitization as “sound financial management” for firms aiming to meet ambitious revenue and profitability targets. Moving underperforming partners out of the equity tier is a way to protect partnership standards and align compensation with contributions.
The pressure is intensifying. “The standards have increased, the bar is high, and it’s only going to increase more in 2025,” he said. “Expectations are going to be higher and law firms are going to struggle to manage the performance of their partners.”
What This Means for Nassau County Attorneys
For legal professionals in Nassau County, these national trends have local implications. Whether you’re working at a regional firm or considering a move to larger practices, understanding partnership structures is crucial. If you’re facing financial pressures that might lead to partnership issues, consulting with a Bankruptcy Attorney Nassau County can help you navigate both personal and professional financial challenges.
“I expect de-equitizations will continue in 2025 until the differentiation between the nonequity partner and counsel titles is cleared up,” said Nicol. Firms are also becoming more selective in promoting attorneys to equity status. This means attorneys must demonstrate exceptional value earlier and more consistently in their careers.
The Ripple Effects on Firm Culture
Nicol predicts that the evolving models will impact other roles, particularly counsel positions. “I suspect the ‘counsel’ role will become less common and reserved for de-equitized partners or those without partnership aspirations,” he said. For firms without a nonequity tier, demotions often mean a shift to counsel roles, which typically involve lower compensation structures, including salaries with discretionary bonuses.
This restructuring affects more than just individual careers. De-equitization is reshaping the partnership landscape in Big Law, affecting compensation structures, career trajectories, and firm cultures. Young attorneys entering the profession face a fundamentally different partnership track than previous generations.
Economic Pressures Driving Change
Economic conditions are also driving de-equitizations. As firms brace for economic slowdowns, they often enforce existing performance standards more rigorously or raise the bar for equity retention. Blane Prescott of MesaFive noted that firms use de-equitizations to adapt to changing conditions. “It is common that, as firms recognize the economy is flattening or declining, that they suddenly enforce existing standards to a higher degree, or adopt tougher standards” for partnership retention.
Preparing for the New Reality
“This trend isn’t over,” Major, Lindsey & Africa recruiter Kate Reder Sheikh said of de-equitizations. “I think it will continue, at least in a trickle, if not a wave,” due to the desire to save and increase profits. “It’s a way for firms to save a lot of money,” she said.
For attorneys at all levels, this new landscape requires strategic thinking about career development. Focus on building portable skills, maintaining strong client relationships, and diversifying your professional value beyond traditional metrics. Regardless of the economy next year, the de-equitizing trend is expected to continue “forever,” said Kent Zimmermann, a principal at legal consulting outfit Zeughauser Group.
The de-equitization wave represents more than a temporary adjustment—it’s a fundamental shift in how law firms structure themselves for profitability. Understanding these changes and preparing accordingly isn’t just smart career planning; it’s essential survival in today’s competitive legal market. Whether you’re a junior associate or a senior attorney, the time to adapt to this new reality is now.