Compensation System Selection
January 3rd, 2008 by Jim Cotterman
The success or failure of any compensation system is not simply inherent within the structure of the program. Compensation is just one element of how law firms operate. What we tend to forget is the purpose of a compensation program is to make good compensation decisions. It is a tool. Certain tools are better than others depending on the circumstances.
For example, a pure lock-step program largely requires the firm to assess a senior associate’s ability to progress as a partner over the remainder of his/her career. Essentially you are making some thirty or more years of future compensation decisions at one time. Such an assessment requires much more careful attention to the qualities of being a partner. And such attention is rare.
Before we dismiss any particular compensation program or quickly accept the “conventional” wisdom of a current favorite approach; we should think about how well the program will fit the firm and how well it will facilitate good compensation decisions.
Let’s start off the year with a look at a law firm partner compensation approach that many consider an antiquity, yet 8% of firms still use. Lockstep compensation for partners has vocal proponents and detractors.
What are some of the key positive attributes of such a system?
1. It supports a single firm philosophy.
2. There is little internal competition.
3. Leadership has more time to lead without the annual compensation ritual.
4. Non-traditional roles and new postings are more easily undertaken.
What are the main arguments against lockstep?
1. There is no accountability.
2. Stars are not specifically recognized monetarily (at least not instantly).
For a more extensive review of this approach read my article, Lockstep Compensation - Does it Still Merit Consideration?
This entry was posted on Thursday, January 3rd, 2008 at 8:55 am and is filed under Partner compensation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.