Managing Partners Compensation
In an article written by Richard Gary (Firm, Inc., March/April 2006), he says that "… the principal message that compensation decisions affecting the managing partners should send is: ‘The qualities that will make our firm successful over the long term are superior lawyering, client service, teamwork, and fairness.’ In practice, that means that the (full time) managing partner should not be the firm’s highest paid partner …"
Agreed that the compensation system must appear to be fair. If not, the whole infrastructure of the firm will collapse. But, one must realize the importance of the position. As Gary concurs, managing partners preside over businesses whose revenues are in the millions, even hundreds of millions, of dollars. This is not a position to be taken lightly or to be appointed to just because "you were out of the room at the time of the vote." This is a demanding position, requiring the trust of everyone (lawyers, staff, etc.) in the firm to be successful. This is the CEO of the firm and should be compensated accordingly.
In business, some salespeople earn more than the executive officers. That may be. But, in my opinion, there is no hard and fast rule on this. Everyone must perceive the element of fairness … and the position of managing partner, the task of managing the firm, must be appropriately regarded and not thought of as a necessary evil or a position of lesser importance than lawyering. One cannot get along without the other. Without a sales force, without a production force, and, yes, without a management team to bring everything thing together, the firm will not succeed.
Each function within the firm must be paid in accord with its market value and its "importance" to the firm … and all must perceive that they are being treated fairly.
In too many firms, the managing partner is expected to not only manage, but also contribute substantial billable hours. It seems that these firms fail to give appropriate recognition to the role and importance of the management function. Non-lawyers cannot guide the ship without substantial involvement by the managing lawyers … And not every lawyer in the firm should be tasked with a management function (such as CLE director, recruiting chair, etc.) in order to be considered a good firm citizen.
In time, more law firms will move toward the corporate model practiced by their clients. Then, we’ll see the true nature of The Business of Law® and greater success for those law firms.Tags: Finance, Management
Categorized in: Management