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In two recent posts by members of Building a Better Legal Profession, we have explained non-equity current events, but it occurred to us that one key element that is often left out of writing on the topic is a simple explanation of what the equity/non-equity distinction even means. (You can read our posts about NALP's decision not to ask about equity/non-equity by clicking this post and reading this article..)
As it turns out, there's not really a simple answer, at least when it comes to formal definitions used by the publications that ask about equity and non-equity in their firm surveys. American Lawyer's AmLaw 100 and 200 and the National Law Journal's NLJ 250 surveys use the same clear, objective definition. Vault's Diversity Database (done in conjunction with the Minority Corporate Counsel Association) and Working Mother magazine's Best Law Firms both use vague and open-ended definitions.
In Their Own Words
Here's how each publication describes the distinction:
What It Means
Vault and Working Mother basically allow firms to define equity as they choose. The "partner's" "share of profits in the firm" or "ownership stake" could be 1% of the lawyer's annual take-home pay, and the lawyer could still be counted as an "equity partner" because she has some ownership stake in the firm (even if it's approximately equal to my "ownership stake" in Apple thanks to the couple of shares of common stock I own).