While Big Law leaders and recruiters seem to agree that a closed-compensation model is the best fit for large firms, midsize firm leaders appear to have a very different philosophy.
The main argument for keeping compensation figures hidden is that doing so allows firms to avoid internal political backlash and partners’ hurt egos. It also allows firms to make lateral hires on varying pay scales depending on market conditions without those new recruits feeling underpaid in comparison to existing partners and vice versa.
But many midsize firm leaders and experts believe that an open-compensation system is the best way to avoid conflict and maintain positive morale.
‘GLASNOST’ AND DEMOCRACY
“We have an open-compensation model, I would say, in that all partners are required to vote for the compensation schedule for equity partners,” said Jeffrey J. Conn of Thorp Reed & Armstrong in Pittsburgh. “They’re aware of it, obviously. They review it and vote on it.”
Conn described the system as “very open and democratic.” “I think our partners feel as though if they’re an equity partner, they should have as much information as they would like to see,” he said.
David M. Kleppinger of McNees Wallace & Nurick in Harrisburg said his firm has a similar philosophy.
He said McNees Wallace makes compensation figures optional for any partner — or member, in this firm’s case — to view.
According to Kleppinger, any member can request to see a list of compensation categories with the number — and, if they ask for it, the names — of the members in each.
“Our system is pretty open and communicative in that way,” he said, adding that a great many of the firm’s members choose not to view the information.
“Especially among the equity partners, we’re as transparent as you can be,” said Maury B. Reiter of Kaplin Stewart Meloff Reiter & Stein in Blue Bell, Pa., explaining that firm financials, including compensation figures, are available to any equity partner that wants them. “I’m a believer in transparency. I think people like to know that even if they don’t take advantage of looking into the information, they have the opportunity to see what they want and have it explained to them.”
Jeff Coburn, managing director of Coburn Consulting in Boston, said the closed-compensation model harkens back to the law firms of yore.
“The old style was to keep it closed and secretive and sort of opaque— and to some extent repressed,” he said. “That was based on the fact that law firms back then were just individual partners, so that was fine.”
But the makeup of most law firms today looks a lot different, he said.
“It’s been more of a trend of the last 20 years to open it up in the spirit of having a firm that’s more collaborative, more of a team concept, more of a collective, shared culture, which would therefore require more openness about everything including compensation,” he said.
More and more firms these days, he said, have a “glasnost” philosophy when it comes to firm financials.
SECRECY AND JEALOUSY
