Best Practice: How to compensate managing partner

Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Q. Our firm has three partners, two associates, and 2 staff members. This is a new firm that started in practice a year ago. We are equal partners and allocate compensation equally based upon these ownership interests. We believe the current system has worked well, but have been considering whether one person should handle all the management duties and how that person should be compensated. We would appreciate your thoughts.

A. First I would identify the duties and hours involved and make sure the duties are managing partner level duties and not office manager level duties that should be handled by staff. Delegate or consider hiring an office manager for duties that can be delegated. For duties that can't be delegated, I would suggest you that a look at the hours that will be required and determine a fixed additional compensation amount based on expected hours and the partner's standard billing rate. The partner's compensation would be his/her fixed additional compensation amount plus his/her allocation based upon ownership interest.

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John W. Olmstead, MBA, Ph.D, CMC, (www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.