Law Firm Compensation Models & Formulas

Refine your law firm's compensation formula to reward what enhances your firm's core values and discourage anything that detracts from them.

Client origination credit. Matter origination credit. Hours billed. Realization ratio. Non-billable firm activities. Non-billable business development work. Non-billable administrative responsibilities. Residual origination credit.

These are the variables in the alphabet soup of most law firm compensation models. They tend to be values-agnostic measures held in tension with lawyers’ subjective and objective measures of their “value” to a law firm. They tend to create immeasurable drama and have resulted in the evisceration of many, many law firms both large and small.

Your solution is to decide what your firm is about, to decide what you want to reward to enhance the firm’s core values and discourage anything that detracts from those core values. Begin with an assumption that everyone in your business shares a commitment to the firm’s core values and the principle that everyone advancing those core values should be rewarded. Be mindful that there can (and should) be more than one path to success for any particular firm member.

If you have struggled with law firm compensation formulas, you know they can be overburdened with the weight of expectation, shame, pride, greed, and generosity. You know that you need a new look. That’s why we’ve gathered these thoughts and resources on compensation for you.