Law Firms

Some law firms are tweaking partner compensation models because of COVID-19

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The COVID-19 pandemic may push law firms that were already reevaluating their partner compensation systems to go forward with changes.

Many firms are doing better than anticipated amid a decrease in expenses and a boost in some practices. At the same time, law firms want to retain rainmakers. In response, some law firms are considering expanded bonuses and widened partner compensation bands, according to

Many law firms create bonus pools to reward partners who performed the best during the year. Typically, the pool ranges from 5% and 15% of a firm’s profits. But the amounts are increasing by a percentage point or two at some firms, according to

“It was happening before, but I think some firms this year looked at the option of expanding their bonus pools even further as a one-time thing,” said consultant Lisa Smith of Fairfax Associates, in an interview with The bigger pool would allow firms “to differentiate between the partners that continue to have a very good year and those where performance might be a little flatter.”

Some firms are also increasing the compensation spread between top partners and those at the lower end, according to The BigLaw spread has increased from a median of 9.8 to 1 in 2013 to a median of 11 to 1 in 2018. Some firms had spreads of 32 to 1 or higher in 2018.

This year, Davis Polk & Wardwell and Allen & Overy changed their lockstep compensation systems. Davis Polk cited the need to reward partners supporting firm priorities, while Allen & Overy said its system would allow more discretion and better compensation in competitive markets.

Still, law firms contacted by were cautious about making any predictions about bonuses.

“If things hold, we’ll reward those who have had exceptional years and in some sense not unduly penalize those that have not done as much as they’d like,” said Bill Stoeri, managing partner at Dorsey & Whitney.

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