March 12, 2007

Law Firm Myopic Compensation Plans

9:49 am

I don’t want to be overly negative.  Midrange are doing well financially, but they leave much on the table and, more importantly, they continually put their future at risk. IOMA, Institute of Management & Administration, Inc., asked to rank 10 items according to their importance when deciding how to distribute profits among the partners.  Here is the myopic list from most important to least important:

 

  1. Collections

  3. Origination

  4. Business Development Activities

  5. Firm Management/Leadership

  6. Cross-selling

  7. Practice Group leadership

  8. Seniority

  9. Teamwork

  10. Associate Development

 

You get what you ask for, especially if you measure it.  Ask any “expert” and they will tell you that the principle weakness of as a business is their lack of teamwork and a neglect of talent development.  Turn your compensation system on its head when it comes to firm partners.  Individual production, depending on the responsibility of each partner, should be a job requirement.  It is all the other stuff that makes you a firm.  Otherwise, you are just a group of attorneys sharing an office.

 

How would I like to see the list?  Try this:

 

  1. Firm Management/Leadership

  2. Practice Group Leadership

  3. Teamwork

  4. Associate Development

  5. Client Retention

  6. Cross-selling

  7. Business Development

  8. Origination

  9. Individual Production Realized (collected)

  10. Individual Production

 

How do you measure the above attributes?

  •  Firm Management/Leadership: Overall against targets
  •  Practice Group Leadership: Practice group performance against targets
  • Teamwork: Performance evaluation and internal surveys
  • Associate Development: Retention percentage plus activity performance against established plans
  • Client Retention: Measure retention and losses plus proactive surveys and client relationship activities against individual attorney plans
  • Cross-selling: Measure against results by partner and measure activity against annual individual attorney plans
  • Business Development: Measure individual performance against annual attorney development activity plan
  • Origination: Drop the politics and measure who really closed the deal—if it’s brand, house, or inertia, it should be credited to brand, house or inertia
  • Individual Production Realized: Collections for individual production
  • Individual Production: Hours worked on clients and authorized firm activities

 

I suppose partners could be broken into two groups: those that are simply production talent and those who are expected to lead, manage, generate business, and develop those under them.  But I find it hard to believe that, under any circumstance, teamwork and associate development should be at the bottom of the list.  It is not what a single player can accomplish. It is about the team’s win/loss record.

 

Morepartnerincome.com is sponsored by Juris, Inc.  For information about Juris® products and services for increasing law and partner income, go to www.Juris.com.

Related posts

Permalink Print Add Comment

Filed under Compensation by Tom Collins

Leave a Comment

Subscribe without commenting

Page 1 of 0