System Compensation Law The Ideal Firm
2005
Volume 16
Number Issue
Winders J. Peter
compensation hymn, might has his hours down his heard the
everyone
were lmost so
suffer, generalization "Amazing for similar This Grace":
or reasons.
applies
savings
the dot the and loan
to cases, "Amazing How the sound Grace! com
sweet
and the scandals. corporate
governance cases saved wretch like That me! a
lost, found, but For
plaintiff malpractice The CLE for was now am
courses
blind but see." Was
lawyers allegations creative have section
must now
a on
personal gain, because, of in Choctaw: Translated the small into
cases, even
plaintiffs
such motives. While
assert
Shilombish Holitoba some are ma!
arguable,
against
suit others forced. A
pulla cha, are Ish minti an
arithmetic will from for in
accountant pia
copy an error Hatak ilbusha ha
complaints
talking section of the Enron about
yukpalashki.
pi one a Ish
consulting overshadowing business auditors. the the
English: Translated from Choctaw back to
jury for obvious. The The this
Spirit[ Holy may My reasons are
likely mistake,
forgive but less
to excuse a
a are Thou must
come,
bending rules,
deliberate of
decision the
to
suffering
or a We
are men.
by gain. close line if motivated self skate the
too to joy. Bring us
difficulty illustrates This of actual- that exercise the This is of the
loss
pre-
every reasons one
people ly communicating professional ideas from whom have vention in strange
to contact
or come
already compensation with believes the in that who who the in law
agreement, system not
are or see
differently, something problems problem
don't is be the firms be feared. The
system at to or see can
of discussion about motivation that all. Hence the introduction the the
argument to turns
a source a
compensation. patient. simple into abuse of the fidu-
Here mistake Be
system, goes. an a
ciary dereliction, venal
of abandonment the
a
or
trilogy. This is of The the
4 th part
parts
get
a more
profession,
ideals of and the thus make it
more
they actually doing difficult because discuss
some-
plaintiff's likely
greed that the
be rewarded. will
problems simply pointing thing about rather than
Consequences (The See, that those them Unintended The other
loss
out. preven-
e.g., reason
same
fLaw professionals cringe Management).1 they tion when about Essence hear Firm o
compensation certain is
systems very common
INTRODUCTION
exaggerated closely related. self-inter- Even if the
large lawyer liability
almost the
In
every
case, claim, does result it in in results
est
not
a an
plaintiff greed.
has been insert element of able
to
by an preventing making increased risk the firm to
or
personal
Whether motivation made
not,
true
or was prevention practices. good difficult loss
more
dangerous in the The issue
was an case. case
FORMULAS WORST
ARE THE
because mistake the mistake there and
was a was
arguably lawyer willing prevention point made because from loss the The
system worst to
was a
lawyer Or,
for the found himself of view is formula the allocates that system cut money.
comers
incoming specialty originations, trying handle dollars based outside his client
to matter
a on
particularly originations,
profitable, it because hours. because and billed
matter or was
those the What's with that? Aren't wrong
Tampa, is shareholder Carlton J, Winders Peter with Fields in Florida. a
Continued 4
page on
from Compensation, 1 it,
if he tempted expects until he hoard work get is to page to
can
deter-
being
the factors that those law firm? Aren't he fears project lifeblood of because
his be
current to soon, a over
they profit? Of
offifthe
better the firm mine would whether be operates firm month. The "under hours" at
next course a
absolutely essential
speeding
available, &the firm
vital assigned Those lawyer
are! who is
work
up to
concerns are a
were
the formu- is increasing its It that existence, let alone chances firm's the and generation for the of the regenue
success.
compensation that determining that individual client fully for has utilized. lawyer la idea creates B will be Partner each a
problems. finn
would be the $200,000 gives
the but in business him year, a
conflict
restrictive
of its
the client because better off without
credit- agreed will be fee
formula Suppose is
upon
a
a
client, the firm keep but
policy. the interest is waiver B's
to
the client, originated 33%
lawyer the who the ed 33% to
to
C client. Parmer without the better off
would be three times
lawyer originated the and 33% lawyer the
who to matter,
recruiting
assignments,
off avoid committee if he
is better
can
essential doing Each element is work. the create
to
revenue.
benefit consuming the
duties that and other time interviews
argued the
affect things
will, be
of
All
to
sorts
can,
or monetarily.
then He benefit him they do firm because
not
can
they
assuming
firm,
lawyers day-to-day in that
of
choices
anybody, ignoring, the
brings than in
claim he
as money more
the formula.
conscious
of
the if essential are duties does, that the other formula the fact
are
abil- originator figured his sales that of with has Green, thrive. Gray the D Brown, & firm is Partner of the finn In to
develop-
problem. by
litigation business ity is served financial interest has his best is ACME client
Brown. ACME
a
a as
putting only finn busy quality, the regardless with reasonably clients of client litigator. is Green at the Green not is ment,
writing off odds of works claims, originated Green also Every himself. risk of hour but greater he and greater at
matters
doing originator the
of the without 66% than 33% share him fees. Since D
rewards
gets ACME
or a as an no more
on
doing
disproportionately
the he is those and work, his write-off falls
the of
hour value him
spent to on case, own
on
an
plenty in of active
has if becomes
long clients, believes he that he tempted work. E favor "his own"
Partner to one
as
so
belong
priority. clients getting organizations of industry his litigation Brown that to,
is the ACME do. The not to
some
the business of future stepchilding it will be
of ACME this to
doesn't
source
as a
see
recognition only achieve firm, right, she begins if
but
and
him try- either fair i to can
or
That
of con•nittee. chair litigation Work
officer
himself. ing
the
to
a or
manage as
an
commitment significant for
litigation, time
will take being the ACME
done is
a
on now
compensation
firms
system in law [T]he
forego
during income which will E supervised by 3 the corporate but
years,
guy.
