How do successful leaders and firms manage their compensation expectations in a record financial year? A recent article by The American Lawyer investigates, positing that some of the most effective means for managing the compensation expectations of partners include structural elements in their compensation system, leadership techniques, and talented, communicative leaders. Blane Prescott, a consultant for legal consulting firm, MesaFive LLC, notes “some firms suffer morale and trust issues because their compensation process fails to manage expectations. Compensation isn’t just about setting a number and then defending one’s decisions. There are many firms for whom setting partner compensation is a surprisingly easy and smooth process, regardless of whether profits are up or down, because they focus on managing expectations and helping partners to succeed.”
Most firms understand the benefits of talking with partners about performance and compensation, but one important question is, is it better to do that before or after setting compensation? It may sound illogical but talking to partners before setting their compensation produces dramatically better engagement, improved performance in the following year, and more effectively manages expectations. But they only work if firms do those interviews well, and unfortunately, perhaps only a quarter of all law firms meet that standard. Good interviews are two-way conversations, focused on helping the partner to be more successful. They explore each partner’s strengths and weaknesses and include a focused discussion of priorities for the coming year, (as quoted in The American Lawyer).
It is often said it is rare to find great leaders who lack great communication skills. Not all communication skills are the same—some leaders are gifted at talking to groups, while others are fabulous at counseling individuals. The key question for managing expectations is, do firms have leaders (at the firm, practice and office level) routinely communicate substantive information and meaningful analyses (not just highly filtered, quantitative data) to partners all throughout the year? Are they honest about telling partners when the firm is doing well, and when the firm isn’t? Are they skilled at accurately describing what the challenges are and how to address them? Are they open about the financial data they share, or does it constantly feel like they are just spinning selected facts?, (as quoted in The American Lawyer).
See highlights from the full article on The American Lawyer.
Contact Bill Sugarman for more information.
The American Lawyer released a recent report, conducted by LexisNexis’ legal pricing data service, CounselLink, which revealed the gap between partner hourly rates for firms with 750+ lawyers and firms with 501-750 lawyers continues to grow. According to the report, the gap between the two groups widened by 11 percent over 2016, with the bigger firms now demanding a whopping 45 percent higher rate on average than their less gigantic counterparts.
The report also revealed rate increases were higher and more widespread than in previous years. The report showed that Seattle, Chicago, Los Angeles and Boston all rivaled New York for partner billing rate increases. The Big Apple firms still led the pack, with a 5.7 percent growth rate. But firms in those other cities experienced greater than 4 percent annual growth in their rates. Nationwide, partner rates increased an average of 3 percent, with Minnesota, Georgia, Oregon and California seeing the highest increases on a statewide basis, (as quoted in The American Lawyer).
See highlights from the full article on The American Lawyer.
Contact Bill Sugarman for more information.