Law firm leaders almost incessantly talk about culture — about collaboration, about integrity, about a "no jerks" policy. Culture is undoubtedly real and important, but it can be hard to explain and understand. Dylan Jackson wrote an article for the American Lawyer where he talked with law firm leaders about what elements make up a firm's culture. One primary factor is, of course, compensation.
"A pure lockstep formula, for example, rewards collaboration among partners—perhaps at the cost of rewarding entrepreneurship. At the other end of the spectrum, “eat what you kill” systems reward entrepreneurship and business generation, but can incentivize attorneys to hoard work.
“I’ve stated publicly for years that a firm’s compensation system is the single most important determinant of a firm’s culture and incentivizes particular types of partner behavior,” said Brad Karp, managing partner of Paul, Weiss, Rifkind, Wharton & Garrison. His firm has a modified lockstep system, aiming to encourage both collaboration and entrepreneurial behavior.
Then there are the add-ons meant to encourage specific actions, such as billable hour credits for diversity initiatives and pro bono commitments.
“A compensation system signals clearly to partners what types of behaviors and contributions are rewarded and what values the firm chooses to emphasize, including, for example, whether the compensation decisions themselves are transparent to all partners,” Karp said."
In working with hundreds of attorneys over two decades, we have seen that the compensation system does greatly effect firm culture. It's hard to say if it is the driving force behind culture, but it is certainly a primary factor. If a partner is unhappy with their comp, it's hard to convince them to overlook that in favor of other cultural factors; likewise if a partner is happy with their comp it is difficult to convince them to make a move, even if they dislike much about their current firm.
The article discusses other aspects of culture, like how firms deal with overwork and burnout:
"Burnout was a major concern among attorneys and firm leaders last year. According to a recent report by Thomson Reuters and Georgetown Law Center, average attorneys hours were up from 120 to 124 per month as demand increased 4% year over year.
While average associate compensation grew by more than 11%, the report found that associate turnover reached 23.2% on a rolling, 12-month basis through November. That’s “significantly” above the 18.7% rate seen in November 2019—a figure that Jim Jones, director of the Georgetown University Law Center on Ethics and the Legal Profession and an author of the report, called that 'alarming.'"
Post 2020, it has become even more important how a firm tracks hours, vacation time, and how much bandwidth both partners and associates have. What is the remote work policy? How effective is collaboration between offices? What happens when a partner gets a big case and all the associates in her office are over-utilized? Burnout is a problem, as is high turnover, and many complex issues boil down to how firm policy and practice help set expectations for how people treat each other.
To read the complete article, click here.