Do managing partners get paid more?

Question

Zippia Team · Accepted Answer

Yes, managing partners get paid more. A managing partner is involved in and responsible for the day-to-day activities of a firm, whereas a general partner may not be involved in the day-to-day operations. Since the managing partner has the most responsibilities, they are usually paid the highest compared to all partners.

In a partnership or LLC, the hierarchy of the different types of partner include:

Managing partner (or managing member for an LLC)
General partner (in general partnerships and limited partnerships)
Nominal partner (a person "acting" as a partner while not formally a partner)
Silent partner (a partner whose involvement in the business is limited to providing capital)
Limited partner (in limited partnerships)

Many factors influence compensation for a managing partner. If all of the partners within a practice assume the role in equal rotation, the position can be uncompensated.

However, in most practices, the managing partner duties are not equally shared. Compensation, in this case, should be higher for the managing partner relative to the other partner types.

When more time is required in larger practices, and the lead partner's stipend is divided among more owners, the managing partner may receive more than $50,000 per year. In a small number of settings, managing partners receive a bonus based on practice collections or profits.

When it comes to compensation, firms have several options, including providing a stipend for managing partner activities, a percentage of the firm's profits, or an annual salary. As a rule of thumb, it suggested that managing partners should be compensated among the top 20% of the equity partners at the firm.