WHAT IS THE BEST SYSTEM OF PARTNER COMPENSATION FOR YOUR FIRM?

 With infinite variations, four basic methods of partner compensation are used by law firms: 1) equal division of profits; 2) a lock-step salary structure based on longevity and seniority; 3) subjective formulas, in which partners’ income is determined either by negotiation, or imposed by a committee or a benevolent dictator; and 4) objective formulas, where compensation is determined by measurable factors such as dollars billed and collected, minus either an equal or pro-rated share of overhead (eat what you kill).

 All partner compensation systems are designed to motivate certain types of behavior.  So what is the best system for your firm?  The answer is simple: you should adopt the system that will motivate the behavior desired according to your business plan.