something
be feared. is
to
compensated
until
effort is because the
not
servicing practice
Gray niche
has
a
origination, she looks for
it results
in
so an developers,
shopping with major
center
produce
will activities that
revenue more
happy
principal
He is
clients.
two very
of the immediately. welfare
mid The
term
worker, originator and
is
the
he
because
immediate ignored individual's favor of the in Firm is
completely
fees, and is
of
the credited
100%
is
and
occu-
by examples, is driven decision
the of these
income. each
In
slumps client and
pied.
stops Until
the
one economy
is odds decision formula,
compensation in each the and
the
at
bankrupt. is Gray des-
expanding other
and the
goes now
whole. of finn welfare the with the
as a be otherwise will his income clients because for cut perate
compensation least the allows in
salvation in the by finds system So
town, two-thirds. He at worst
person
new a
greed, inef- impression business based help his decisions promotes
lawyer that
looking him
for set to
up on new are a
profit. impedes Then sloppy with and futures and European
in marketing ficient investments management, currency a
compensation
the there be sideline this solution? Gray How
guaranteed what is the
40% sys- return.
a
as can
new sees
perception
though decisions real
that compensation problem, the both
eliminates that
his tem are to
even
answer
background. considera- individual primarily of securities, his because
monetary made investments
estate, not are or
running
firm? better
salesman, but oil time tions, snake and Gray's the
promotes client is
thinks
Brown at a
same a new
Gray tak-
anything
who is it is
since
he
feel doesn't
say
can
COUNTERING
FORMULA SYSTEM
PROBLEMS
OF THE THE
share. affect Brown's ing won't risk and it
the
problems approaches created
the
There to
two
or
are
Everybody minding paid nobody the for
is
And store.
compensation by the exacerbated
system.
wrong
duties, and
administrative
there that
of
are
course,
agrees,
approach
does
This Establish approach:
Rules.
First
they
chores,
the they but divide the
system
are assures
up
compensation "market
such
where touch
the system
not
billable from punished taken
hour for each
away every
the loss
that
"informed self interest"
forces"
worst
only
assure or the that much work, the guarantees and
system pretty
rules
attempted, establishes prevention but
decisions will be
managed
crises. things
that will be
are
that rule Make
decisions.
control
the
put
to
a some on
profitability loss than
interested in
those who
For
litigation.
more are in lawyer, dabble the
Brown,
cannot corporate
compensation
of
prevention,
the formula
systems coun- are handling
the theoretically from forbidden Thus, is
Brown
clearly,
formula
Pretty the terproductive well.
there
sys-
is
he as it litigation, and does if ahead but he
anyway,
goes
members individual of
the
financial interests the
at put
tems
avoided, be Unworthy
doing clients
rewarded for to
are
so.
A profitability of the firm. Partner
welfare
and
with the
odds
Crime in does originating
compensation paid is for but one.
PROFESSIONAL LAWYER THE 4
appointed keep of
the web sites firms with that sound him is
great fact but
statements to
cop person seen pay, as one
(maybe paraphrases of three of the Commandments and since work is under- the Ten of
doing from it. And
cop
course
points Law)
provided of the twelve of the Scout but have non-billable, paid (it for in the four system) and is not no
sporadically.
stands for. only what know the firm temptation like resemblance Enron's do it It is there is to to
we
a
inspirational. published
importation code of ethics That is what drugs by hoping from of Columbia the not stop to was
talking manning about. penalties decreasing law enforcement with and
we are
unpaid
volunteers.
list is harder make of values that the members of It to
a
which, Change commit because of and the approach: other the firm
Motivation. The Second to to
agree
mem-
guide commitment, entity good the firm's decisions. the
for firm bers' But approach what is the is decide
to
can as an
developing compensation
good is compensation first in that reward is what the system and model system step not to
a
inherently
punish destructive values. is decide If the is that still what In for the firm and to not. upon
core way, may
we
important making only thing temptation, temptation is devel- the firm the
but will be have deal with to to to
money,
or
everybody oping work, of then admit it tell right. volume and is do what
a
personal goal lawyer who
The has of service concerned. to
a
PROPOSAL
profession lawyer firm, and both the fit in that the
not
may
approach.
the second
This article elaborates For
they on a better off if it and the firm honest about and end
are are
compensation
work with effi-
system to encourage
negotiations. parties more or All will avoid wasted That firm's
years.
compliance prevention
loss ciency with contribute
and
to
compensation going
and is be differ-
management system to
following
firm,
practices the
welfare of the
and overall
goals. are of another firm with different Louis from that ent
hispro necessary: including work, for bono Brandeis is {:amous his ami-
Brandeis Briefs in which he the individual
put
curiae 1. DECIDE cus YOUR FIRM IS ABOUT WHAT
societal is said Brandeis reimbursed that in It
context.
case a
given
of officer candidates class A
was
his firm for time he those
the in spent
pro
following instructions,
timed
test
on
a
(a) is bono If that
true, matters.
we can
complete
prize with for the first
to
per-
a
conclude his firm did share that
not
pro
read all fectly.
takers
The
to test
were
(b) Unworthy value, avoided, but bono and clients be bet its
to
as a core we can
are
complete beginning, then before
to at
compensation sucked.
system
originating compensation paid
is for
one. couple speed. hundred direc- There
were a
Once has its firm
left, agreement serial from in tions "name
a on core
upper
place things values,
fall into easi-
physical
right" such number to can more
upper
compensation ly, only decisions,
but loudly, saying things standing and "I not
as
achieving
also decisions Discussions about in other
champion
instruction #78. the the first reach
at
areas. to
am am
goals resolving problems intermediate decisions and
following instructions," and Of last the like. the on are
course
productive
the solutions consistent with if be begin-
have read all before instruction that must "Now
more you
was,
applies only
agreed compensation,
This values. but also introduction, ning, the instructed in the not to
put
your name on
as
approval budgets expenditures, style, of management and watch the fun." and sit back to
or paper
expansions, hiring, things. decisions about other and
many
important.
