New York, NY – August 30, 2025 – A growing wave of de-equitizations—where law firm partners lose their equity status and become salaried employees—is poised to sweep the legal industry in 2025, according to a new survey revealing that a “sizable” portion of partners anticipate such changes at their firms. The findings, detailed in a report released today by legal recruitment firm Major, Lindsey & Africa (MLA), highlight mounting pressures from economic uncertainty, talent retention challenges, and evolving partnership models. With 28% of respondents expecting de-equitizations within the next year, the trend signals a potential shake-up in Big Law’s traditional equity structure, as firms seek to manage costs and reward top performers more selectively.
The survey, which polled over 300 partners and practice leaders from Am Law 100 and 200 firms, underscores a shift away from the “eat-what-you-kill” compensation paradigm that has dominated the industry. De-equitizations involve demoting long-term partners to non-equity roles, often with reduced profit-sharing but maintained titles and client responsibilities. This practice, once rare, has accelerated post-pandemic as firms grapple with lateral hiring booms, hybrid work models, and softening demand in sectors like tech and finance. “Firms are under immense pressure to optimize their partnership rosters,” said Eric Lange, a partner at MLA and co-author of the report. “A sizable number of partners—particularly in mid-tier firms—believe de-equitizations are not just possible but inevitable in 2025.”
Survey Insights: Expectations and Drivers
Key takeaways from the MLA report include:
- Prevalence of Anticipation: 28% of partners surveyed expect de-equitizations at their firm in 2025, up from 18% in a similar 2024 poll. Among those in firms with revenues under $1 billion, the figure rises to 35%.
- Geographic Hotspots: Respondents in New York and California reported the highest expectations (32% and 29%, respectively), citing high overhead costs and competitive talent markets.
- Reasons Cited: Cost control topped the list at 45%, followed by performance-based restructuring (38%) and succession planning (22%). Many partners noted that recent lateral hires have diluted equity pools, forcing firms to “right-size” their leadership.
- Impact on Morale: 41% of those anticipating changes expressed concern over job security, while 19% viewed it as an opportunity for merit-based advancement.
The report draws parallels to recent high-profile cases, such as the 2024 de-equitizations at firms like Perkins Coie and Seyfarth Shaw, where dozens of partners were transitioned to salaried roles amid profitability dips. MLA analysts predict that 2025 could see a “second wave,” driven by anticipated interest rate cuts and a rebound in M&A activity, which may prompt firms to consolidate equity to fund expansions.
Industry Reactions and Strategies
Legal experts view the trend as a double-edged sword. On one hand, de-equitizations allow firms to retain institutional knowledge without the full financial burden of equity distribution. “It’s a pragmatic response to a maturing market,” noted Deborah Epstein Henry, founder of DEvonshire Group, a legal consulting firm. “Firms are moving toward hybrid models where only rainmakers get the full equity stake.” However, critics warn of potential talent exodus, with 52% of surveyed partners indicating they would consider leaving if de-equitized.
To mitigate fallout, the report recommends transparent communication and performance incentives. Some firms, like Kirkland & Ellis, have already implemented “lockstep” adjustments, blending lockstep compensation with merit bonuses to ease transitions. Recruitment firms report a spike in inquiries from partners seeking lateral moves to avoid de-equitization risks, with demand for roles at elite firms like Wachtell or Cravath surging 15% year-over-year.
Social media discussions on X have amplified the report’s release, with legal professionals sharing anecdotes and predictions. One viral thread from a former Big Law partner stated, “De-equitizations aren’t just coming—they’re here. Firms are quietly pruning the partnership tree to keep the profits flowing to the stars.” Another post highlighted, “28% expectation? That’s conservative. In my network, it’s closer to 50% for mid-market firms.”
As 2025 approaches, the legal sector braces for transformation. MLA’s Lange concluded, “This isn’t the end of the equity partner model, but its evolution. Firms that adapt thoughtfully will thrive, while others risk losing their best talent.” The full report is available for download on MLA’s website, offering deeper data on compensation trends and firm strategies.
Sources: Major, Lindsey & Africa Report, Law.com, Above the Law, American Lawyer, X Posts