Is your lawyer compensation system a strategic liability?
The most important aspect of lawyer compensation in law firms -- and one that often is overlooked -- is that it is a strategic issue. A law firm's compensation system should promote and reward performance and contribution to the long-term value of the firm. It should help the lawyers in the firm, partners and associates alike, to achieve their collective and individual strategic goals and professional aspirations.
In many firms, however, compensation actually undermines performance. An inadequate compensation system can also be a major factor in a firm's inability to recruit and retain the lawyers and other professionals that it needs.
Which compensation system is the best?
All of them and none of them...
Every compensation model -- even the much maligned "lockstep" and "eat what you kill" systems -- can work very well. Every compensation model can also fail miserably. This is why each Walker Clark professional compensation system is custom-designed for each firm.
We have no "preferred models" for professional compensation. Each firm's rules, procedures, and structures should be a unique reflection of the firm's goals and business values, as well as the financial characteristics of the firm's business. Regardless of the model that a firm selects, there also must be a fair and reliable way to reward extraordinary performance and to manage underperformance.
We can help.
We will assign a multidisciplinary team -- not just one consultant -- to work with your firm. The basic review and redesign of a compensation system usually takes 90 to 120 days -- so start early! . We charge a fixed fee, which includes all expenses, depending on the size of the firm and the complexity of the firm's current compensation system. Most firms can recover this amount in less than nine months, in terms of improved financial performance, business results, and the tangible benefits of improvement in the collegiality and collaboration in the firm.
- Has it been more than 10 years since we conducted a complete "no assumptions" review of our compensation system --- not just tinkering around the edges?
- Are we thinking about the possibility of merging with, or acquiring, another law firm sometime in the next five years?
- Is more than 10% of our equity partnership more than 55 years old?
- Have we recently lost senior associates or non-equity partners to other law firms? Are we able to attract lateral replacements if we want to do so?
- Do our new partners lack the professional and business skills they need to be productive and profitable partners from the first day?
- Are a relatively small number of lawyers "carrying" the rest of us in terms of billing or business development?
If you think that the answer to any of these questions is yes, contact us for a complementary initial consultation to design a project that fits your firm's unique situation, issues, and goals.
Not sure that you need to revise your compensation system?
Even if you believe that your current structures and policies for compensation are working well, you still need to know about your risks, some of which can materialize into a crisis in only a few months.
One of the most cost-effective investments that a small or midsize law firm can make in its future is to conduct a Walker Clark Lawyer Compensation Review, which will identify the strengths and risks that could affect the stability of your partnership, your associate constituency, and your firm's current and future financial performance. This service is especially designed for the special economic and professional dynamics of small and midsize law firms (usually firms with fewer than 60 partners). Contact us for a complementary initial consultation.