DLA Piper, you may have heard, is making news today with its plan to ask hundreds of U.S. income partners (that’s non-equity partners, to me and you) to kick in some capital in exchange for a limited stake in firm profits and losses (that’s a smaller stake than the equity partners have, to me and you).
The firm professes to be trying to reduce its credit exposure by 30 percent (though it professes no crisis in that area yet) through the plan, which also calls for reducing monthly payments to some top U.S. equity partners.
Anyway, the most thorough article we’ve seen on this yet is up on the site of one of our sister papers, the National Law Journal. Read it here.
We’re kind of curious what some of the other consequences of this plan might be, intended or not. Will the change prompt anyone to leave? Will the partners previously known as non-equity become more hard-core about their collections and business development? The money quote from DLA Joint Chief Executive Officer Frank Burch Jr. in the NLJ story has us wondering:
“We have found with a large class of income partners, there’s a tendency on the part of some people to behave and think like an employee as opposed to someone with a vested interest in the long-term success of the firm.”
And perhaps the biggest question of all, for all the non-DLAers out there: Will other firms follow suit?
— Pam Smith