Of Counsel vs. Partner: What's the Difference?

Law firms are known for their hierarchical structure, with partners at the top and associates at the bottom. However, there are other positions within law firms that often cause confusion, such as the of counsel position. To understand what we are talking about, imagine a client in need of legal advice. They've researched and found a law firm that seems to have the expertise they're looking for. But browsing their website, they notice something — some lawyers are listed as "of counsel" while others are listed as "partners." 

At first glance, the difference might seem trivial. After all, both titles suggest a level of expertise and experience. But in reality, the distinction between counsel and partner can significantly impact their case. In this article, we'll look at the differences between counsel and partner and what they mean for you as a client.

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Also, be sure to check out our latest Grow Law Firm podcast episode, where we were joined by Tom Lenfestey, CEO of The Law Practice Exchange. Tom shared his expertise on what every law firm leader needs to know before acquiring a practice.

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Defining the Roles of Counsel and Partner

An of counsel attorney is essentially a consultant who provides legal advice on a case-by-case basis. They may work with multiple firms or have their practice, but they're not officially a member of the firm they're working with. On the other hand, a partner is a full-fledged member of the firm, with an ownership stake and a say in the firm's decision-making process.

— Who Is a Law Firm Partner?

A partner owns the law firm, holding a stake in its equity and playing a pivotal role in its strategic decisions and policies. They invest their own capital in the firm, contribute to client acquisition and retention, and share in the profits based on their performance.

The key aspects of the role of a law firm partner are:

• Ownership and decision-making: Partners have an ownership interest in the law firm, granting them the right to participate in its strategic decisions and policies. They have a say in hiring new attorneys, setting billing rates, and determining the firm's overall direction.
• Financial investment: They typically invest in the law firm by contributing capital to support its operations and growth. This investment demonstrates their commitment to the firm's success and aligns their interests with its profitability.
• Client development: They play a pivotal role in client acquisition and retention. They are responsible for cultivating and maintaining client relationships, often bringing new business to the firm through their network and reputation. Partners are expected to provide excellent client service and ensure client satisfaction.
• Profit sharing: Partners share in the profits of the law firm. The distribution of profits is typically based on various factors, including the partner's contribution to the firm's success, such as billable hours, business development efforts, and overall performance. Profit-sharing arrangements may vary among law firms.

Non-equity and Equity Partner

A non-equity partner is an attorney who holds the title of partner but does not have an ownership stake in the firm. They may have certain benefits and responsibilities similar to equity partners, such as participating in decision-making processes and sharing in the firm's profits to some extent. However, their financial investment in the firm is typically limited.

Equity partners are attorneys who have both the title of partner and an ownership stake in the law firm. They have a higher level of financial investment in the firm and often have a more significant role in decision-making and profit sharing. Equity partners typically have a greater say in the firm's operations and may have a higher share of the firm's profits compared to non-equity partners.

— Who Is an Attorney of Counsel?

An attorney of counsel is an experienced attorney who holds a senior advisory role within a law firm. They bring specialized knowledge or a unique skill set to the firm and often provide mentorship and guidance to junior associates.

They may not have an ownership stake in the firm, and their financial ties are typically more flexible compared to partners.

The key aspects of their role are:

• Senior advisory role: Attorneys of counsel are often experienced attorneys who bring specialized knowledge or expertise to the firm. They may have a distinguished career in a specific area of law and provide valuable insights and guidance to the firm and its clients.
• Mentorship and guidance: They often serve as mentors to junior associates, providing guidance and sharing their expertise. They may assist in training and developing the skills of younger attorneys, helping them navigate complex legal issues and professional challenges.
• Limited equity stake: While some attorneys of counsel may have a limited equity stake in the firm, it is not a defining characteristic of the role. Their financial ties to the firm are typically more flexible compared to partners, and they may have different compensation arrangements.
• Niche specialization: Attorneys of counsel frequently specialize in a particular area of law. They may focus on complex cases, provide strategic advice, or contribute to the firm's knowledge base in their specialized field. Their role often involves handling unique legal matters that require their specific expertise.

Counsel and Partner: Different Responsibilities

We have mentioned above that counsel and partner are 2 distinct positions in the law firm. Therefore, Understanding these differences is essential for lawyers and clients alike.

— Responsibility of a Law Firm Partner

• Administrative duties: Partners in a law firm have active involvement in the firm's management. They participate in decision-making processes related to finances, hiring, and overall strategy.
• Client origination: Partners are expected to bring in clients and generate business for the firm. Their ability to attract and retain clients is crucial to their role.
• Long-term commitment: Becoming a partner often signifies a long-term commitment to the firm. Partners are not only financially invested but also emotionally invested in the practice's success.

— Responsibility of an of Counsel Attorney

• Specialized contributions: They are valued for their specialized knowledge and often contribute in specific legal areas where their expertise is particularly beneficial.
• Reduced administrative burden: Unlike partners, of counsel attorneys typically have fewer administrative responsibilities. This allows them to focus primarily on legal work and mentorship.
• Flexibility: The role of of counsel is often more flexible, allowing attorneys to maintain a work-life balance while still providing valuable contributions to the firm.

Can You Become a Partner as an of Counsel Attorney?

