“Selling” a new compensation plan to your partners

“Selling” a new compensation plan to your partners

As noted before in this blog, the past three months have been an unusually busy time for our firm's partner compensation practice. Law firm partners worldwide are asking whether their present partner compensation plans are still relevant to the changed business conditions and internal professional issues that many of their firms face.

Whether it is a simple lockstep or a complex formula, partner compensation plans are hard work. Once you have developed what appears to be a reasonable plan, it is sometimes even harder to sell the new plan to one's partners.

Here are some suggestions based on conversations that I have recently had with managing partners who are now trying to convince their partners to change, update, and, they hope, improve their compensation systems.

  • Get everyone involved at the earliest practical opportunity. This does not mean that every partner has to be involved from the very beginning. However, do not allow anyone to feel left out.The most resolute and divisive opposition to new partner compensation plans is usually based on a feeling of exclusion or suspicions of a fait accompli, rather than substantive doubts or objections about specific features of the proposed changes.
  • Be prepared to deal with tough issues. A discussion about partner compensation can quickly lead to other, more difficult, issues that perhaps the partnership has avoided for years. Do not table them as irrelevant. In some instances those "dead skunks" need to be addressed before the partners will be ready to make intelligent decisions about a new compensation system.
  • Don't scare your partners. No matter how intellectually compelling a new compensation plan might be in theory, if it requires some partners to risk a significant short-term reduction in compensation, that plan is dead on arrival.

Read more on the Walker Clark Worldview Blog.