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White Box vs. Black Box Compensation Systems

By J. Mark Santiago
February 01, 2024

It is early winter and amazingly cold, snowy, or rainy in many parts of the U.S. In Buffalo they recorded over 5' of snow in less than a week accompanied by winds of up to 45 mph and the Bills "was robed again" just like in 1992! Being from Western New York, I truly understand what a winter of discontent feels like.

But what depressed me more was a spate of articles in the legal trade publications about a small (but possibly growing) number of law firms that were moving or considering moving to a "Black Box" type of partner compensation systems. A Black Box system is one in which an individual partner's compensation is kept secret from the other partners.

One article quoted a "consultant" who said, "Almost by definition, you have to pay laterals above homegrown talent!" Later I learned the consultant was not really a compensation consultant but a recruiter.

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