skip
is it the
don't this
Please
most
one, as
goal disagreements
is about the the When the how get to
same,
through
that skim and
think this is article don't
you
an can
costly
begin debating those that there less than with the
are
is, pick point if it this is essential. but
two,
up even one a or
goal again. Some decisions become self-evident
management
requires change,
If it culture fine. See Law be
hard. It
may a
because values the other choice will detract from and
one
core
Importance
Overcome and Culture-
How It. Firm Its
to
specialist will enhance successful who them. choice A
wants
fungible. Large firms alike. firms
Law
not not reputation join firm for its the and but who are support, are
wants to
Boutique firms different from
alike. Small firms
practice independent not poli- wolf continue of firm's lone the
are are
to
a
sole general practice whose firms.
There firms main
regardless cies should be the attractiveness of of
are or
easy no,
an
public profit. interest firms. goal There
is There
important income, because would it
are
are
counter to
more an run
profession, sig- goals include service and the firms
whose to such teamwork. firm value
as
important firms with bono
work. There nificant
pro are
II. DECIDE FIRM'S
VALUES TO REWARD WHAT ENHANCES THE CORE
AND
diverse, they egali- goals be involving
work be how
to to
FIRM'S
FROM DETRACTS
TO DISCOURAGE CORE VALUES WHAT THE
professionalism, tarian, for their firms be noted Some etc. to
hard,
agreed
be because the has This shouldn't firm malpractice malpractice insurance, and suits
treat on
carry no
White, Redd, firm values. If in the of Black & all
doing risk
of business. Others and
agree cost
core
are averse as a
profession important, Redd, service is who does the that extremely conservative. to
happiest spending service committees and is
like Bar
not
on
adopt something-for-everybody
will list of
Some firms
a
only
work,
time billable will mind all his that not not
on
hot
values, all the members do in fact
but
agree
on core
spends service, substantial time
Black the he will be
on
adopt
is what is needed. is
values.
That It those
not to easy
pleased, of because does the shared value. If Black
core a
platitudes nobody violently disagrees with,
of
that and
list
a
good job it,
of firm's values. does he has advanced the If he
lip everybody willing give service is of have
Most to to. us
PROFESSIONAL LAWYER THE 5
lawyer
is for,
who is it worthwhile. The firm stands it, job, least what the rewarded for mediocre he shouldn't be not at
a
solving problems legal but does is skilled about. all, fima decided it After this is what the has not much. at possess very
succeed in advanc- clients
skills that the different
attract
can
things
values, of
will include
firms'
Some
course,
core
representation of clients. The
ing of first-rate
value the
core
penalty.
susceptible
For less reward than
that
to
exam-
are
reputation of civil
lawyer for gains her advancement
who
a
But, somebody good ple,
is hard
for
it
to extra
pay manners.
public good
rights of service for the values advances the
core
provide agreed
of values of
the finn is
if the
to
a con-
one
approach
professionalism. like
If this sounds
and team to
a
respectful working
be environment, genial, should it
not
efficient,
much should. practice, firm will be it A the
more
acting compensation
for from
hard subtract someone's
to
multiple goals
and achieving much
effective
at
more
more
damaging jerk of thereby real- chances and
the finn's like
a
allowing goals
approaches profitable
its
if it team,
spe- as a goal. izing
that
abilities. members' Few of its
cialization and the best
use
Ill. ASSURE responsi- COMMIIMENT TO SHARE THAT ALL MEMBERS OF THE FIRM of work and division businesses succeed without
SHOULD BE production, THEM designers, CORE VALUES AND THE PRINCIPLE THAT ADVANCING and THE force, bilities the sales between
might value. REWARDED be Teamwork itself
management. a core
the hard, easier but essential. becomes much This is It once V. MANAGEMENT
lawyers
inter-
values, established because firm has
new core
they Everybody just That is
what
do not want. cannot
they
joining share
told
if do in
the firm be that ested not
can
paths The for-
what idea of different
the
to
success means.
sig-
they buy principle
that
values, and do
into the
the not
a
are
simple math do the criticized above is
least
mula
system at
join. compensation, they be
of should It nificant
part
not
may
prob-
enough hope clean the and that make
to
up money
you
existing
if members
commitment from 100% of harder
get to
produce that
values lems. The that rewards
system
no core
change
specific in substantial sharing
values
presents
core a
work; (e.g., bono
immediate income
pro
existing
members But, if the the
status
quo.
requires
management) control. The
central
unwilling commit, iden-
have
to
you
so
are
public
service
fact that
the firm has
as
a
problem, important
and that is the tified
to
a
adopt platitudes
list of that is It to
easy firm
the a
value does
not
can
mean core
adjusts compensation it its filan whether
nonprofit public
people form violently disagrees allow 50 nobody with...
to
a
If member
accept systems
cam•ot not. a
or
under- that the finn has interest to
group
good
values of
the that is the
group,
a core
politi-
allow its Bar write. Or that it
can
Eventually, thing know. there will be to
amok, with half its cians partners to
run
it understood such
that
if is agreement
politics spending the firm val- in because
half their time Bar
around.
important.
members will is
Some agreement
come
profession. values be And
service the
to
core can ues
buy leave
values members who do
in the Some
not to
core
projects.
assigning by achieved other than
partners
to
means
world
through of the attrition realization
that their view
or a
functions firm Management
should decide that
are some lawyers
accepted job. who in Outside will be better another
performed efficiently by lay personnel outside
most
con- or
whose Lawyers
firm attracted. the
values of the share
com-
are
doing might enjoy though them.
