Almost half of law firm partners think they should be paid more than they are currently, a survey on partner pay and performance by BDO has found.
Among the key findings in the BDO research, which looked at a range of issues including how remuneration and bonuses are divided up and whether firms’ rewards mechanisms were fit for purpose, was the result that nearly 50 per cent of partners said they think they should be paid more.
A more bullish 69 per cent of partners said they expected average profit per equity partner to increase over the next three years.
Nick Carter-Pegg and Colin Ives, the report’s authors, said the research also quantified the lost value at firms caused by the often lengthy remuneration process itself. Based on partners’ estimates of average lost partner time in almost 40 law firms, the potential lost revenue in each firm as a result of issues to do with partner pay and performance ranges from £3m to £16m each year. According to the report, the lost value caused by the remuneration process at a £200m turnover firm is £17m.
“The remuneration process can take up a huge amount of time,” said Carter-Pegg. “And very senior people are often heavily involved, which means it costs money. Firms should review their profit-sharing methods because of the time it’s taking and the fact that, according to our research, 50 per cent of partners feel it needs fixing.”
There are hints within the research that last year’s run of law firm mergers may also carry on into 2013, Ives added.
“If the majority of partners think they should be paid more, then the only way to pay more is if the firm generates more turnover and more profit,” said Ives. “That’s likely to mean more mergers in 2013.”
Partners are also looking for more transparency and fairness in their firm’s profit-sharing system, the report found.
“There needs to be more honesty about performance,” added Carter-Pegg.
The full BDO report can be read today as part of The Lawyer Management fortnightly alert.