February 5, 2007
Impact on Associate Hours Due to Law Firm Compensation Plans
Recently a managing partner asked me if there had been any economic surveys targeting US midsized law firms using lockstep compensation plans. The question came up as I was explaining the finding that under the traditional US compensation plan approach, midsized law firm partners are hoarding work—working more hours than associates. Why? For one reason, they make more income by doing the work rather than delegating it.
To my knowledge, there haven’t been any U.S. studies or surveys targeting just lockstep followers. Lockstep plans are not common in the USA. With regard to the hoarding issue, the buzz is that lockstep compensation plans can have the opposite effect unless ruthlessly administered. Since individual production is largely removed from the compensation equation, lockstep can give a raise to the partner who suddenly dropped from 2000 billing hours per year to 400. And that missing 1600 hours has not been redirected to management or rainmaking. Thus, performance standards must be ruthlessly enforced so that those abusing the system are outed quickly to prevent the system from becoming corrupted.
The consulting firm John P. Weil & Company has posted a thorough description of the lockstep approach on their page, which contains other articles of interest to those involved in law firm management.
Even in the UK, where lockstep is a tradition, there are few pure lockstep plans around nowadays. Modified lockstep plans prevail as firms introduce both objective and subjective measurements to affect results in support of law firm strategies and goals. Bruce MacEwen of Adam Smith, Esq. posted an interesting article dealing with the trend toward modification of lockstep plans. Patrick McKenna has an insightful post on performance differences among firms depending on their compensation plan type. His post supports the belief that statistically driven plans yield lower results. McKenna also has a great white paper on the various types of plans used by law firms.
Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
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Filed under Compensation by Tom Collins
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