member
tractors,
even a detracting adversely welfare
pensation from the
is affected for
Assuming making living the immaterial
that is
not to
a
change
they
fit.
either decide
do of the firm will
not
or
firm members, will enable the there be balance that must
a
point, been and who have This is serious
part
most profit,
and Without substantial income very income.
a
to
none
earn
easi- would be lot firm will k•aow that it of
law
Management goals firm governance achieved. of the other of the be a
can
there better, and morale of the firm would
be
and the
just hard, it is of formula-driven is the finn er,
stress- not
very
problems
levels, personnel and there all would be fewer at part-time and cri- ful and inefficient since will it tend be
to
would time, wasted
and there would have been much less
broad of
Management sis of finn with driven.
range
core
a
a
profit of times left the and fun if Fred had have been
comprehensive,
any and difficult, values will be
more
more more
firm. with the threatened the last 10 he he
everything
to Somebody how years businesslike. has
was
over
to
can
more
see
large
Florida nonlawyer firm administrator of
One
together fit maintain the balance was and a to try to necessary
history he firm the 15 write
the of the asked
to years
agreed goals values. The based the
achieve up
over
accom-
core
on
the served, stories about
and when finished 90% it
had
service plishment goals the such
of diverse in
was to
as
areas
joined that.
problem allow in five. Don't who
partner diversity profession, public, commitment year service the
to to
compensation
values, of
enforcement of
The
matter
product requires superior legal
production and of
core as a
team
a
a
problem
probably otherwise, corrected the
would have
and
approach, essential that is and effective management
to
see
departing problem resulted in the of the
behavior
positions being
all covered. source or
are
off.
Everybody
better firm. would have been the
therefore itself be of the Effective
management must
one
COMMIT IV.
recognized PATH TO properly rewarded, THAN ONE and PRINCIPLE values, THAT THERE IS MORE lO THE
and be must core
FIRM also for service MEMBER OF THE but only SUCCESS ON THE PART OF AN INDIVIDUAL for full the time to not
managers,
mentoring,
leaders, practice business by fu•n
the
than that there is group This of
one core
more
course assumes
administering bono things the intake,
such
program, requires from the pro achieve. then follows that work It value as
to
and the like.
advancing rewarded. If it is should be that values
idea core
PROFESSIONAL LAWYER THE 6
Unworthy major VI. INFORMATION for is clients it harmful.
loss
preven-
are a
problem. Origination
credits of tion reward the intake
an
billings statistics such and Some hours recorded and
as
unworthy client, least until falls is the roof in. The firm
at
collections assemble. Information such
contri-
to
easy are
as
profitable
unworthy the if
screened client is There
out.
more
subjective, bution and harder
col-
management
to to
are more
origination.
of
Some clients different attracted
sorts
are are
lect. be devised Some collect the
system systems
must to
or
by reputation firm, with of the retired the
part-
contact
or a a Lawyers describe activities latter. be asked their
to
may
lawyer
origination The whom the switchboard finds
gets
ner. goals, department toward firm's be heads the would their
as
development firms. Business
should be credit in
some
practice they leaders, graded and would be
group pro-
or on
origination distinguish rewarded,
credits do between but
not
jects assign- by firm, undertaken the such
management
as
development hap- lawyer business efforts of the trial the who
questions lawyer's
The should asked of the be
ments.
same
working
pened antigravi- late when be the inventor of the
to
practice
information, leader, department head and
group
or
machine window because he had heard of knocked the
ty
on positive negative, requested both and should be from admin-
department (none
present), firm's of the whom
patent
were
impor- istration, human and
If it is
management.
resources,
posi- lawyer who has
firm's and the the
spent request
at
years
organiza- lawyer's overall contribution value the
tant to to
a
tioning organization herself enhance the firm's in that will
an tion, effort worth information. it is the collect the
extra to
industry.
origination clients in desirable
The
to
exposure
a procedure that is
the
Beware
argument management
to
easy a
lawyer. of firms credit
will reward the
system
wrong
some administer if fairness. it does also and
promote
not accuracy
thefirm's
reputation belong Business built should the
to
on
LEVELING
VII.
EfIbrt the firm's direction should firm. be rewarded at sepa-
rately belong rewarding should from the result. Luck the subjec- Since of the information be evaluated much to must
firm. clients conflict situation should choice between in tively, consistency A imposed
valuation there be
must
a
some on
depend personality the of the subjective contributions. of the not on
long-term lawyers involved but the
Department
head Williams is enthusias- on
an
firm. benefit the lawyers tic for cheerleader all his and eval to
superior,
all what. them
uates matter
somebody
[I]t as no Similarly, is hard
logs extra
to the who the most
pay
person
only give Department
head Jackson will
genuine, high quality hours, billable all all
good
for
manners.
praise charge lawyer
if
credit has taken
or a paid expected the is and
rate asset. at
an
project something of and invented
extra-
a spending
work But all her time billable
on
ordinary. managing firms,
the
In
some lawyers handle that other the
must
means
president
interviews
partner every or mentoring responsibilities, recruiting, the work for the the
yearly, member of least differences in
the firm that the
at
so profession, running
the of the firm. All these functions
are
the evaluators be leveled. evaluation of all members The
can
singling essential, and for tbrmulaic is reward nei-
out
one a
by
single help
will address
issue
the universal of
person
a
positions good
business. all
ther fair On team, must
any nor
grader/tough grader" subjective "easy
burdens the that all paid.
be filled and
valuation elements.
