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It's Compensation Time Again

By Michael E. Mooney
November 21, 2008

If your firm is like most, much of the month of December seems to focus on compensation. If your firm's compensation system is a retrospective one, partners may be jockeying for their “fair” share of the pie for the current year. If the system is a prospective one, as is the case in my firm, all eyes are looking forward.

Whatever compensation system a firm uses, everyone should agree that the purpose of the system is to allocate the firm's profits equitably among the partners who have contributed to the generation of those profits. Whether that is achieved, of course, may be in the eye of the beholder. In any event, absent a system in which a single person or committee has absolute discretion as to how profits are to be allocated, a compensation system cannot be successful unless it has the confidence of all partners.

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