A Simple Philosophy
There is no single best pay program.
- Success is defined by partner satisfaction
- Success depends upon consistency with the culture of the firm and the contribution of the incentives to achieving the firm’s financial goals
- All pay regimes contain incentives, whether explicit or not
- The distribution or “shape” of partner sentiments about pay matters for the success of individual pay regimes. The sentiments of the management group are not all that matters.
- The market for legal talent cannot be ignored. Failure to recognize the market will lead to losses of talented partners
Accounting for the determinants of compensation involves these elements, among others:
- What share of the current year’s income will pay for expenses and investments and what share will be available to pay partners?
- How will project-specific expenses figure in pay determination? Practice, office and firm expenses? Does pay based on billings or revenue (where those metrics are used) relate to individual profit contribution? How can the connection to firm-level profitability be improved?
- How will partners’ non-financial contributions be assessed and rewarded?
- How will the firm pay new partners who join during the course of the year and how will the firm deal with partners who leave?
- If new lateral partners are given pay guarantees, will some or all existing partners be asked to fund these costs? Will the firm bear full responsibility or will these costs be shared?