Diverse Compensation Schemes for Law Firm Partners
As a general rule, firm partners in the California legal industry are well-compensated for their contributions, but the difference in compensation can be staggering, both between workplaces and between partners.
Partners Perform in Multiple Capacities
When determining whether a firm is evaluating a partner’s contribution fairly, one must first consider the many different capacities in which a partner serves their firm. Though there is significant variation in daily tasks from firm-to-firm (and based on seniority and specialty), a law firm partner generally provides value in three ways: through their project-based production as an attorney, through their supervisory role as a manager in the firm, and finally, through their contributions in the realm of client acquisition and retention.
Each of these contributions must be properly weighed and evaluated when compensating a partner — though it’s worth noting that many firms do not use data-oriented methods for evaluating such contributions (and as such, whether the compensation outcome is fair depends on the overall result, and not necessarily the specifics of how that result was calculated).
Let’s take a closer look at the different compensation schemes that partners may face in the firm context.
Lockstep compensation for partners is (as with associate-oriented lockstep compensation schemes) one in which every partner at a given “level” in the hierarchy receives standardized pay for the year. Lockstep compensation does not necessarily mean poor compensation — it simply means equitable compensation. As such, if you do not really see yourself assuming the role of a superstar partner who will go the extra mile to acquire and retain clients, then a lockstep compensation scheme may be quite suitable for your purposes. You will not feel the extra pressure to perform day-in-and-day-out at a high-level in order to be evaluated fairly for your contributions.
Lockstep compensation has fallen out of favor in recent decades, though it can be found in a limited capacity with respect to junior partners in smaller firms (who are given significant autonomy early on, and whose compensation structure will change once they have “proven themselves” capable in their junior partner role).
Formulaic compensation is objective and data-based, and there is a level of transparency that many partners find refreshing. A formula based on a number of specific factors determines the partner’s compensation — factors such as one’s billable hours, for example, or client acquisition (dollars brought in). Since partners know what factors directly influence their end-of-year compensation in a formulaic scheme, there is no issue involving one’s compensation expectations not being met by the reality.
Subjective compensation can be frustrating, but feels “organic” to some partners. In a subjective compensation scheme, a set of decision-makers at the firm evaluate a partner’s perceived contributions to the firm and determine fair compensation on that basis. There is no specific formula for evaluating their contributions.
This is not a bad approach for certain partners. If you feel as though your contributions to the firm are more difficult to stuff into a data point — for example, if you feel as though you are an excellent and well-liked manager — then you may benefit a great deal from a more subjective approach to compensation.
The mixed formulaic-subjective approach is quite common in today’s legal industry in California. In the mixed approach, baseline compensation may be determined based on a formula, but additional bonuses may be based on subjective assessments of one’s contributions to the firm for the year. This allows firms to really push partners and further incentivize them meeting certain goals, while ensuring that a partner’s “soft” contributions are still valued through the subjective assessment process.
Contact Garb Jaffe for Legal Recruitment Guidance
Ready to move on to greener pastures? Here at Garb Jaffe & Associates, our seasoned Los Angeles legal recruiters have decades of experience helping associates and partners secure ideal positions with prestigious Biglaw firms and in-house legal departments throughout the state of California.
Over the years, we have developed the insights necessary to effectively connect mid-level and high-end attorneys to opportunities that take full advantage of their skillset, provide competitive compensation, and satisfy the various other requirements that the candidate might have (i.e., adequate work-life balance, interesting projects, autonomy within the workplace structure, growth mindset, etc.). Thanks to our extensive network of insider contacts within legal workplaces in California, and our long and consistent track record of working with attorney-candidates in the regional market, we are well-acquainted with the challenge of separating false expectations and market misperceptions from the reality of a particular workplace environment.
If you’d like to get in touch with a member of our team to learn more about our services and how we can assist you, please call us at 310-207-0727 or send us an online message through our website or by email.