Compensation: Is <i>Not</i> Tracking Contributions a Good Idea?

Joel Rose authored last month's A&FP article on how to balance compensation for law firm partners whose strengths lay in origination, production and management. So A&FP sought his reaction to the following thought-provoking quote from Peter C. Lando and Matthew B. Lowrie.

The quote is from a recent article Lando and Lowrie coauthored for the National Law Journal. Their article addresses the question: Can a firm wanting its attorneys to have a better work-family balance survive and flourish if it requires only 1600 billable hours/yr per lawyer?

The quote (emphasis added): “Maintaining balance and a fair return for the work requires teamwork. This is necessary so that an undue burden is not placed on any one person. If the vision is not shared, then internally competitive behavior can distract from both the personal and financial rewards of practice. It helps toward that end not to track originations or billing credit.”

Rose duly noted the tie-in between the authors' firm-culture objective and their surprising recommendation not to track some types of lawyer contributions.

Rose's reply: I agree with Peter C. Lando and Matthew B. Lowrie's thesis about the importance of teamwork to maintain balance and a fair return for work performed in a law firm. However, I take exception to their comment that “[i]t helps toward that end not to track origination or billing credit.”

A given firm's culture is based on values such as aggressiveness, collegiality, sensitivity to quality of life, competitiveness, democracy, etc., that set a pattern for the firm's activities and the roles and relationships among and between its partners. That cultural pattern is instilled in partners and associates, and thereby perpetuated in the firm, by the examples set by lawyer management and other influential partners.

In 38 years as a management consultant to law firms, it has been my experience that a law firm's culture can be one of its major strengths when it is consistent with its current and long-term objectives. But if a firm's culture prevents it from meeting competitive threats or adapting to changing economic environments, that culture can lead to the firm's stagnation and decline – unless its partners make a conscious effort to change.

The significant majority of law firms that I have worked with over the years do track origination credit, billing credit, productivity, etc. This data can indeed contribute to firm problems if partners use it as “ammunition” to earn points for themselves or to tear down others. But most partners use this information as a basis for making sound business decisions about the allocation of profits.

Like this majority of firms, I conclude that properly keeping track of originations, billings, production and other objective factors ' as well as a multitude of subjective factors that may not be as readily quantified ' is required to compensate attorneys fairly for their total contributions to the firm.

Finally, I recommend that record-keeping practices used in credit tracking be examined periodically. These practices often initially evolve in response to demands by strong and influential partners, so over time they can become increasingly unsatisfactory to other firm members. At the very least, these practices should be clearly articulated and understood ' and open for discussion.

Joel Rose authored last month's A&FP article on how to balance compensation for law firm partners whose strengths lay in origination, production and management. So A&FP sought his reaction to the following thought-provoking quote from Peter C. Lando and Matthew B. Lowrie.

The quote is from a recent article Lando and Lowrie coauthored for the National Law Journal. Their article addresses the question: Can a firm wanting its attorneys to have a better work-family balance survive and flourish if it requires only 1600 billable hours/yr per lawyer?

The quote (emphasis added): “Maintaining balance and a fair return for the work requires teamwork. This is necessary so that an undue burden is not placed on any one person. If the vision is not shared, then internally competitive behavior can distract from both the personal and financial rewards of practice. It helps toward that end not to track originations or billing credit.”

Rose duly noted the tie-in between the authors' firm-culture objective and their surprising recommendation not to track some types of lawyer contributions.

Rose's reply: I agree with Peter C. Lando and Matthew B. Lowrie's thesis about the importance of teamwork to maintain balance and a fair return for work performed in a law firm. However, I take exception to their comment that “[i]t helps toward that end not to track origination or billing credit.”

A given firm's culture is based on values such as aggressiveness, collegiality, sensitivity to quality of life, competitiveness, democracy, etc., that set a pattern for the firm's activities and the roles and relationships among and between its partners. That cultural pattern is instilled in partners and associates, and thereby perpetuated in the firm, by the examples set by lawyer management and other influential partners.

In 38 years as a management consultant to law firms, it has been my experience that a law firm's culture can be one of its major strengths when it is consistent with its current and long-term objectives. But if a firm's culture prevents it from meeting competitive threats or adapting to changing economic environments, that culture can lead to the firm's stagnation and decline – unless its partners make a conscious effort to change.

The significant majority of law firms that I have worked with over the years do track origination credit, billing credit, productivity, etc. This data can indeed contribute to firm problems if partners use it as “ammunition” to earn points for themselves or to tear down others. But most partners use this information as a basis for making sound business decisions about the allocation of profits.

Like this majority of firms, I conclude that properly keeping track of originations, billings, production and other objective factors ' as well as a multitude of subjective factors that may not be as readily quantified ' is required to compensate attorneys fairly for their total contributions to the firm.

Finally, I recommend that record-keeping practices used in credit tracking be examined periodically. These practices often initially evolve in response to demands by strong and influential partners, so over time they can become increasingly unsatisfactory to other firm members. At the very least, these practices should be clearly articulated and understood ' and open for discussion.