This is the time of year when many lawyers have a meeting with a supervisor or a compensation committee to discuss their performance over the past year. Many big firms, corporations and government agencies have instituted procedures that give the attorney an opportunity to submit a self-evaluation in advance of their performance review. Many small law firms are more informal, or even haphazard about the process, however.
If there is an established procedure, follow the guidelines or instructions. When an organization doesn’t have a formal review procedure, I recommend that my clients prepare a concise memo, email or other written communication summarizing their accomplishments of the past year. Most associates just wait anxiously, but passively for the news. They may think the partners are aware of what they have been doing all year, or perhaps they think it is safer to stay under the radar. Maybe they just don’t know what else to do.
I believe it is necessary to be proactive about your career. You can stop by the office of the appropriate person with your memo and say something like, “I know that you have a lot on your plate at the end of the year. I thought I might save you a little time and make things easier on you if I prepared a summary of what I’ve been doing over the past year. If there are other ways I can be of assistance, please let me know.”
Here are a few tips on putting together your year-end self-evaluation: Read more
Post Date: December 18, 2012
This is the Appendix A mentioned in the previous seven articles discussing structures that law firms tend to adopt for partner compensation. In Part 1 we discussed the Monarch structure, in Part 2 the Parity structure, in Part 3 the Executive Committee Monarchy, in Part 4 the regular Lock Step, in Part 5 the Modified Lock Step, and in part Part 6 the Eat What You Kill stucture. Appendix A provides an example of some partnership agreement language in a Modified Lock Step compensation system.
to Partnership Compensation Plans
Selected Provisions Of
Agreement Of Limited Liability Partnership
A & B, L.L.P.
[Not Intended As A Complete Partnership Agreement]
This AGREEMENT OF LIMITED LIABILITY PARTNERSHIP of A & B, L.L.P. is entered into to be effective as of the __ day of ___, 200_,
by and among A (“A”) and B (“B”) (collectively, the “Partners”) pursuant to the provisions of the [State] [Partnership Law], and according to the terms and conditions set forth herein.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: Read more
Post Date: May 22, 2012
This is the 6th article in a series of 7 discussing structures that law firms tend to adopt for partner compensation. In Part 1 we discussed the Monarch structure, in Part 2 the Parity structure, in Part 3 the Executive Committee Monarchy, in Part 4 the regular Lock Step, and in Part 5 the Modified Lock Step.
Each lawyer’s compensation is based on the revenues she generates. Usually there is some kind of formula that attempts to account for overhead, and then distributes all remaining profits to the lawyers based on their collections. In some systems a flat dollar amount is determined for overhead per lawyer, by dividing up the sum of fixed and predictable expenses, such as rent and shared staff salaries. Everything the lawyer bills and collects in excess of the fixed overhead figure gets paid to that lawyer after subtracting certain firm expenses directly associated with that lawyer such as business development expenses, retirement plan contributions, and salaries of staff or associates who work mostly for that attorney. In that model the firm is more akin to an office sharing arrangement than a partnership.
A variation of the EWYK model does provide for sharing of risk. The firm’s profits are determined, and distributed in accordance with a formula that averages the collected revenues attributable to a partner over multiple years (usually two to four). The averaging slightly shaves off peaks in income, to provide support from partners on the upside of the seesaw to partners on the downside, during cyclical downturns or temporary crises. The income levels remain largely tied to billable hours produced, however.
When It Works Well
This system may be the only system that Read more
Post Date: May 21, 2012
This is the 5th article in a series of 7 discussing structures that law firms tend to adopt for partner compensation. In Part 1 we discussed the Monarch structure, in Part 2 the Parity structure, in Part 3 the Executive Committee Monarchy, and in Part 4 the regular Lock Step.
Modified Lock Step
Many firms have modified the lock step model to allow a committee to subjectively reward or punish behavior. The modification helps the firm to encourage essential behaviors such as business development, high productivity, recruiting, training and mentoring associates, management, and client relationship maintenance. It also provides the flexibility to bring underperforming partners into line, without having to completely expel a partner.
Some of the modifications may include the ability to promote a partner to a higher level earlier than the other classmate partners, or demote a partner to a lower level. There may also be a “slush fund” for allocating bonuses to reward desired behavior. Appendix A to this article (which will appear in Part 7 of the seven-part series) contains an example of provisions that might be included in a modified lock step compensation plan. The author extends her gratitude to Bill McDonald, a partner at Thompson & Knight LLP, whose practice includes advice on law firm formation, for the provisions included in Appendix A.
In Appendix A, the agreement provides for seven lock step levels, but permits the management committee to assign each partner to the appropriate level annually. It also provides that a certain percentage of profit distributions, say 75%, will be made in accordance with the points assigned in each level. The remaining 25% of profits are allocated to the “slush fund” that is distributed by the management committee in its discretion. Thus there are two mechanisms for modifying the lock step profits and loss allocation: level movement and discretionary distributions.
When It Works Well Read more
Post Date: May 18, 2012