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18 05, 2012

Partner Compensation Plans – The Modified Lock Step (Part 5 of 7)

2025-07-09T20:16:05+00:00By |2 Comments

This is the 5th article in a series of 7 discussing structures that law firms tend to adopt for partner compensation. In Part 1 we discussed the Monarch structure, in Part 2 the Parity structure, in  Part 3 the Executive Committee Monarchy, and in Part 4 the regular Lock Step.

Modified Lock Step

Description
Many firms have modified the lock step model to allow a committee to subjectively reward or punish behavior. The modification helps the firm to encourage essential behaviors such as business development, high productivity, recruiting, training and mentoring associates, management, and client relationship maintenance. It also provides the flexibility to bring underperforming partners into line, without having to completely expel a partner.

Some of the modifications may include the ability to promote a partner to a higher level earlier than the other classmate partners, or demote a partner to a lower level. There may also be a “slush fund” for allocating bonuses to reward desired behavior. Appendix A to this article (which will appear in Part 7 of the seven-part series) contains an example of provisions that might be included in a modified lock step compensation plan. The author extends her gratitude to Bill McDonald, a partner at Thompson & Knight LLP, whose practice includes advice on law firm formation, for the provisions included in Appendix A.

In Appendix A, the agreement provides for seven lock step levels, but permits the management committee to […]

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17 05, 2012

Partner Compensation Plans – Lock Step (Part 4 of 7)

2025-07-09T21:48:39+00:00By |3 Comments

This is the 4th article in a series of 7 discussing structures that law firms tend to adopt for partner compensation.  In Part 1 we discussed the Monarch structure, in Part 2 the Parity structure, and in  Part 3 the Executive Committee Monarchy.

Lock Step

Description

This model is used mainly in large, stable, well-established firms that have a lot of institutional clients. It rewards seniority. Usually, all of the lawyers who become partners in the same year are a class, and make the same compensation. The class as a whole receives an increase in points, which are the basis of allocating profit distributions, when they are elevated to the next level. Typically, the spread between the salary of the highest paid partners and the lowest paid partners is not that large – 3 or 4 to 1 is not uncommon.

When It Works Well […]

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16 05, 2012

Partner Compensation Structures – Executive Committee Monarchy (Part 3 of 7)

2025-07-09T21:32:08+00:00By |3 Comments

This is the 3rd article in a series of 7 discussing the different kinds of partnership compensation structures that law firms tend to adopt. In Part 1 we discussed the Monarch structure, and in Part 2 the Parity structure.

Executive Committee Monarchy

Description
Both of the prior structures are usually only found in small firms of ten partners or fewer. In a larger firm, the Monarch structure may be expanded to a ruling executive committee. In this situation a rather stable and predictable executive committee functions like a single monarch. Usually they are the founding partners or otherwise the most experienced lawyers in the firm.

When It Works Well 
This structure works when the
executive committee, as a body, has the same attributes as the type of single monarch that functions well in this system. In addition, the members of the executive committee must have compatible values and priorities, so that they can come to a consensus about the compensation to be paid to themselves and other lawyers. In this highly subjective structure, the more lawyers in the firm, the more important the role trust plays among the lawyers.

When It Works Poorly
The committee approach can still have all of the failures of the single monarch. This tends to occur if the executive committee engages in “group think,” relying mainly on each other for viewpoints, and tending to tell each other what they all want to hear. They need to stay in touch with the other partners,  have the ability to respond to their concerns, and recognize their contributions, for this to be successful.

This structure begins to crumble as larger numbers of lawyers mature in their rainmaking capability and begin to challenge the “Junta.” The senior partners may wane in their productivity […]

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15 05, 2012

Partner Compensation Structures – Parity (Part 2 of 7)

2019-03-19T21:26:59+00:00By |4 Comments

This is the 2nd article in a series of 7 discussing the different kinds of partnership compensation structures that law firms tend to adopt. In Part 1 we discussed the Monarch structure which involves one partner who rules over the others on compensation issues.

Parity

Description
All of the partners split the profits of the firm evenly. This format usually comes out of a situation where two or three lawyers of similar vintage are friends, and decide to form a partnership.