recurring just reference The the firm is
to team not
as a a
VIII. ADMiNiSTRATiON
particular- thing. firm, motivational formula morale The
or
ly origination credits, competi-
because of the given problems Consideration various of has be the to encourages to
rivalry firm, internal the
tion who compensation administration of and refine- the to to system, to a as can earn or
manipulate share
firm's the of the The Setting ownership will make work. income greater it that and ments revenues.
firm than of its in that be the example,
lawyers
advance, system in for will greater the
to can no sum encourage
max-
organizes, itself and if the firm But opportunities parts. operates of knows in imize the their If Jones partners.
manages
pursuing identifying specific goals and profits advance that he 1% of of the firm for will receive the team, team as a on a
long
bearing basis, firm of
with the the the then he should do much he maximize
term
expense pro- to
a
year, as as can
ject getting reward, the firm whole will but the firm the firm If in formula the income of the whole. the firm he
as a
as a
profitable. successf•d, be The firm
will have tempted anticipated
would be hoard work down for to more more an
practitioners from of individual busi-
evolved time,
in where will he he be to
percentage, system gets group
a a
a a
organization, advantages brings. nesslike that with the encouraged who the
the work has the time to to pass
one
Similarly, might better, firm will do it be and will he.
4
so
X. EDUCATION
PROBLEMS AND THE OF PERCEPTION
pool exceptional service, wise have bonus reward and
to to
a
extremely important. will Education is The firm have
penalizing provide of who from detracted
anyone
a means
maybe worked,
records of hours of clients and and
matters goals by inappropriate conduct. the of the firm
produced. The fact that the numbers exist allows them
to
IX. ELIMINATE
FORMULA
THE importance
might that excessive take be in the firm
on an
intends
contributions that reward all the firm. hard, This be but it be e'asier than think. to to may you may
important Education This is that.
credits, Origination they
prevent
firms least treated in
at
manage- can an
as are some
explain repetition function. take the chron- will
It easily of law firm the destructive
ment to to aspect most
compensa- are
hoarder of work that his income will if he ic increase instead Origination tion. business is vital. The formulaic of reward
PROFESSIONAL LAWYER THE 7
assigns
others.
He
eventually will to
it,
but he get has
Some with "billable credit," which is good,
merely but
already
proved short-sighted,
be
will
and it to effort. take adjusts
formula
eliminating rather than it;
subjec- a
some
tively,
significantly, but XI.
DOES
good
businesses
do. THIS WORK REAL IN LIFE as
Some
firms assign
ce.rtain
it
Everybody does. tasks such how client
this to
works am persons sure
at can see as
development,
the
small with idea they the Angus level. that will be
extraordinary is compensated
developing group
at
on
their
business but loves with and
the it. Hereford
lawyer's
that others is the not success, lawyer tests
who
same
are.
This is
adds good
example value
identifying
of
he advises separately to and
very he and a is every able case to
on
valuing
supervise contributions
deemed
be in than the Santa best interest Gatrudis has the of to been most. asked more
to
firm.
A is
the
made
Bar's of board different
team performing of
judicial and the in
serve up on
persons governors,
nom-
inating their strength. of committee,
the and finn believes areas he should accept
both.
Each
is
successful what does,
he
these
and at
One represent adopts firm
"article
faith"
of
that records
as an
no
three of
the
shared
values.
They
will have problem
kept
core
"originations."
of
big This no by is deal itself,
are
a
as
agreeing
compensation.
recognizes Each
that without
the on origination "client
is
credit" of the
pervasive
and most
one
others, they would
nothing
done,
instead
get
of the worth-
disruptive
compensation
elements. know
of
least
at
two
while
they that work
do
serving
variety
of agreed
team
firms
with as a formulas in which a the fact individual that part-
values.
"origination"
numbers entitled them
large ners to
very
incomes,
they
when
problem The doing
is little in
fair work, administration
the caused hundreds
of were
or no
over
breakup
the of partner-level lawyers. finn.
will It hard be work. But is it hard
so
living
with
formula
its and
fallout.
a Several firms have
full time positions, management now
lawyers where
large the holding
firm them
follows that cannot have
•
name
a no
exactly .:
principles budget billable all
the here, and :.i.: but compensated know for are
of
follow
that several, contributions
management alone.
This some
most.
many or
And with Toamwor/r be
principle managing each might
itself implemented,
be CEO value, partner and it may
a
or core a
there improvement is
general be
in counsel satisfaction func- another may an
a
or
with the tion.
Others provide compensation
reduced a1,d expectation
safer system
a a
and of billable
organization.5 work
assigned view in of
more secure man-
other tasks.
agement Valuations for
or
least At major
pledge firms
keep two
individual
to
com-
these
full jobs time
from
negotiated,
being depen-
vary
to
pensation
and
compensation secret, by is
set
two
per- one or
dent
what
compensation
before the upon
management
was
who
compensation
based set
sons,
overall contribution.
on
job
undertaken,
subjective
valuation
quality to of the
was
of
By large,
and the
quite
satisfied partners
with the
are
sys-
performance.
the
Every
finn
that
have that encountered
has
Since
the
compensation tem.
is have
I clue secret,
no
employed
full
time
believes
that
it has
benefited
a manager
whether formula
does
play does
the in
not a part
or
any set-
substantially
having from
one. ting of
compensation, but,
since it is it doesn't secret,
mat-
Anecdotal
information If finn
is members all don't have ter. offer know in this piece. the they to
can't try
process,
manipulate
polls of
they it.
