Best Practice: How can we determine if our partner compensation system is working?

Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. Do you have any suggestions concerning how we can determine if our compensation system is functioning properly? A. You can start with the following firm - self-test. Has the firm experienced or is it experiencing:

• Partner defections
• Firm splits and breakups
• Personal fiefdoms
• Maverick partners
• Hoarding work
• System perceived as unfair
• Problems acquiring and retaining top legal talent
• Low productivity
• Low profitability
• Client dissatisfaction
• Low morale
• Disputes with former partners

If your firm is experiencing or has experienced the above symptoms, it is time to really examine where the firm is headed and what messages your compensation is sending out to your partners. Is the firm trying to be a firm or merely a group of lone rangers. It is not just a matter of whether people are happy with their compensation – it is also a matter of whether the firm is achieving its goals and targets. John W. Olmstead, MBA, Ph.D, CMC, 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 General ListServ, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.