Tips & Trends

Keeping current with the law industry is pertinent.  Boyer Greene, LLC wants to keep you informed about the latest trends happening within law firms across the nation plus offer tips to further enhance success in your firm.  If you have questions, please fill out the form on this page and either Sandy or Arthur will be more than happy to personally contact you for discussion.

April 2010

TIPS

Partner Compensation Systems

There are two goals of any partner compensation systems: first, to fairly reward each partner for their contribution to the success of the firm and second, to act as a management tool.  It is critically important that the compensation system reward desired behaviors and not reward (or penalize) unwanted behaviors.  A secondary concern is the nature of any financial reports circulated.  Too often, the data reported is cast in a way that may discourage desired behaviors.  A prime example is a system in which the partner does not get dollar credit for work delegated to associates and paralegals.  In that circumstance the partner is likely to hoard work in order to keep his or her numbers up.

 

A successful partner compensation system will have all of the following ingredients:

  • The partner compensation system is based on the values of the partners.
  • The partners agree on the compensation system.
  • All partners understand the compensation system and its application.
  • The compensation system is applied free of politics and secret agendas.
  • Each partner understands what he or she needs to do to improve their compensation.
  • Each partner has an annual plan that provides a basis for evaluating their prior year’s contribution.
  • The firm’s financial reports will be present data that encourages desired behaviors.
  • Whether subjective or formula based, the system will reward desired behaviors.
  • The managing partner and others in leadership positions are rewarded for their non-monetary contributions.
  • The firm reviews their partnership compensation system at least every five years and modifies it to the extent desirable, based on changes in the legal environment.
All partner compensation systems cause tension in a law firm, but the goal is to be certain it is healthy tension, not unhealthy tension.  Unattended, the partner compensation system can cause a firm to splinter or blow up.

    TRENDS

    We are seeing a number of small firms with partners approaching retirement with no exit strategy for themselves and no succession plan for their law firm.  These are usually firms that were established in the 1970s and in many situations, all the firm’s partners are over age 55.  They simply have not mentored a new generation of lawyers to be either rainmakers or future leaders of the law firm.  In many circumstances, there is a clear generation gap, with no lawyers in the 40-55 year old range.  This is particularly dangerous in first generation law firms that have no experience transitioning from one generation to the next. 

     

    This situation is becoming acute because there were so many start-up firms about 30 or 40 years ago.  Lawyers are becoming more attentive to succession planning, but for many the efforts will come too late for a successful transition.

    Do You Know...

    ...the failure to meet client expectations is the greatest robber of law firm profits?

    Write-downs in the amount of bills, slow payments, and collection problems are usually the result of client’s failed expectations.  The solution lies in the intake process and communications with the client during the course of the matter.  Be sure the client understands the realities of the specific legal process involved, how their matter will be staffed, the likely range of results, how long it will take, and, most importantly, how much it will cost.  In fact, being surprised by the amount of the bills goes to the top of the list of clients’ failed expectations.