Kirkland & Ellis recently updated its policy regarding departing equity partners, allowing the firm to withhold accrued compensation upon their departure. Previously, the firm already deferred 55% of annual compensation for equity partners until the following year, but this new policy gives Kirkland the discretion to retain the accrued compensation.
This change in policy has caused concern among laterals joining the firm, as it creates a potential “pain point” for those looking to leave. The option for Kirkland to withhold partners’ compensation could impact the financial security of departing partners, especially if they were relying on that money upon leaving the firm.
The decision to withhold accrued compensation could also have broader implications for the firm’s reputation and ability to attract and retain talent. Potential lateral hires may be deterred by the new policy, as it introduces uncertainty and financial risk into their decision to join Kirkland.
While Kirkland & Ellis has not provided specific reasons for the policy change, it is likely a strategic move to protect the firm’s financial interests and incentivize partners to stay with the firm longer. By retaining control over accrued compensation, Kirkland can better manage its cash flow and potentially reduce the financial impact of partner departures.
Overall, this new policy on withholding pay for departing partners at Kirkland & Ellis highlights the complexities of partner compensation in law firms and the challenges that come with balancing financial stability and attracting top talent. It remains to be seen how this change will impact the firm’s reputation and ability to retain and recruit partners in the future.