Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am a partner in a 16 attorney firm in Memphis. Our firm has had the same partner compensation system for 20 years and we are generally happy with it. It is an eat-what-you-kill system. Since we are generally happy why should we consider changing it?

A. You can start with the following firm self-test. Has the firm experienced or is it experiencing:

• Partner defections
• Firm splits and breakups
• Personal fiefdoms
• Maverick partners
• Hoarding work
• System perceived as unfair
• Problems acquiring and retaining top legal talent
• Low productivity
• Low profitability
• Client dissatisfaction
• Low morale
• Disputes with former partners

If your firm is experiencing or has experienced the above symptoms, it is time to really examine where the firm is headed and what messages your compensation is sending to your partners. Is the firm trying to be a firm or merely a group of lone rangers? Even though your partners are content, your compensation system may be holding the firm back from becoming all that it desires to be. Contentment may not be the best measure of success.

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John W. Olmstead, MBA, Ph.D, CMC,(www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.