Compensation Issues for Law Firms
Law firm partners who make more money in a year than they ever imagined earning will become instantly agitated if they learn that one of their colleagues takes home marginally more than they do. Such are the dynamics of compensation. It’s about money and a whole lot more, such as status, recognition, competition, and a feeling of progress.
In too many law firms, compensation is the topic that is either never discussed openly or has been discussed to death. And in some firms where we have consulted, many partners believe that, if only compensation was improved, the rest of the firm’s problems would be easily managed. The truth is often somewhere in the middle; compensation is often an issue in its right and a proxy for other challenges the firm is facing.
Law Firm Compensation Issues We Address
Compensation has arisen in connection with a wide array of issues on which we have advised, including the following:
- How to encourage more partners to participate in more effective rainmaking activities?
- How to reduce associate turnover, especially among mid-level associates
- How to encourage more partners, of counsel, and associates to bill the additional hours required to obtain a bonus?
- How to encourage more partners to cross market each other’s practice areas?
- How to foster more cooperation among partners?
- How to reward and retain lawyers who do have a larger than average book of business?
How We Work
We can collaborate with law firms in a variety ways to address compensation issues, ranging for a top-down approach, in which we work with the firm’s leadership team and financial advisors (internal and external), to a more open-ended exploration, in which we meet with many partners individually and facilitate partner meetings in order to reach a consensus. In our experience, compensation is rarely the only issue facing a firm; it is often linked with factors that drive individuals to change, such as a sense the one is mastering skills or contributing to something greater than themselves
In today’s competitive environment, it is more important than it used to be to address compensation issues and get them right. Lawyers and staff have more access to salary information, and there is more mobility between firms. Thus, firms that don’t address compensation and the myriad of institutional and cultural issues that are related to compensation are likely to see dissatisfaction and defections.