In the legal industry, law firm compensation is ALWAYS a hot topic. If you attend any program with law firm leaders, the conversation will inevitably turn to compensation, especially at the partner level. Having been involved in numerous conversations on this topic, I can say with certainty that there are many compensation philosophies and systems. This is good news for my candidates because it allows them to find a compensation system that fits their needs, practices, and personalities.
While there are many types of law firm compensation systems, there are only so many factors that can be thrown into the mix. The following are some common terms in the determination of partner compensation:
- Originating Attorney
- Billing Attorney
- Working Attorney
- Relationship Attorney
- Realization Rates
- Citizenship Credit
- Firm Contributions
- Bonus Pools
Some firms have formulaic compensation systems that give a certain amount of weight to the above factors. Some law firms use these factors in a more subjective approach to compensation. And, some firms are very transparent with the compensation systems. Others not so much. In your current firm’s system, where do you stand? What is important to you? What are you good at?
The Right System for You
There really is a law firm compensation system for every type of lawyer. Are you the lone wolf who likes to eat what you kill? Do you prefer to hunt in a pack and share your success? Maybe you prefer to be on a team where you can just bill a ton of hours and not worry about origination? Do you have a practice area that is high volume with lower rates? Does your current firm reward you or punish you for this? Does you firm require you to take on leadership roles? If so, do you get paid for your time? Does your firm’s current system reward origination too much, not leaving enough money for the worker bees?
The point of all these questions is simple. Your firm’s compensation system should reward you to the max based upon your contributions and skills. If it does not, there are firms out there that may be a better fit. Let me add this disclaimer though – you need to be able to show your contributions in a tangible way. This means having data. If you are not a rainmaker but an essential cog in the practice area machine, you will need to be able to show this to a new firm. For example, a rainmaker can sell your unique M&A expertise and you are willing to bill 2500 hours at $600 per hour. Without your expertise, this rainmaker has nothing to sell. The value of your practice in this example is 2500 x $600 = $1.5M. This can and should be pointed out on your behalf.
So, does your firm’s compensation system meet your needs? Like I said, I have been involved in countless discussions on the subject. If you would like to discuss your specific situation, please give me a call.