Partner Compensation Assessment

$35,000 USD

($27,500 USD for firms < 50 lawyers)

The Assessment. Our Compensation Assessment is designed to help law firm leaders better align what’s good for the partner with what’s good for the partnership. Our process combines confidential stakeholder interviews with financial and operational analysis first to understand how your current compensation plan operates and then to identify opportunities to improve the plan’s effectiveness. This qualitative and quantitative assessment of your firm’s approach to partner compensation will help leaders understand if, why, and how your compensation plan might need to be revised.

The Process. We never approach an assessment with preconceived notions of what works best. There is no one-size-fits-all solution. A plan that works smoothly in one law firm’s culture may prove disastrous in another’s. A plan that effectively addressed a law firm’s needs ten years ago might be insufficient in today’s economic climate. We may also determine that your current partner compensation plan is already quite effective. Any recommendations we provide will be both actionable and tailored to the specific culture and strategic priorities of your law firm. We draw on knowledge of best practices in place at other law firms, or in similar professional services firms, and we may also incorporate suggestions from executive compensation schemes used in the corporate sector.

The assessment generally covers a lot of ground, all related to or having an impact on compensation. However, the topics we address will vary based on your firm’s individual circumstances. Areas of observation and recommendations may include performance metrics, financial systems, role definitions, fee-sharing policies, governance, firm values, firm strategy, profitability, and communication. The assessment will address questions such as:

  • How well does your compensation plan further (or hinder) the firm strategy?

  • How transparent is your plan, e.g., how well do the partners understand the link between their behaviors and the corresponding rewards or penalties?

  • How well does your plan not only reward but drive desirable and profitable behaviors consistent with the long-term interests of the firm?

  • How consistent is the partners’ understanding of the long-term best interests of the firm?

  • How well does the plan manage partner expectations and reduce perceptions of inequity?

  • How easy is the plan to administer?

  • How effective are the reporting systems?

  • How well does your plan support (or hinder) succession planning?

  • How well does the plan support (or hinder) lateral recruitment?

  • How well does your plan align with requirements on the path to partnership?

  • What are the cultural implications of your plan?

  • What will likely change, for better or worse, if you change the plan?

The Deliverable. A comprehensive written report and scorecard will be prepared within 60-90 days. This includes our in-depth analysis and conclusions and detailed recommendations to improve the plan’s effectiveness. We will also conduct an interactive Q&A session with firm leaders to explain our insights and recommendations and to offer initial guidance for implementing recommendations.

The Scope. All of our projects are billed on a flat-fee basis, depending on the project’s complexity, the time incurred, and the nature of the deliverables. This approach aligns both parties’ objectives and fosters efficiency. Both parties must approve any scope expansion, and these are the most common triggers:

  • Increasing the number of interviews

  • Keying/cleaning up historical financial data unavailable in electronic format

  • Assessing governance, i.e., how roles & responsibilities of managers and election processes impact compensation

  • Assessing profitability, i.e., the accuracy and effectiveness of the firm’s current approach to calculating profitability; the potential for the firm’s current systems to support more effective calculations of matter and timekeeper profitability

  • Conducting an all-partner presentation and Q&A session on our findings and recommendations

  • Scheduling three or more introductory calls with various management stakeholders to determine whether to proceed

Next Steps. We recommend scheduling an introductory call using the link below. This is an opportunity to explain the deficiencies of your current compensation plan and share other cultural or financial factors that lead you to believe the compensation plan may need a refresh. This introductory discussion also allows you to assess our capabilities and process. We’re happy to accommodate two introductory calls — one for initial vetting by an “advance scout” and another for a larger management team to make a final decision. You’re welcome to record the introductory call(s) for the benefit of those unable to attend. If we both agree there’s a good fit, we’ll recommend a project scope and a timeline to get started. We generally do not prepare formal proposals or participate in RFP processes.

Frequently Asked Questions

  • Who will be interviewed? The confidential interviews should include a cross-section of firm stakeholders, e.g., senior partners, junior partners, income partners, senior associates, c-level executives, top rainmakers, the management committee, different practices, offices, etc. This is typically limited to 25 interviews, so selecting a representative cross-section is important. We can adjust the scope for larger stakeholder communities.

  • Should we include everyone? The most compelling reason to schedule more stakeholder interviews is to engage more voices. A common reaction from stakeholders who don’t participate is, “This analysis doesn’t reflect my views or apply to my unique circumstances.” Another is: “This analysis says only what management wants it to say. Or it’s just a few loud voices and not the majority view.” The principles of change management prove that the more involvement stakeholders have in defining a problem, the more willing they are to accept and adopt recommended solutions… even solutions they don’t prefer. We don’t necessarily gain more incremental insight when we interview a higher number of stakeholders, but buy-in is always improved.

