As law firms increasingly move away from the traditional
lockstep (seniority-based) approach to compensation, various
alternative compensation methods are emerging. Some of these,
however, are proving less effective because they emphasize revenue.
Compensation should be aligned with your firm's short and
long-term goals. Employing a profit-based approach is more likely
to facilitate the achievement of these strategic goals.
Pushing Profits Forward
Focusing on revenues can present a distorted picture of a
partner's contributions. For example, a firm has one partner
who generates $600,000 in billable revenues, performing all of the
work herself. A second partner generates only $450,000 in revenues
at the same hourly rate, but also supervises four associates who
each bill 2,000 hours annually. The second attorney clearly brings
more profits to the firm, even though he personally generates less
revenue. However, in this scenario, a revenue-based compensation
model
