Study shows metrics-based comp helps firms retain partners

By using more objective than subjective methods when making compensation decisions, law firms can largely address partner dissatisfaction without simply distributing more cash, a recent Aderant report reveals. Concluding a six month research project, the legal software company released a new white paper titled “Your Partner Compensation System Can Be Better: Here’s How,” which examines the most common remuneration challenges faced by law firms.

Determining the best compensation strategy for partner recognition and motivation has become a debate among law firms worldwide. Early in 2015, Aderant embarked on a research study on the topic, involving a review of industry studies, interviews with industry experts and five Aderant Leaders in Law events held around the U.S. attended by managing partners and senior leaders at more than 50 top U.S. law firms.

For the research project, Aderant focused on the following key questions:

  • How are law firms currently structuring their partner compensation systems?
  • Which models are the most widely used, and why?
  • What are some of the primary challenges firms face in determining partner compensation?
  • Which measurements are firms using to determine remuneration?

The white paper released today reports on Aderant’s research, which revealed dramatically different approaches to partner compensation in North America versus Europe. Confirming findings in prior industry studies, Aderant determined that a growing number of equity partners are not satisfied with their firm’s compensation system and would like to see changes made. Interestingly, this partner dissatisfaction seems to be true even if the types of partner compensation systems in question are vastly different.

Aderant also concluded that compensation plans based on objective analytical data appear to be best practice among top firms. Firms that use actionable data metrics as part of their model are able to provide partners with clear and accurate explanations for their decisions. In the midst of the current trends of high-level lateral poaching, dissatisfied partners will likely start evaluating their options, and may end up joining the growing wave of lateral defections. By evaluating partner performance using clear metrics, Aderant determined firms can increase transparency and abate suspicions that the compensation process is arbitrary or unfair.

“Compensation is a difficult business issue regardless of the company or level of employee,” commented Ian Oxman, VP of Marketing. “For law firms, partner compensation becomes a strategic issue as it can drive retention, recruitment and ultimately revenue. For long term growth, firms need to get partner compensation right.”

Aderant Leaders in Law research will continue to explore important strategic issues impacting the business of law and help enable firms for success now and in the future. The full research report is available for free download on the Aderant website,

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