Why the irregularities in calculating PEP make it an inadequate indicator of success
When times are good, most partners are content with their lot. However, over the last three years, legal practices have been hit with an onslaught of lower demand for services, increased competition, higher tax rates, regulatory change and the disappearance of traditional funding. Partner expectations should therefore have also changed. However, a managing partner at a significant-sized law firm was recently heard to say: “We know that our performance has suffered in the recession and we can live with that as a partner group, as long as we are not suffering more than the competition.” You can understand his concern. When partners feel squeezed, they tend to be more likely to look at opportunities elsewhere.
Smith & Williamson’s head of professional practices, Giles Murphy, argues PEP should be replaced with profit per member
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