During the COVID-19 pandemic, we have noticed a sharp increase in partner migration among law firms. Some of these partners have told us that money alone has not been the decisive factor but, instead, the desire to move to a firm, or in some cases an in-house counsel position, that offers a better business case for them for when the economic disruption is over.
We have observed even greater movement among associates, including senior associates whom their firms wanted to retain.
Consider these questions. A "yes" answer to any of them usually is a good sign that a law firm needs to review its lawyer compensation system:
- Has it been more than 10 years since you conducted a complete "no assumptions" review of your lawyer compensation system --- not just tinkering around the edges?
- Are you thinking about the possibility of merging with, or acquiring, another law firm sometime in the next five years?
- Is more than 10% of your equity partnership more than 50 years old?
- Have you recently lost senior associates or non-equity partners to other law firms?
- Are you able to attract lateral partners?
- Are a relatively small number of partners "carrying" the rest of the firm in terms of billing or business development?
The answers to these very preliminary questions, and the solutions that might eventually flow from them, are highly firm-specific. There is no magic formula or structure that succeeds for every firm. In some instances, Walker Clark clients have concluded that a traditional lockstep works best. Others have found that a system that is primarily performance-based better meets their needs. Most of our clients, however, usually adopt a carefully crafted hybrid in which equity, seniority, and performance are each given appropriate weight to produce the measurable financial results that the firm needs. At the associate level, our clients have introduced new features that link professional development, professional advancement, and higher compensation in an integrated system.
The key concept in all this is "strategic." What type of a compensation system will best support retention of the partners that you will need to sustain your market position and business success in the future? What type will best motivate your most promising associates to engage in the professional development, to learn the business skills, and to demonstrate the performance that you will need when they are considered for promotion?
Walker Clark LLC has been advising law firms of all sizes, practice specialties, throughout the world, about partner and associate compensation for more than 19 years. Our experience can help your firm resolve your compensation challenges in a highly cost-effective, custom-tailored project designed to get the best results for your firm and for your firm's future.
Click here for more information about how Walker Clark can help your firm strike the compensation balance that is right for your firm's culture and your strategic aspirations.