Our firm is a fourteen partner firm in the northern suburbs of Chicago with ten partners and four associates. We are a general practice firm with different partners focusing on specific practice areas. Our partner’s compensation is determined by a three member compensation committee. The compensation committee uses a combination of quantitative data based upon working attorney fee collections and client fee originations and makes a subjective determination regarding other contributions that a partner has made to the firm. The problem that we have is the compensation committee does not have a way to effectively measure the other contributions that are being considered subjectively. We would appreciate your thoughts.
Your problem is a common problem. While it is easy to measure working attorney, responsible attorney, and originating attorney fee collections, billable hours, realization rates, and other hard measures of short-term financial performance, (it is hard to capture the subtler aspects of partners’ contributions such as mentoring new lawyers, firm management, idea development) and its virtually impossible to measure the long-term present value of each partner’s work and contribution.
The key is to make the subjective considerations more measurable. Many firms are supplementing the easily measured economic contributions per partner with additional measurements to determine the actual value per partner and incorporating into their compensation systems. Some firms:
Partner performance reviews are often avoided like the plague by many firms. They are time consuming and it is hard to give candid feedback to colleagues. However, without partner performance reviews neither the partners nor the firm will reach full potential. When partner performance reviews are used not only to review performance but to set measurable goals this data can be incorporated into the compensation system and provide additional hard data for providing a true measure of partner contribution and value.
John W. Olmstead, MBA, Ph.D, CMC
Our firm is a 15 attorney firm in Kansas City, Missouri. I am a member of the management committee and our committee is charged with the responsibility of determining partner, associate, and staff compensation. Several years ago we switched to a competency based goal driven system for partners, associates, and staff. The system requires self-evaluations, peer evaluations for partners and associates, and self-evaluations. This requires extensive performance reviews, tracking, scheduling, and documentation. We are using Excel spreadsheets and MS Word documents and having a hard time managing all of this. Do you have any ideas?
With 15 attorneys you probably have close to 30 people in the firm. I would look into performance management software (performance appraisal software) to management the process. Typical features of performance management/appraisal software, depending on the vendor, include:
Some vendors offer cloud-based solutions and others offer install software solutions.
Just a few of the vendors include:
Some of these solutions can be pricey – so look into a solution is right-sized for your firm. I have firm's your size using solutions that are costing around $3000.00 per year.
John W. Olmstead, MBA, Ph.D, CMC