Pay Proportional to Performance

Unfortunately, the challenges increase when a law firm has either very little or a great deal of money to distribute. At the low end of profitability, there are competing needs of collegiality and a sense of partnership that suggest a flattening of the pay range, set against the risk of competitor poaching of high-performers that may necessitate a broader range of pay. At the upper end of profitability, the human emotion ' greed ' tends to display its unpleasantness.

There are also lively and ongoing debates about the appropriateness of nearly every facet of a compensation program:

1. The decision perspective: Should performance be evaluated prospectively, retrospectively or using a combination of both?
2. The type of compensation system: Formulaic, subjective, lockstep or some combination?
3. The process: What is the right amount and type of input and feedback?
4. Transparency: Should the compensation system be open, closed or a hybrid?
5. Who makes the decisions: A managing partner, various committees, or a committee of the whole?
6. The Compensation Committee: How should it be constituted and chartered?

None of this really matters except in how each facet supports consistently well-made compensation decisions. We can probably all think of a number of law firms (or any other organization for that matter) that achieve great success and some measure of harmony with each of the variables mentioned above and any of the possible permutations. Likewise, we can also point to where each has gone very wrong and failed. If there were truly “one right way” to do this, a profession as learned and well-read as law would have discovered it. There is no one right approach, which is why advising firms in this area is an interesting and challenging career.