Definitely Mabey

Compensation systems under siege

While never having actually timed it with a stopwatch, it is fairly quickly after two lawyers begin chatting that the topic of compensation comes to the forefront. Rarely is it about what they are being compensated for, but rather about their contributions that are not being compensated by their firm.

Stephen Mabey Author

While the scrutiny is somewhat cyclical in nature, currently there seems to be a heightened focus on compensation systems. This increased focus arises for myriad reasons including:

  • A change in the weighting of a firm/partner value—for example, firms wishing to place more emphasis on “firm mindedness” than individual autonomy;

  • An attitudinal change in how and when to compensate—more recent generations being perceived to be unwilling or unable to wait the same time that was experienced in the past to achieve certain levels of incomes or older partners having suffered wealth losses unwilling or unable to step down at a normal career stage;

  • A change in the external marketplace—when files were plentiful and getting the work out was as important as getting the work in, business development was respected but not “valued.” In a flat marketplace, superior business development skills are increasingly highly valued; and

  • A change in the emphasis of the internal business focus of the practice—client value propositions and retention, alternative fee arrangements, project management, fee discounting, talent retention, etc., all have placed increased importance on managing for profitability which in turn means effective delegation is a key driver. Many compensation systems play “loose lip service” to this aspect of the practice.

"The range of compensation systems runs the gamut..."

The range of compensation systems runs the gamut from totally objective systems, where numbers are the only input into the setting of compensation, to totally subjective systems, where no numbers are looked at as compensation is set by a subjective valuing (small committee) of each partner's contribution to the firm.

Objective or subjective—there is no best system. The only way one compensation system is better than another is if it more closely aligns with what the partners are attempting to achieve as a firm.

For example...

The rest of this article is available in Stephen Mabey's new Book

Book Cover - Leading and Managing a Sustainable Law Firm - Tactics & Strategies for a Rapidly Changing Profession by Stephen Mabey

Available for purchase on BookBaby.




Until next month's column, remember as Cary Grant is quoted as having said:

"Do your job and demand your compensation—but in that order.”


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First Published in Canadian Lawyer August 2012. Copyright © Applied Strategies Inc.

Legal Strategy Consultant