Compensation / Articles
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Hands down the best leadership conference for managing partners I've ever attended.
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AttachmentJohn Smock believes that well-run, focused practice and industry teams offer the best opportunity for consistent and continued growth in revenue and profitability. He further maintains that it’s critically important for law firms to reward and compensate team leaders based on the performance and profitability of the team.
The problem is that far too few firms do it in a meaningful way, as compensation systems typically focus on individual, not group, performance. In this six-page article, John describes an approach that rewards team leaders without upsetting the existing compensation system at your firm.
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When a group of managing partners settle into a conversation about firm leadership, the topic – sooner or later – turns to partner compensation. Over the years, we’ve seen systems that range from pure formula with heavy emphasis on personal collections to mostly subjective with an emphasis on difficult-to-quantify “firm-building” contributions. What’s the best system for a smaller to mid-size firm in today’s environment? More to the point, what’s the best system for your firm? Micheal’s article will help answer these questions as he takes us through seven types of systems with commentary on the strengths and weakness of each one.
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Splitting the Pie: Partner Compensation
Read MoreCompensation is invariably the most talked-about subject at The MPF Leadership Conference or at any gathering of managing partners for that matter. Over the years, we’ve learned that no two systems are exactly alike, and there is no “right” or “wrong” system for any particular law firm. We like systems that reward both billable and non-billable contributions to the long-term success of the law firm.
August Aquila, a long-time member of the MPF Faculty and a leading expert on compensation models in professional services firms, weighs in with some very thoughtful concepts on the topic in this short, but very important, article.
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Compensation is always a hot topic when a group of managing partners gets together to talk shop. And if you’ve read any of our writings over the years, you know how we feel about compensation. Yes, it’s important to consider the numbers (typically billable hours, collections and origination), but it’s also important (perhaps more so in some cases) to reward the time and effort your firm’s attorneys invest in the future. Contributions like mentoring, training, business development, firm leadership, etc. And that applies to associate attorneys, as well.
In the article, seven managing partners share how their firms go about rewarding associate attorneys. In addition to the billable stuff, here are some of the other factors they consider at bonus time:
- Firm Citizenship
- Sharing and Teamwork
- Client and Partner Satisfaction
- Business Development Effort
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Have you ever considered the difference between the total compensation of the highest and lowest paid partner at your firm, and how it affects overall cohesiveness and profitability in the organization? Does too wide a spread have a negative impact on a collaborative, firm-first culture? And what’s fair to the individual partners, some of whom bring considerably more to the table than others?
For AmLaw 200 firms, the average multiple is just under 11, according to the most recent survey. That is to say that the highest paid partner makes 11 times more than the lowest paid. The widest disparity was at Lowenstein Sandler, a 300-lawyer New Jersey-based firm, with a multiple of 24. Only a few firms reported multiples under 5.
Aric is the Editor-in-Chief of American Lawyer Media. He serves on the MPF faculty and was the keynote speaker at this year’s MPF Leadership conference. His article appeared in the July 17th issue on The American Lawyer.
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If you had to pick one topic that intrigues managing partners and law firm leaders the most, it would be compensation – by far.
The most successful firms look at the numbers (usually billable hours, collections, and origination credit), but also consider non-billable (and difficult to quantify) contributions such as firm citizenship, sharing, teamwork, mentoring, client satisfaction, governance and leadership.
Over the years, we’ve featured quite a few articles about law firm compensation models and these are five of the best.
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This is one of the better articles we’ve read on law firm compensation systems. It succinctly reviews the pros and cons of seven basic systems, including lock-step, modified Hale and Dorr, and eat-what-you-kill. Importantly, Anderson says there is no perfect system that will satisfy all partners, that compensation must support firm strategic goals, and it’s important to keep it simple, stupid.
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In this gem of an article, Ed says he finds little in common among unsuccessful law firms, because each one tends to fail in its own unique way. He does, however, find that there are a number of factors that are almost always present in highly successful law firms. These factors include leadership, expectations, and a subjective compensation plan.
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In this terrific article, Aquila offers his guidance to build a "near-perfect" compensation system at your firm. He says your compensation system should strive to achieve nine important goals if you want to achieve long-term success
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In this article, Howard says you get what you pay for when it comes to setting partner compensation. He encourages law firms to look beyond seniority and personal productivity. Too short-sighted, he says. Rather, they should find ways to measure and reward contributions to the firm's long-term success. These criteria might include client service, project management and firm leadership.
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Partner compensation. It’s invariably the "hot-button" issue whenever a group of managing partners gathers to talk shop and compare notes. This thoughtful article discusses ideas your firm might consider to build a more "unified" firm culture. When it comes to comp, there’s more to it than formula.
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Compensation is a hot-button topic for almost every managing partner. It is also a critical driver behind the lateral movement of equity partners. This article by placement specialist Jane Sender provides an overview of recent trends in law firm compensation systems, including open vs. closed, and formula vs. subjective systems.
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Compensation is always a touchy subject…especially in an off year like this one. This article features case studies of what a handful of innovative firms are doing to reward exceptional – often non-billable – contributions to firm goals and objectives.
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While there is certainly no such thing as the "right" compensation system, here’s an interesting article from our friends at Edge Group concluding that formula-driven compensation systems hurt firm profitability.
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This is the first of two articles Anderson has written on the topic. He asserts that, while there is no perfect system, a good compensation plan supports and aligns with the firm’s strategic goals and objectives. Be sure to read Part Two of this article, as well.
