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Profits Per Me (PPM)

By Mark Jungers and Jane Sullivan Roberts
September 29, 2008

Over the last 20 years, The American Lawyer's profits per partner (PPP) has become the number America's largest law firms use to keep score. Perhaps more importantly, it is the number lateral partner candidates use to evaluate the strength of a firm and to predict their compensation. While law firm partners generally assume that a higher PPP will result in higher compensation for them, PPP is a surprisingly poor predictor of an individual partner's compensation. PPP is just a measure of the average compensation of the firm's equity partners. As one of our firm's founding partners, Jon Lindsey says, lateral partner candidates need to look beyond PPP and focus on what he calls PPM ' “profits per me.” Averages are great, but how much of the law firm's profits can I fairly expect to get?

We have seen situations where the market compensation for an individual at one set of firms is roughly $500,000 and at another set of firms in the same city is double that for a guaranteed period of time. The difference lies not in the firms' respective PPPs, but rather in the various structural, cultural and historical factors that influence their ability and willingness to pay premium compensation and bonuses, guarantee base compensation, and take creative approaches to attracting talent.

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