Distribution of profits is frequently one of the most potentially disruptive experiences that partners or shareholders have to face. It is axiomatic that no single compensation plan will be universally accepted and agreed to by partners in firms no matter how closely these legal organizations may resemble each other in size and type. The “best” compensation plan for any law firm is the one that creates the least amount of discontent and has the highest “grade” of fairness among and between the partners.
Philosophically, every law firm has a method for compensating its lawyers. Many compensation plans are purely subjective in nature, while others are highly structured. Most plans are a combination of the two.

A compensation plan that is well-conceived and skillfully implemented should accomplish the following:

  • Enhance the ability of the lawyers to provide a high quality of legal work;
  • Reward extraordinary performance in terms of business developers, over-achievers (production and collection), rising “young stars” and lawyer managers (legal and administrative);
  • Promote an atmosphere conducive to client service;
  • Attract and retain qualified lawyers;
  • Encourage efficiency through division of skills and utilization of the expertise within the firm; and
  • Improve the economics of the practice.

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