Linking Partner Pay to Strategic Firm Objectives

However, in general law firms have been slower to adopt pay for performance systems. There were many reasons for this. First and foremost, the law was thought of as "A Profession" not a job and partner compensation reflected not only the work that one did but a return on invested capital and the number of years an individual had been at the firm. It was not unusual for old law firm lock step pay systems to increase compensation as a partner aged (and presumably had additional financial responsibilities brought on by a family) peak in the mid-fifties and then decline (as the financial obligations of colleges and marriages decreased) through the partners later years.

Those lock step systems gradually gave way to the "Scorecard" pay systems that predominate in law firms to this day. In these systems, objectives were set for each partner in a number of quantifiable areas such as originations, recorded billable hours and billed fees. These systems, which may have served law firms in the past, do not provide a law firm's management with the proper tools to incent partner behavior into those activities that will help a firm achieve its strategic objectives. Indeed, some of these systems are so heavily weighted to the wrong compensable factors that they actually hinder a firm's ability to succeed.