In the competitive landscape of professional services, the distinction between associate and partner roles is pivotal for organizational structure and career progression. In law firms, for example, the partnership track is a coveted path, with only 2.4% of associates making partner annually, according to a 2020 report by the National Association for Law Placement (NALP). Similarly, in accounting firms, the pyramid model prevails, where a broad base of associates supports a narrower tier of partners. A study by the American Institute of CPAs (AICPA) suggests that the ratio of associates to partners can significantly influence firm profitability. Understanding the nuances of associate vs partner roles not only clarifies the hierarchy but also illuminates the potential for career advancement within these professional environments.
Essentially, you can view the associate as an employee of the partners. He or she is paid a salary or wage, and may be offered the opportunity to become a partner at a future point in time. The ability to “make partner” is based on job performance, hours billed, time on the job and other factors. Associates in profitable companies tend to make much less money than partners, since their salary is pre-determined, though they may get bonuses for superior performance.
A partner, on the other hand, is part owner of the company in many cases. Their salaries may be based on the profit the company makes each year, and they may receive very large bonuses at year’s end if a firm has made large profits. These top end employees still work hard, but have the assistance of associates, and they also carry some personal risk.
If a company loses rather than makes money, this may be reflected in a partner’s salary. Generally, an associate is less at risk for losing salary should the firm be unprofitable, since he or she works at an agreed upon salary (though he or she can lose a job if the firm cuts jobs). Partners are additionally more liable for actions of the firm. If a law firm is sued for providing ineffective counsel, the primary targets of the suit are the partners, since ultimately they are responsible for the actions of their employees, especially in civil court situations.
In exceptionally large law firms, there is some criticism of this model. Associates may have little chance of becoming partners, and the first five to ten years in this job are a weeding out process, with only a few of a very high number of employees ever considered for partnerships. Moreover, not all firms promote partners from associates; some partners buy into the firm or are recruited from other firms. This model has been criticized and prompts a number of new lawyers to eschew the model in favor of opening their own practices, or forming limited liability partnerships with a few other lawyers. There is of course, greater financial risk in hanging out your own shingle, rather than being an employee, but many cite that the freedom of not having a boss is worth such risk.
Lawyers, accountants or others who choose to go into business for themselves share something in common with partners. Partners are usually responsible for bringing new business into a firm. In fact, their continued partnership may hinge on being able to constantly provide new revenue for a company. A partner or single lawyer also has what is called “voting interest” in the firm, and may get a vote on the direction of the company, and on the matter of which cases or clients to take.