Taking a Fresh Look at Setting Compensation for Managing Partners

At a time when the legal profession faces unprecedented challenges—from globalization, consolidation, technological innovations, changes in client expectations, increased competition from non-traditional sources, and a continuing profit squeeze caused by rapidly rising costs—the need for such top-quality leadership is more acute than ever. This is not a time when firms can grow and prosper simply by engaging in “business as usual,” nor can they “manage” their way around the current challenges. What is desperately needed is not managers but leaders, CEOs who provide leadership vision and direction to businesses.

Managing Partner as Leader
Simply put, if the job of a manager is “to make the trains run on time,” the job of a leader is to ask where we should lay the tracks—or, perhaps, to suggest that it's time to close down the railroad and start an airline. Most law firms are reasonably well managed but seriously under led. At a time of dramatic change in the legal market, this deficiency can be fatal. Having an effective leader as managing partner, though certainly not a panacea, can go a long way to helping a firm weather the storm of change going on all around us.

Unfortunately, effective leaders are not in abundant supply in most law firms. Contrary to popular myth in the profession, the managing partner's job—at least today—is not one that can be effectively performed by any partner who decides to devote a portion of his or her time to it. Most firms are lucky to have even two or three partners with the skills, temperament, and creativity necessary to be an effective managing partner. And increasingly, to entice those partners to take on such leadership responsibilities, firms must craft compensation packages that recognize the unique work that managing partners perform. This is particularly true in larger firms (of 150 lawyers or more) where the managing partner's job is usually a full-time position.