Partner Compensation: Creating a Performance-Boosting Scorecard by August J. Aquila Until recently, times were good, very good indeed, for most law firms. The single greatest failing of law firm partner compensation plans is the lack of transparency. The survey found that average partner compensation was up 5% from 2012, to $716,000. The chapters cover all topical issues on partner remuneration systems from locksteps to “eat-what-you-kill” meritocracies, performance management and remuneration-related decision making. The mid term welfare of the Firm is “If things hold, we’ll reward those who have had exceptional years and in some sense not unduly penalize those that have not done as much as they’d like,” said Bill Stoeri, managing partner at Dorsey & Whitney. The death of a lawyer: A journey from law school to retirement, Public defender with Patreon for FOIA lawsuits shares her thoughts on lawyers and social media. Give us feedback, share a story tip or update, or report an error. Some law firms are tweaking partner compensation…. ABA Journal Daily News. Compensation models drive the overall firm culture and shapes the lawyer -- positive and negative – knowing full well that you get what you pay for. The program was an objective, Our firm is often asked to help law firms evaluate, design, and overhaul partner compensation systems. Within the law firms that are not up to snuff with partner compensation the lawyers are usually more dissatisfied with the method used to determine compensation than with the amount of compensation itself. Summary: Learn more about the history of law firm partner compensation and how partners are compensated in law firms today in this article. What Do Law Firm Titles Mean: Of Counsel, Non-Equity Partner, Equity Partner Explained Top 6 Things Attorneys and Law Students Need to Remove from Their Resumes ASAP Why Going In-house Is Often the Worst Decision a Good Attorney Can Ever Make They shared the administrative burdens and tried to split them up according to their respective talents and interests. It worked well for the first few years.Gradually, Jill emerged as a much more effective rainmaker than Jack or John. How partner compensation fits into the overall scheme of managing a CPA firm Partner compensation is obviously very important to partners. Law firm compensation can come in many forms. Some misguided firms feel that partner compensation is the most effective way to run a firm. Even when Partners are doing well financially, they still voice concerns related to the process and outcomes delivered by the model. “If you want to understand a firm’s culture, start by understanding the firm’s compensation procedures,” wrote Eric Goldman, an Associate Professor of Law at Santa Clara University School of Law. “Every lawyer and law clerk who interacts substantially with a partner is asked to rate that partner,” says Les Viner, the firm’s managing partner. BILL4TIME All Rights Reserved. Over the years, we've featured quite a few articles about law firm compensation models and these are five of the best. Law Firm Compensation Model #4: Team building system With this system, individual performance takes a back seat to the firm’s performance. In response, some law firms are considering expanded bonuses and widened partner compensation bands, according to Law.com. Traditional law firm compensation models lead to unnecessary competition and unmotivated employees. Partners frequently advise us in confidential interviews that they are more dissatisfied with the method used to determine compensation than with the amount of compensation itself. They had a sense of teamwork and mutual goals, and reveled in each other’s successes. This is the 6th article in a series of 7 discussing structures that law firms tend to adopt for partner compensation. comments. This is the first in a series of posts describing the most common structures law firms use for partner or shareholder compensation. All rights reserved. “Eat What You Kill” Partner Compensation Plan By Bill Reeb, CPA In my last column, I discussed the differences between the “Eat What You Kill” versus the “Building a Village” models. Profitability increased year by year and the economy kept lawyers in the money. Dal Bhathal is a Managing Partner at The Counsel Network, a Canadian legal recruitment firm specializing in legal talent management strategies covering all levels of lawyers and practices for both corporate legal departments and law firms. But the amounts are increasing by a percentage point or two at some firms, according to Law.com. The 2014 Partner Compensation Survey from Major, Lindsey & Africa (MLA), based on 2,083 respondents, found that firm partners in the U.S. are faring well in a recovering economy. The longer an attorney/partner stays with the firm the more compensation (e.g. I am receiving more and more questions pertaining to partner compensation. However, if you want to build a compensation formula that supports a BAV model, then that is where we are picking up today’s topic. Former general counsel of LeClairRyan agrees to disbarment. “It was happening before, but I think some firms this year looked at the option of expanding their bonus pools even further as a one-time thing,” said consultant Lisa Smith of Fairfax Associates, in an interview with Law.com. Afternoon Briefs: Strip club not eligible for PPP loans, court says; lawyer pleads not guilty in bank embezzlement plot, Legal industry gained 7,200 jobs last month but is still below last year's numbers, At these top law firms, profit boosts followed layoffs of lawyers and staff members, Capacity limits on businesses can be a 'direct physical loss' covered by insurance, judge rules in bellwether cases. The bigger pool would allow firms “to differentiate between the partners that continue to have a very good year and those where performance might be a little flatter.”. From personal experience compensation does drive behavior in a law firm – good and bad.