Law Firm Compensation Practices Update
Incisive Legal Intelligence Surveys (formerly Altman Weil Publications) has released its sixth look at the methods and philosophies of compensation in private law firms: The Survey of Compensation Programs in Law Firms. Data was collected during the last quarter of 2008. This article provides commentary on highlights from the partner compensation portion of the study.
In the first survey on this subject in 1993, law firms were almost evenly divided with regard to prospective, retrospective, or combined approaches to when the compensation decision is made. Fifteen years later, a retrospective philosophy prevailed in 41% of the systems, while 35% adopted a mixed (prospective and retrospective) philosophy. The clear loser over time has been the purely prospective approach. This reflects a market-driven need to recognize individual performance more quickly in order to attract and retain people. It is too early to conclude if this trend will make firms more competitive long-term, or possibly more fragile, in a market dominated by shifting loyalties and an economy which is visiting shifting economic fortunes upon law firm practices.
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