X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Consider three partners with the 2018 performance metrics shown in Table 1. Which one contributed most to firm profit? Partner A is a tax partner who worked hard serving clients willing to pay for the time billed; Partner B is a deal lawyer whose major client did no major deals last year; and Partner C is a junior litigator who discounted heavily to win a big case that then settled early.

Partner compensation committees throughout Big Law will grapple with this kind of question in the coming weeks. Many will incline to believe that Partner A (who kept busy on high realization work) contributed robustly to firm profits, while Partner B (who struggled to get busy and had average realization) contributed a little, and Partner C (with soft hours and very low realization) probably didn’t contribute anything at all.

It would surprise many compensation committees to know that all three partners made equal contributions to the firm’s profit pool. How can this be? Simply put: partners’ intuitive sense of profitability overemphasizes the value of hours and realization, and undervalues leverage. This is particularly a problem at firms with wide ranges in partners’ practices on these metrics.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 

Massachusetts Legal Ethics MalpracticeBook

Navigate Massachusetts' system of attorney regulation; this book contains practical advice from the authors regarding Massachusetts Bar Discipline and Legal Malpracti...

Get More Information
 

Think Globally

How does your firm compare against firms around the globe? Evaluating a potential global alliance? Find critical information on the Global 200 law firms in Legal Compass - compare financials, track laterals, and more.

Get More Information
 

WIPL.UK Awards 2021Event

The WIPL.UK Awards honors the industry standouts and rising stars who are making a mark within the profession.

Get More Information
 

WIPL.UK Awards 2021Event

The WIPL.UK Awards honors the industry standouts and rising stars who are making a mark within the profession.

Get More Information
 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.