Improving Compensation Decisions in a Mixed Economy

This year's annual ritual of dividing income is over now for most law firms. This round of decisions affects 2009 income and 2010 base or positioning in a prospective program. A year ago, the profession was quite anxious about the economy (legal and otherwise) and their personal financial futures. It was analogous to being boxed in with pressure being asserted on all six sides simultaneously ' a severely depressed economy, ultra tight credit markets, skittish partners reluctant or unable to contribute capital, price-sensitive clients under their own cost reduction imperatives, intractable landlords and facility leases, and competitive approaches by firms less severely affected by the downturn. The profession responded with serial layoffs, furloughs, reduced hours, wage freezes and reductions. Non-wage expenditures were scrutinized like never before. The medicine, while bitter, largely worked, although aided by an economy that finally found its bottom. Yet the recovery is not complete as the effective unemployment rate remains frustratingly high.