Defining a process for setting and adjusting base salaries is difficult for most law firms. Law firms typically make salary decisions based on the following factors:
A well-developed compensation plan can provide a roadmap for law firms and lawyers to derive the maximum benefit from their association. To start, firms should devise written compensation policies, guidelines, and incentives to ensure lawyers are paid competitively and commensurate with individual contributions. When firms add progression policies and guidelines to this pay structure, their lawyer groups are usually found to be more productive and satisfied.
Fairly compensating and promoting nonowner lawyers (associates, income partners, counsel, of counsel, etc.) is best accomplished using a structured process. The process should be transparent and include:
Compensating based on profitability ensures that a firm’s bonuses are tied to created profits. While more difficult to accomplish, the results are often better.
Hire the best attorneys.
Develop them into successful attorneys.
Encourage productivity and retention with compensation and incentives.
Beyond the billable hour, there are additional ways in which associates can bring value to a firm. However, firms rarely consider these areas of value in developing their associate compensation plans. Four of the more quantifiable, non-production ways that associates, depending upon their level, can add value include: