A question that arises repeatedly in professional service firms is what constitutes reasonable compensation for employee-owners. For many firms, no single operating expense category impacts the bottom-line enterprise profit as much as the compensation paid to the employee-owners of the enterprise.
Reasonable Compensation for Law Firms and Attorneys
This article is intended to provide some fundamental guidance for attorneys and law firms whenever employee-owner compensation is at issue. In many instances, this focus will relate to ownership decisions regarding the overall allocation and character of enterprise profits, but the same concepts and analytical framework can be of benefit in the assessment of reasonable compensation for other purposes, such as the valuation of a non-compete agreement and in the segregation and measurement of personal/professional versus enterprise goodwill for dissolution of marriage purposes in jurisdictions where this aspect is in play.
By
Ronald L. SeigneurThis premium content is locked for Accounting and Financial Planning for Law Firms subscribers only
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