If
in to think they this
fairly is paid, It am they
aware no will surveys or
to area. easy
are
imagine
be that
tempted
would hoard be useful. "Q. not
work dabble Does
in to not the some
field
your or wrong
firm's despite
compensation
policy. firm have
The substantial system subjective effect
is
achieved
if the
a
same
as
element?"
could compensation truthfully be
totally subjective
answered in
but wide fair. vari-
were yes
a
of situations
for
ety
example,
complaint
about inven- the
a
Some keeps firms
of track
"the
numbers" inform and the
tiveness
of
origination the client partner
form;
the
a
on
them,
of or
but partners also inform them
that major there is
a
situation
where
controlling the
fixes compensation partner
element subjective of adjustment, including
adjust- negative
because
he
interesting,
It
would
however, be
can.
to things
for
more
that
do ment reflect
finn, well the
failure not
on
systematically
major
ask firms
they
how
deal in
compensa- follow
firm policies,
Convincing to
members etc.
that
the
tion
with
problems who matters partners of morale,
create
numbers
given
weight undue
not remains
education
are
an
with
originators historic
who
tend
"rest
laurels," their
to
function. on
Some members
refuse
believe subjective that
to
and with powerful
income producers
who
factors poor are prevail,
they man- but
do prevail
those
in
firms.
then,
But all
have would
would agers.
be
you
Satisfaction
more
increases anec-
the education
emphasizing
effort
as
dotes.
they doubt
would differ
from nmch these.
subjective the element of compensation has increased.
CONCLUSION
Several firms
have managing the partner firm another
or
reading
Some leader interview
this
will
all have reacted,
"What
least about
partners
at
matters
once year my
a
on
origination
of including credits?" Others
thought, will
compensation have
"Well, issues,
concern,
purpose one
maybe
being
origination have
insure
opportunity credits
decrease to
have
fair
can we consideration
of to an
over
a cer-
tain things number all of years."
that
know difficult, believed this is but be relevant don't to overall contribu-
are
to
you
abandon
formula tion firm,
the by approach changing and formula. provide another the to leveling the The a function. to
that
"we have argument
done it
this before"
is
never
way not Several finns specifically
reward efforts. management
8 THE PROFESSIONAL LAWYER
fairly statistic. This intended and well but is list of
argument not sate an a as a
pointers,
approach the but different of
management
to
as a a
provide legal services, services and
rather than related
To
extremely firm, compensation important of which is
part.
an
entrepreneurial
activities in
to
engage
requires Yes, of
it deal but for with
great trust,
group
a a
A. WITH
MIND,
THOSE VALUES ADOPT CORE IN THE FOLLOWING MAN-
goals above) (see shared and values
trust
common core can
POLICIES AS BEARING AGEIVlENT ON THE COMPENSATION OF THE confidently expected. be
more
LAWYERS:
preceding Actually, paragraph. exaggeration there is in the
expected
Every lawyer is devote full time the 1. to to profit identifying enormously firm from
and The will in fact
firm,
being
full business of X hours. X the time Assume adopting sincerely by by making
all, values and the held
core
is fixed 2400.
at
they decisions based whether in accord with those
are on core
necessarily affect for- values. Even that will almost the everybody everybody step
This that has that
to
agrees assures
compensation necessarily
for better because almost mula the performance, for
is work. You but there get extra
may
no
subjective
element of valuation will intrude. If service the
resting budget, billable that but laurels. Note this is to
not
on a
community exception
value, the firm is the will make
full time definition of business. to firm It should also
a an
on a
lawyer encouraged for who the formula the the firm take encouraging timekeeping achieve the bonus of better to
on
president be of the Chamber of the time Commerce. Or if things keep firm needs of. bono time that the track to Pro to
recognizes managing lawyer, the firm the full need for time
reporting records various bar and also for needed for a
are
negotiate
it
value for The will have tracking management. system information about value. Time to
spent
core a on con-
points eventually,
evolve. each of the above is But
might flict resolution that firm the suggest can as cov-
efficient with additional would be
more
practice productive, safer willbe andmore
will aid of and all in the
systems operate
choice between clients in conflict situ- A
a
non-billable 2. All
activities for the
aspirations.
firm's
depend personality
ation should the firm, recognized not
benefit of be the
to
on
as
ADDENDUM
business, approval firm of have the must lawyers of involved the
Harry
convention of the firm. The the
Give illustration. Holy would it
me an
Hobbyists Association Potter the
work? • or ......
Mountain Experience
won't Man
count
This addendum reflects the reaction of those asked
to
might
knows, potential just because, who into
you
run a
review the draft. would it work? How
approved by client; for non-billable firm be work the must
a
foregoing application designated [practice president, leader, is theoretical. need decision The Practical maker group
precise, depend committee, development committee] values business be and will what the
management not
on core are.
hypothetical application, suggestion,
pre-authorized this within list. So is be
not test- must
a a a or
ed,
hypothetical of refinement. and in need It firm
assumes a
of time
3. The non-billable activities
spent
amount
on
number, is
100 and with because that
owners an even
through by be authorized firm similar the
deci-
must
a
following
values, stated, that the however and
assumes core
be brilliant have sion It
maker.
management
to may
one
particular
adopted
sincerely order, in have been and
no are
presi- lawyer opportunity advantage of
take
to
an serve as
by held firm: the
prestigious charity dent of national consistent with the
a
public Reputation highest bringing prestige for dedication standards of service value and and the firm the to to
even
professionalism though ethics and take three of time for it will his
It quarters
year. a
extremely assign wise be suited the
to most to
may
person
Reputation legal prod- for dedication first and class
to
a
spend investigating virtually identifying full time and the
uct
potential existing business from business It
contacts.
new
place Reputation being congenial
for and for
work
to
a everybody practice foolish
do also be let in the to
may
area
employees both
and
owners nobody legal and work for six months. that leave do the to
Using good
talent for needs be done is what Reputation being leading for service the and firm in to management. to
a
legal striking done, the vital bal- But work has be and the profession to
requires
management.
