By John W. Olmstead, MBA, Ph.D, CMC

Q. Our law firm is a New Orleans 14-attorney firm that focuses its practice on business representation in both litigation and transactional matters. We have four equity partners. The other ten attorneys are associates. We have been discussing implementing a non-equity partnership tier and how we should handle compensation and other perks. We would appreciate your thoughts and suggestions.

A. I believe that the non-equity partnership tier should be meaningful and distinctive - both internally and externally. Consider the following:

1. List non-equity partners as partners on the firm's website and other firm marketing collateral material. If you feel you must make a distinction list the equity members as managing partners.
2. Allow non-equity partners to attend some partner meetings and have input as non-voting partners into management decisions.
3. Allow one non-equity partner to be elected to the Executive Committee as a non-voting partner.
4. Allow non-equity partners to serve on firm committees.
5. Pay dues to a Country or other similar club for the non-equity partner.
6. Tie a portion of the non-equity partner's compensation to a bonus based upon firm performance.

While you want to create incentives - status and economic - for the non-equity partnership tier be careful that you don't diminish the desire for future equity partnership.

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John W. Olmstead, MBA, Ph.D, CMC,(www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.