Most Law Firms Fail to Pay Chairs Based on Management Success
Sixty percent of top law firms surveyed base compensation for their chairs on their individual performance as lawyers rather than their contributions to leadership and management.
Chairs were the highest-paid partners at only 30 percent of the 24 firms surveyed by law firm consultants Peter Zeughauser and Ron Beard. At firms where chairs did not earn the most money, they were on average the seventh-highest compensated partner, the American Lawyer reports.
When the chairs were asked how they would compensate themselves, three-quarters said they would base their pay on the overall performance of the firm, its financial picture, and their success in articulating a vision and achieving strategic goals.
The consultants conclude the firms that base pay on individual performance, such as business development and client relationship management, have got it wrong.
“It seems curious that a majority of firms don’t view the role of chair as different enough from that of other partners to merit different base pay criteria, especially since three-quarters of the chairs of the firms we surveyed devote only 10 percent or less of their time to legal practice,” their article says.
“If a firm has a talented leader, its paramount concern should be to remove any incentive for him to spend time on anything other than leading and managing the firm.”
The consultants say the best way to pay a chair is to tie base pay to specific goals and to pay bonuses for extraordinary strategic accomplishments. Paying chairs top dollar would send an important message about the importance of leadership, the article says.