ance
leading
Reputation being firm service the for and in to
a
development 4. Client is business of the firm. the public
is choose between client and When there
to
one a reason
Reputation principles
diversity for and dedication of
to
another, class of clients and those another and firm
one are
good active Dedication
and
management by designated decisions, to Hopefully, made decision maker.
a
problem good this will of the client for eliminate the
Operation firm; firm's interest with the
one
team;
as one as
a
gives business, his but conflicts who him half
who partner important
than individual interest
more
business from and similar
twice the others in the firm
out
profitably,
in
businesslike To
operate operate to
a man-
origination problems
Likewise, attach client
credits. that
to
provide good members, for income
to to compen- ner, a
PROFESSIONAL LAWYER 9 THE
position previous might partic- leadership recognized category] in and added it be reduced that the
to
a a
industry develop both desirable business ular and will
group points. 100 1000
Assume
partners,
public, be service of but the that it will take minimum
to
a a
points assigned
those 100 500 will be
partners
among
significant expenditure of of time for indi- three
years
a an
recognized positions
based
historic in the
matters,
position. Thefirm having approved
on achieve such vidual to
a
points
firm, experience,
divided
The 500 be
etc. to
may
fi•'m lawyer endeavor, so effort, should the for the the the
pay
points
junior points
from the
2 7 partner to most to range thefirm
project failing, and takes risk the of the but also the
largest
[An historical contributor. alterna- for the
belong or more rewards the firm. to
getting
year's the started take last tive for
program
com-
5. There is achieve than
to at
way
one more success
pensation, fair,
is determine how much it
assume was
lawyer, this The successful successful firm. trial the
trans-
extraordinary,
points.] base,
translate arrive and into
at
a
lawyer, developer
successful action of business and the
may
perfor- points assigned extraordinary
for
250
paid now are be the all the does One need "touch
not to
same.
assigned mentoring
tasks. If head of in the the the
filling variety bases", mance by achieve of the
but
may
success a
profession has
for and turned it into model the
program of fir•. a needs the
relating thus firm's
has advanced the values
to
core con-
B. COLLECT
REGARD TO CONTRIBUTIONS DATA WITH OR PROBLEMS OF
genial diversity, envirol•rnent, fairness,
work and the firm
EACH
EACH OWNER REGARDING CORE VALUE.
points entity, his increase. If has total should he
as an
position merely co•rcrnittee, data is collect. recorded filled the of of Some
Hours chair the but to anyway,
easy are
Everybody serving nothing nothing track. knows who is done he little from and this
gets to easy
more, are as a or
practice department paid by paying stuff has been for for his hours leader and head. Other is That in group group.
probably points. Similarly, but first chair of the efficient the the 500 secret, most not
provide development, collect
business who has achieved it is form and
to to way
a a
lawyer significant improvement quality each information have of the the put to
together perfor- base, for reviewers. efforts for the
is "What the client rewarded that
If firm members don't know the
process,
points by development
business behalf of from toward level. additional this
on mance
they manipulate
can't try it. to
firm lawyer in, involved is is the how The done with the whose
you
your are same
plan quality progressing, legal and of has enhanced what work the
successes or
reputation milestones achieved?" fim•'s for excellence
have who has you or
achieved notable There is
success. room
Similarly,
negative contribu- be collected data
must
on
here
the full time of finn
well for the
manager
as man- sloppy lawyering endangered tions. Has the finn? Note that
aging president only who has filled the
partner
not
or necessarily what should is
be considered bad
not
exposure,
position
but has smoother has excelled it and achieved
at
a results. the finn of If has suffered loss because Jackson's
not
a
running,
prot•table operation. is
There also
more room frequent good deadlines, missed of luck but that is because
or
problem partner's compensation. here detract from
the
to
work, corrective the considered and for- be must not
exposure
assigned given dodged. points special because the bullets values 250 for these Some
were core are now successes
positive positions plenty contributions, repeated, compensated
for but for be have few for ad be not cannot
may so
negative assigned infinitum, recognition. contributions. If the head of but deserve the
The three
person years
as
diversity performed admirably, working
has firm has been in the committee value Partner advance A to construc-
a
industry organization joined approval has been the whose he with finn enhanced. attitude and behav- tion is But
person
something paid working assignments ior has for the 6 floor uncomfortable has been for of his made he
th part
on as
negative by categories has the firm from values first for last subtracted and the under the the
three
two women core con-
paid tribution have this effort has off. Under this But the
must consequence. year years. a
develop
his rela- he did take time the
system, to not
own
C.
WITH
MIND, THOSE COMPENSATION MANAGEMENT POLICIES IN WILL
tionships
and the
business he the last three
years,
over
[IN
ADVANCE, DETERMINED,
AS PERCENTAGE POINTS BE APPLIED TO AND
assigned paid effort, it, for
and the firm him the
to
was
90%
YEAR]
ASSUMED FOR WITHIN THE FOLLOWING
OF PROFIT NEXT
and the firm
the whole is entitled the reward.
But
to
as a
[3? 57]
GUIBELINES,
EVALUATED ROLLING BASIS. ON A YEAR
might specially successful effort firm well. reward the
as
Profit, this less other in
context
expenses Repeated means revenues
first will reward Partner A under the
successes
compensation. owner's than
categories in the future. two
assuming
50% base full time
base draw
as
dividing or point by of the is The value 90% of determined
magic. employment budget. work.]
