April 10, 2007
Law Firm Profitability-Culture vs. Compensation
Both Larry Bodine and David Maister have written about the firm of Levenfeld Perlstein PC and its creative chairman Bryan Schwartz. I haven’t met Mr. Schwartz, but if you are looking for someone who has modified their compensation approach away from an emphasis on individual production to one designed to promote team work, I would give Bryan Schwartz a call.
While morepartnerincome stresses the importance of balanced financial management, we have also emphasized the importance of law firm culture. I define that as a common set of beliefs. It comes from the partners getting together and agreeing on the things they believe in. Then they must communicate those beliefs to the entire team and they must do it repeatedly and often. It goes without saying that the partners have to walk the walk as well as talk the talk.
Let me use Bryan Schwartz’s own words. “…and most importantly, firm leaders must create a culture that energizes the lawyers and gives them a reason to stay with the firm. It makes a big difference in profitability. An inspired group of people can make a lot more money than people who are trying to bill a lot of hours." ….. "Our lawyers are the most competitive people, but it’s a culture where everybody helps the other person, they don't compete against each other."
Back to the compensation issue: David Maister reported on a communication he had from Schwartz describing some of the discussions at the firm’s recent retreat. Maister had apparently spoken earlier at the same event. Schwartz wrote, “We talked about compensation and our subjective plan. You set that up beautifully. We spent 10 minutes on that - a miracle for a law firm. I believe people are realizing that in the absence of subjectivity, which we currently employ, we become a mercenary firm, which we do not desire to emulate.”
I could not say it better and it is worth repeating:” …in the absence of subjectivity…. we become a mercenary firm”.
I encourage you to read or reread my earlier post How to Fix Your Compensation Plan.
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