  • Will you share quotes from your interviews? In our analysis and conclusions, we will generally illustrate key observations with stakeholder quotes. We will not attribute any quotes to individual stakeholders. We only include quotes if an issue recurs frequently enough to reflect a clear pattern. We may also cloak some quotes to emphasize the substance of an issue without unnecessarily exposing those who have shared it.

  • Is the intent to address underperformance? Many firms seek a compensation review due to issues of partner underperformance or, more commonly, subjective perceptions of partner underperformance. Our Assessment will help you better define underperformance, even in areas where performance is less observable. We caution firms against rewriting an entire compensation plan because it seems easier than directly addressing one-off cases of underperformance. If you’d strongly prefer to avoid these tough conversations, we can step in and help. The ultimate outcome of this effort is to afford every partner a chance to be successful. The Assessment helps by clarifying the contributions necessary to drive the firm’s strategy and then illustrating where the compensation plan falls short in driving and rewarding these contributions.

  • How does this connect to other firm priorities? The Compensation Assessment may be linked to, or even be combined with, related projects such as a Governance Assessment, a Profitability Assessment, an Associate Elevation Assessment, a Work Allocation Assessment, or a strategic planning process. Our observations and recommendations nearly always touch on these areas. We believe partner compensation is a critical factor in driving firm strategy, fostering or revitalizing a collegial firm culture (or building a new culture after a significant disruption), or catalyzing changes necessary to remain competitive, e.g., technology rollouts, new pricing demands, etc. If you have such efforts underway or are contemplating them, we can help you understand how everything ties together.

  • What’s the deliverable? We provide a written assessment that contains our observations, analysis, and recommendations. This report is augmented with stakeholder quotes and comparisons to best practices. We also deliver a live Q&A to the management team to discuss our findings. We can also adjust the scope to present our findings to other firm stakeholders, such as at a partner retreat or at an all-hands meeting.

  • What’s the next step after the Assessment? Our objective is to present a stand-alone Assessment with sufficient insight and recommendations for firm leaders to take action if warranted. Often, our recommendations are sufficiently robust for firm management to take immediate action and our contribution ends. In some cases, the scope and strategic necessity of our recommendations will benefit greatly from outside assistance to properly execute. Where we can help, we’re pleased to be invited to participate in project implementation. For areas where we don’t have the relevant expertise or bandwidth to assist in implementation, we will recommend other suitable providers. Note that we do not withhold observations or recommendations in the hope of securing additional projects. A key philosophy of our consulting practice is to teach our clients how to fish.

  • Can we shorten the process by providing a detailed overview of our current plan? Our process often takes 60-90 days primarily because of scheduling logistics with busy people, and secondarily due to disaggregated and messy financial data. If our commitments permit it, and your culture is receptive, we can certainly accelerate the process. However, we cannot accept a management presentation in lieu of stakeholder interviews. In 100% percent of our engagements, management is partially (sometimes substantially) wrong about the contributions partners perceive to matter, and often misguided about the contributions that actually matter. Yes, even those in the room making compensation decisions. And yes, even in an open and formulaic system.

  • What bias do you bring to this process? Our primary role is to help you align your incentives with your culture and priorities. This applies whether you have (and want) an eat-what-you-kill culture, a black box system driven by a small number of partners, a collegial culture where everything is open and everyone shares credit, or any other variation. What you value likely differs from other firms, so we don’t start with a template solution. We will offer insights on the relative benefits of alternative approaches that will produce the desired outcome, particularly approaches that have widespread acceptance and success elsewhere. However, unless you ask us to, our goal is to help you align partner incentives with the culture you have or want, not to urge you to change your culture or values to conform to our preferences. Note that we occasionally decline engagements, particularly with law firms whose leaders very clearly want us to endorse their pre-existing views. This perspective may appear in all law firms, but it’s particularly commonplace in the largest law firms.

  • Can you provide references? Yes, we will gladly provide client references whenever possible. We value our clients’ privacy and respect the wishes of some law firm leaders not to disclose their efforts at addressing partner compensation. We also rotate our list of references to both offer a mix of firm sizes and geographies and to avoid burdening our busy clients. As a result, the list of references we provide may not include law firms of a similar size, demographics, practice mix, or geographic footprint as your own. We have provided partner compensation/remuneration advisory services to law firms in the United States, Canada, Australia, Mexico, India, the EU, and the UK, among other locales, with clients ranging from several dozen to several hundred partners. You can view a partial list of current and past clients, some of whom may have engaged us for compensation advice, here.