[50%
60% would
is
at not profit by year's estimated 10% 1000. The other next
(assuming materializes) will either increase the it of value performance quality assigned 25% of duties advanc-
at
point,
special including the
could be used for ing negative affect, provide [To interests of the firm. the purposes,
or
you
special bonuses,
extraordinary advance, but for
in adequate performance 12.5%, could assumed of not
start at
an
performance
might Or, results materi-
in the it down.] and evaluate
not year. or
up or
might alize, be
the better used
etc., to
at
prepay expenses, or
extraordinary performance provides
for
This 25% the
governing discretion of the board.
again, [Here contributor. this could be superstar amount
10 PROFESSIONAL THE LAWYER
job, is outline. Of That the be refinement. there recognizes job thus do the and
is that the must to
sary course
neces-
nothing
example, using inconsistent For only with there is the of compensation. but that is 50% The is deter-
rest
sary,
classify lawyers above "categories" criteria qualitatively by into instead evaluating mined he has how well to done that
"pay grades" please job for firms such who
others. practice But well The
leader systems. who has or use
group as as
following: the developed
plan bring and practice executed note the to
a group
into forefront recognized sophis- "go the
for
to"
as a
source
This is effort share of decrease the rain- the
to
not
an
high
marks,
clients ticated
through while
who
gets
goes
one outstanding performers makers of other firm. The the
or
the motions does practice
100-person leader of The
the
not.
antipathy origination
for of credit formula is
part
not
as a
job
than
has harder
members,
with the
and 15
group
a
one recognize origination
refusal client vital
of
part to
a as
a
that will affect the
consideration.
But the
saddled
person recognition firm, the of that the but time
it
success over
job with the dislikes he
is
stuck. There
management
not precludes are fair administration and discord. Partner
creates
paths
different
and he
firm and the
well to success may extremely developing business, B, who is talented in will
handling that his contribution decide
is
busi-
client greater
recognized doing be for and will make less
than
so no
leaving and
the
duties
another. management
to
ness prior assuming under the
continues the firm be system
to
Similarly, diversity head of the the elect, committee
may
successful.
as
approval, spend firm
with couple for time of
to
years more a
this should do What reduce friction such is
in
system
a as
implementing creating, educating and about the firm
sys-
efficient,
and make profitable, the firm it
and
more more
procedures integration and minority the of
tems
to
assure
brought safer. they Industries the firm "I when Acme
to
provide early members into the firm possi- and alerts for
to
doing nothing manufacturing jet but instant holes and
were diversity problems. simply ble is
hold-
It
not
powered
shoes for the sale
coyote
to ing position paid the for, that is she is
it
they market. Now have the
comer on doing
good job
it.
at a
high
businesses don't under- tech
even
"[W]e compensation
perfect. have
before"
done it this No is
But system
way
never origina- will with it the stand"
not
carry
awful.
based A fore- the
system
some are subtracting
on credit, tion iS but statistic. from funds the argument not
an a
principles going
impedi- (a)
should
lawyers remove firm needs the who do
to
pay
good
(b)
ments to management,
business, remove understand who the and
are
impediments increasing
quality
of the the
to
expand
vital work is and the if the
to
base, impediments firm's client (c)
remove is with the firm. client business Additional devel-
stay
to
long planning, (d) firm
fairness and
impedi-
to term
development remove continued of work is of Acme
opment,
or
good
prevention practices, loss
(e)
cohesive-
to ments
concurrently recognized. assure
is value and
more
agreed of values, (t) because the be flexible
and
ness
core
subjective, subjective but This is
within limits of the
very enough address needs the firms with of different values.
It
to
values, contribution
between and divided
levels
of
to
core
good
will take it. management
to
mn
they
math, really Formulas look but like
not
success.
are
Endnotes
people "play formula" manip- because tend the by to exact
Winders, input. Consequences ulating approved of the Unintended (The 1. Peter J. this undesirable "I Essence client
Management), 14, Vol. Law Firm
No.
3 T• PROFESSIONAL develop because business" Joe needed is the char-
to some
(2003). LAW¥:•R
made, itable while, bad decision is originated "I
reason
a
fair, imposed 2. To be there
be that
enforce systems giving client,
this but him to senior
devel- associate
are can
to to
am
policy, particularly
gatekeeping
there is opportunity. where
and handle" a that is the uncharitable clients difficult
op
way
business intake requiring approvaI A
of unin-
system
new
unsuspecting.
foisted the bonus There is under
are on no
volved example.
is is still
It
this is in addi- better if
persons
an
proposed
taking
the
for client, undesirable and system
an
aligning
interests the tion
individuals of the good
with loss to
subjective points fact the in of allocation
allows for also
prevention, doing rather instead of
than
so.
subtracting
negative
contributions such them for these.
as
Winders,
Importance 3. Peter J. Law
Firm Culture- and Its
How
point. That disincentives is There should be the
for and bad
It, Overcome 2004
SYMPOSIUM
ISSUE
PROFESSIONAL
to
OF THE
longer
unwise decisions. reward last A should than it is
(2004). LAWYER no
deserved. managed
firm, The firm should be
and
not
as a
by The has
derived 4. 1% been
that
not
process may a may
or
develop,
be allowed consolidate
and divide
of result
to
compensation formula but since involve is
as a of share
set
a
as a
random decisions of self-interest. distribution, available self interest the of the individual tends
be co-extensive the welfare with of the firm.
to
flexible, provides such this is in that A it method
system
as a
permission do have
5.
firms the General whose
not to rewarding lawyers
for service of other the firm than name
to
per-
Counsel Prevention spoken Loss with, Partners have
and forming legal developing Management and business. work or
of information the
from
who did
simply not large essential, of want is law firm form some in the sources of came
not
a
a
particuiar publicly. firm identified
Besides, with
of
most CEO, practice full but also the time
level
a and at
group
cer-
these conversations did going
know
later
try not to
to give
practice other functions. this tain does But was
system
not
a
synthesize experience information the
about various with
by allowing
leader "free him ride" his bud-
to meet
group
a
approaches compensation
into this, article like and nei-
to
logging by hours. an credits hours It get management
neces-
•
those talked ther did with.
PROFESSIONAL THE LAWYER 11