When It Works Well
When the lawyers have […]

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10 05, 2012

Reducing Culture Clashes in a Small Firm Merger

2019-03-19T21:32:16+00:00By |Comments Off on Reducing Culture Clashes in a Small Firm Merger

“We’re thinking about combining our firm of three lawyers with another small law firm. Do you have any guidance for us on what to consider in making our decision?” Clients ask me questions like this more frequently these days.

In some cases, a booming law practice has rainmakers looking for experienced help. Some senior lawyers in solo and small firms consider mergers as they begin thinking about succession planning. Sometimes young lawyers with developing practices seek to cut per capita overhead by spreading fixed costs across more fee earners. For some small firms, the merger mania in BigLaw has stimulated them to consider their options.

When contemplating a merger, many risks and rewards must be considered and due diligence investigations should be conducted. Culture clashes undermine mergers more frequently than any other factor, however.

When there are only 5 lawyers in the whole office, common values become even more critical. There is nowhere to hide. Variances in strongly held beliefs and values tend to grow from cracks to chasms. They can threaten the productivity, health and work satisfaction of everyone in the office, as well as the success of the firm as a whole.

Fortunately, with fewer people involved in a small firm, it can be a little easier to identify and discuss issues that may develop into rifts in a law firm partnership. Here are a few subjects to discuss.

1. What is your attitude toward money and the firm’s fiscal policy? Do you advocate leveraging debt to help the firm advance quickly and to weather dry spells? Or do you prefer a more conservative pay-as-you-go approach, relying on partners for any bridge loans required during slower periods? […]

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12 04, 2012

Is Your Law Practice Evolving or Devolving?

2019-04-01T21:02:53+00:00By |2 Comments

Most lawyers evolve as they develop experience. They learn from mistakes and from observing other lawyers. Although every lawyer is different, most go through some of the same predictable stages.

Conscious Incompetence
You’ve just graduated from law school and passed the bar. Whether it’s your first client or your first assignment from a partner, your excitement is mixed with anxiety. You’ve never done this before. You don’t really know what you are doing. You’re scared that someone will find out.

Unconscious Incompetence
You have some experience under your belt. You feel like you know what you’re doing. In fact, in some circumstances you actually do know what you’re doing, but you don’t know what you don’t know.

As a young lawyer negotiating agreements, I carefully examined every aspect of the proposed contract. I was trained in a prestigious firm that expected perfection from its lawyers. I sought to achieve a pristine document that gave my client maximal protection from every conceivable mishap. […]

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7 03, 2012

Are Smartphones Confidentiality Risks for Lawyers?

2019-04-01T21:03:49+00:00By |Comments Off on Are Smartphones Confidentiality Risks for Lawyers?

Jared Correia  of LOMAP posted some important factors attorneys should consider in response to a question he frequently gets: Should solos use a smartphone as their primary telephone? He pointed out a number of concerns that the lawyer should address, including the ability to “wipe” a lost or stolen phone, and Plan B for practical issues such as dead zones and dead batteries, for a mobile lawyer.

I would like to add another security issue that should be taken into account. All lawyers, including those who also have a regular land line at the office, should give some thought to this. More and more issues are surfacing about apps having unexpected access to data stored on or transmitted by smartphones. Today the Washington Post reported that “Sen. Chuck Schumer (D-N.Y.) has called on the FTC to investigate Apple and Google after reports that smartphone and tablet apps could pick up more data from consumer’s phones than they realize.”

[…]

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6 03, 2012

Groupon for Legal Services: What Could Work and What to Watch Out For

2019-03-19T22:14:27+00:00By |Comments Off on Groupon for Legal Services: What Could Work and What to Watch Out For

I previously blogged about the results one lawyer obtained when he promoted his law practice using Groupon. That post generated a number of informative comments which I recommend reading. Before rushing off to get an advisory opinion on the permissibility of daily deal advertising in your state, however, make sure you understand how the process works. A daily deal is essentially “loss leader” advertising, the success of which depends on selling additional services at full price at some point.

What Services Fit a Daily Deal? […]

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