Bloomberg Law’s Post

Partner compensation is an ongoing theme in our coverage, and an area that continues to evolve. Here Hugh A. Simons breaks down how some nonequity partners' above-market pay can affect firm finances overall. Addressing those issues, as you might guess, requires much more than changing the math. Take some time to read this piece.

The economic health of a law firm is crucial in determining fair compensation for partners and associates. It is important to consider market value and the firm's financial stability when setting compensation. Striking a balance between rewarding individual contributions and ensuring firm sustainability is key. The takeaway is individual merit and market rate are pivotal in setting compensation, but an astute recognition of the firm's internal economic realities is necessary. If the firm struggles to meet market rates, it may be time to reevaluate the economic model. To learn more about determining fair compensation for your partners and associates, visit https://bit.ly/3WwPfsV Contact PerformLaw: https://bit.ly/3Uut97P

𝗪𝗵𝗮𝘁 𝗬𝗼𝘂 𝗡𝗲𝗲𝗱 𝘁𝗼 𝗞𝗻𝗼𝘄: 🟦 Increasing bonus pools, redrawing lines between equity and nonequity partners and expanding credits to go beyond origination are a few ways firms are changing partner pay. 🟦 Firms have been making such moves for at least the last decade, but their use has arguably accelerated. 🟦 'On the compensation side, we’re always looking to thread the needle to where our rates are fair to clients and where we can demonstrate that we value our top talent,' one firm leader said. https://lnkd.in/gNmTWsM8

The economic health of a law firm is crucial in determining fair compensation for partners and associates. It is important to consider market value and the firm's financial stability when setting compensation. Striking a balance between rewarding individual contributions and ensuring firm sustainability is key. The takeaway is individual merit and market rate are pivotal in setting compensation, but an astute recognition of the firm's internal economic realities is necessary. If the firm struggles to meet market rates, it may be time to reevaluate the economic model. Contact PerformLaw: https://bit.ly/3WCpPKF Sign up to receive our latest posts: https://bit.ly/3WwkXq3

Data shows how RWI adds time and complexity to M&A post-closing claims. Learn what it could mean for you in our new report here: https://lnkd.in/gy-2VDhH #RWI #Indemnity #MergersAndAcquisitions

If you work in the Family Offices industry, this is a must-watch video. I chat with my colleague @Jordan Bergmann, senior counsel and member of our Tax group, about qualified business stock. During this interview, Jordan defined qualified small business stocks (QSBS), and the tax benefits they provide, and explained how family offices can take advantage of the QSBS exception. Follow the link below to watch the short video, and feel free to reach out to me directly if you have any questions or if Foley can be of any help to you as you navigate this complex area of the law. #FamilyOffices #EstatePlanning #Investing #Tax

Many attorneys struggle to attract and retain key associates without having to give up equity in their firm. In this video, Greg Maxwell discusses how attorneys can use deferred compensation plans as an incentive ("golden handcuffs") to retain key associates.

I had an interesting discussion with a partner the other day & the pressure that increasing associate salaries has on charge out rates. Their old firm had transitioned everyone onto full Cravath rates in their jurisdiction; and naturally charge out rates had to increase. This meant that they could not target certain clients and had to leave behind interesting work and could only realistically pitch for large scale deals with clients happy to pay NYC rates. Since moving to their current firm, where there is more flexibility on rates - they have been able to win work that they would have never been able to as there is flex in the rate model. Are you hamstrung by rate pressure at your firm? Do you think your practice will benefit from fee flexibility? Maybe it is time to think about making a move to a platform that has a billing structure that works for you.

Undisclosed bonuses are indeed a valid part of a retention or recruitment strategy. But, done wrong, they are inherently dangerous. With the increasingly heated market for high value laterals and war for revenue, firm management teams need to think carefully about these "black-box" type arrangements. - Don't assume your existing, hard-working partners will "just understand" that a new entrant or peer needs to be paid more for the "good of the firm". - Never assume that what happens in the black box, stays in the black box. It seldom does. So plan in advance for how you will deal with the fall-out and knock on effects. - Don't start with the assumption that your partners will "not understand". Take them into your confidence and explain why the strategy is needed and what the benefit is to the partnership as a whole. You may be surprised at how supportive they are. - This sort of tactical strategy does not suit all firms. Be aware of your firms financial means, and define a clear and immovable commercial line in the sand when it comes to the negotiation. Rather withdraw gracefully than create an unacceptable financial rod for your back. - Be prepared to play hardball where appropriate, and refuse outright to play the game. You will be amazed at how often the counter-party blinks first. An added bonus is seeing how your partners respect your decisiveness. So, a valid tactical strategy - in the appropriate circumstances, within the appropriate firm - but always to be carefully considered before implementing. If this becomes the default approach, then it is neither strategic nor commercial.

If you work in the Family Offices industry, this is a must-watch video. I chat with my colleague Brian Lucareli, Esq. director of Foley Private Client Services and co-chair of our Family Offices group, about qualified business stock. During this interview, I defined qualified small business stocks (QSBS), and the tax benefits they provide, and explained how family offices can take advantage of the QSBS exception. Follow the link below to watch the short video, and feel free to reach out to me directly if you have any questions or if Foley can be of any help to you as you navigate this complex area of the law. #FamilyOffices #EstatePlanning #Investing #Tax https://lnkd.in/gPKU95gA