Yes, an of counsel attorney can become a partner in a law firm. However, the transition is not automatic and requires careful consideration from both the attorney and the firm. The decision to transition from counsel to partner is often influenced by changes in the attorney's career goals, the firm's needs, or shifts in the legal market.

1. Career goals: Attorneys may choose to transition from the counsel role to become a partner if they aspire to have an ownership interest in the firm and take on a leadership position. This transition allows them to have a greater say in the firm's decision-making processes and potentially share in its profits.
2. Firm's needs: The transition from of counsel to partner can also be influenced by the firm's needs and strategic goals. Suppose the firm recognizes the value and contributions of an "Of Counsel" attorney and believes that promoting them to a partner position would benefit the firm. In that case, they may offer the opportunity for advancement.
3. Legal market shifts: Changes in the legal market can also impact the transition from "Of Counsel" to partner. For example, suppose there is a greater demand for experienced in-house lawyers in law firms. In that case, firms may be more open to considering of counsel attorneys who have gained valuable client-side perspectives and business acumen during their time in-house.

Furthermore, transitioning from counsel to partner can vary depending on the specific policies and practices of the law firm. Some possible steps in the transition process may include:

• Evaluation and recognition: The firm evaluates the performance, expertise, and contributions of the of counsel attorney to determine their suitability for a partner position. This evaluation may include factors such as legal skills, client development, leadership abilities, and compatibility with the firm's culture and values.
• Partnership track: If the firm determines that the attorney is a good fit for a partner position, they may outline a partnership track or probationary period. This track may involve specific milestones, goals, and expectations that the attorney needs to meet to be considered for partnership.
• Business development: Transitioning to a partner role often involves taking on additional responsibilities, including business development. Attorneys may be expected to bring in new clients, expand existing client relationships, and contribute to the growth and profitability of the firm.
• Firm vote: In many law firms, the decision to admit an attorney as a partner is typically made through a firm-wide vote. The existing partners evaluate the candidate's qualifications, potential for future success, and alignment with the firm's strategic goals before making a final decision.

Are Partner and Counsel Law Firm Titles Relevant Today?

While the traditional roles of partner and counsel remain important, there is a growing trend toward creating customized positions by large law firms that cater to individual strengths and preferences.

Modern law firms understand that attracting and retaining top talent requires offering diverse career paths like senior partner. This flexibility allows law firm attorneys to pursue their passions, specialize in their areas of expertise, and contribute to the firm's success in various ways.

Some firms are creating new titles, such as "Senior Counsel" or "Managing Counsel," to recognize the contributions of senior lawyers who may not necessarily fit into the traditional partner or counsel roles. These titles provide a sense of recognition and status while allowing attorneys to focus on their specific areas of expertise.

Additionally, law firms are exploring alternative compensation structures that reward attorneys for their contributions beyond billable hours. This shift recognizes the importance of non-billable work, such as mentoring, pro bono service, and business development, which are essential to the firm's overall success.

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Tom Lenfestey's Advice on Law Firm Acquisitions

During the discovery phase, you should focus on determining a clear acquisition plan that aligns with your firm's goals. This plan should outline how you want to grow revenue, whether through diversifying practice areas, expanding into new markets, or strengthening existing specialties.

For solo practitioners, establishing buy-sell agreements with peers in similar practice areas can provide a seamless succession plan. This approach allows you to set up a contingency for unexpected situations and plan for eventual retirement, even if you don't have a natural successor within your firm. By agreeing on valuation concepts and payment terms in advance, you can ensure a smooth transition when the time comes.

Valuation plays a key role in acquisition discussions, and it's important to have a realistic understanding of your firm's worth.

Many sellers overestimate their firm's value without proper assessment, which can lead to deal-breaking disagreements. Conversely, as a buyer, you need to consider not just the purchase price but also the time and resources required for integration.

Strategic Considerations for Law Firm Acquisitions with Tom Lenfestey, the Founder of The Law Practice Exchange

In this podcast episode, Tom Lenfestey discusses strategic considerations for law firm acquisitions. He emphasizes the importance of having a clear acquisition plan that aligns with the buyer's goals, whether it's diversifying practice areas or expanding geographically. Lenfestey advises against impulsive decisions, urging lawyers to wait for the right strategic fit rather than jumping into unrelated practice areas. He also highlights the significance of thorough financial analysis and the need for a well-planned integration process to ensure a successful acquisition.

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Tom Lenfestey

CEO of The Law Practice Exchange

Tom Lenfestey is the Founder and CEO of The Law Practice Exchange, a leading platform facilitating law firm sales, mergers, and succession planning. A practicing attorney and licensed CPA, Tom recognized the legal profession lacked resources for practice transitions. He founded LPE in 2013 to fill this void, providing services to guide lawyers through succession planning, exits, and acquisitions.

With vast expertise in evaluating law firm transactions, Tom consults firms on valuation, integration, and long-term strategy. As an accomplished speaker, he regularly shares insights with legal associations on topics including succession planning and law practice sales. Clients praise Tom for his expertise and personalized guidance.

Conclusion

The roles of counsel and partner in a major law firm represent distinct career paths with varying responsibilities and opportunities. While partners are actively involved in the firm's management and client generation, counsel attorneys, contribute their specialized expertise and enjoy greater flexibility. Understanding these differences can help attorneys make informed decisions about their career trajectory within the legal profession.

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