Best Practice: Law firm managing partner compensation
Asked and Answered
By John W. Olmstead, MBA, Ph.D, CMC
Q. I am one of the founding partners in a 27 attorney law firm in San Antonio, Texas. We have four equity partners, six non-equity partners and seventeen associates working in the firm. We focus totally on litigation. Each of us four equity partners have equal ownership percentages and since day one (20 years) have divided firm profits equally along those lines (25%, 25%, 25%, 25%). We each put in the same amount of effort and work - but since I am managing partner - my fee collections are much lower than those of the other three equity partners and I am concerned that they may feel that I am not carrying my weight since my fee collections are lower. How should this be handled in our compensation system?
A. This is a common question that we hear often. It sounds like you are still allocating income in the same manner that you did when the firm first started. Often when a firm grows the partner compensation system needs to be reexamined when and if partner roles or contributions change. As the firm has grown I suspect that your time spent on management activities has grown as well. I, as well as many other legal management consultants, believe that firm management (running the business) is as important as generating client fees and should be so considered in partner compensation systems.
We have numerous law firm clients where at least one or more of the equity partners "run the business" and do not provide billable client services at all.
The ISBA/JTBF Law and Leadership Institute (LLI) wrapped up its residential program last week at the Southern Illinois University School of Law in Carbondale. The downstate program is a one week residential program that ran from Sunday, June 23 through Saturday, June 29.
The Illinois State Bar Association had its mobile billboard in the lineup of Sunday's Gay Pride Parade in Chicago – one of more than 200 entries. The parade entry was a collaborative effort between the ISBA, CBA, and LAGBAC (the Lesbian and Gay Bar Association of Chicago).