Although law firm revenues are generally up, costs have risen even faster, resulting in a decline in annual profits among many mid-size and larger U.S. firms. How should this impact partner compensation? Does it work to have pay be tied solely to revenue? Or, perhaps, financial reward might be aligned to individual contribution toward firm goals?
This was the topic of “How Closely Should Law Firm Leader Pay Be Tied To Profits?”, a Law360 Pulse article by Aebra Coe in which Peter Johnson, Law Practice Consultants founder, was recently quoted. An extract of Peter’s comments:
It’s absolutely vital that the people in law firms in charge of top leader compensation — usually a management committee offshoot — create a series of objective measures upon which leaders are evaluated, and combine those with subjective measures of performance, according to Peter Johnson, founder of management consultancy Law Practice Consultants. “People do what’s measured and rewarded, and for the most part you can’t change behavior unless you can affect compensation,” Johnson said.
You can read the full text of the article at the link below.