Half of partners think they're underpaid, BDO study finds
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.
Readers' comments (6)
Anonymous | 17-Jan-2013 2:32 pm
"Money, money, money" and zero business development or innovation; a mere reduction in headcount that's the approach which law firm chose to adopt in the near future. Bravo! I hope ABS will put more pressure on the existing status quo.
Unsuitable or offensive? Report this comment
Anonymous | 17-Jan-2013 3:26 pm
Yes. We know that.
It's the reason why many firms have cut assistant salaries for the past few years.
In case they're reading, yes we had noticed that turnover was increasing, whilst you were cutting those salaries.
Unsuitable or offensive? Report this comment
Anonymous | 17-Jan-2013 3:41 pm
Try having a secretary's salary, talking about being underpaid.
Unsuitable or offensive? Report this comment
Anonymous | 17-Jan-2013 4:06 pm
How can people be so greedy! The associates, who are actually doing the actual work, are working much harder than their partners!
Unsuitable or offensive? Report this comment
Ashley Balls | 17-Jan-2013 9:36 pm
Quite why time is lost managing partner remuneration schmes beggars belief. Setting up and running a partner appraisal system linked to a remuneration programme with variables for qualitative and quantitative performance measures should require no more than 2-3 per partner per year. More and it is not being done right - or well. As for the focus on earnings as others have said where is attention to innovation, business development and CPD?
Unsuitable or offensive? Report this comment
Anonymous | 18-Jan-2013 10:19 am
To be fair, I don't think the knee jerk response is the right one. All these respondents are saying is that compared to their firm's position they feel underpaid.
Take Dickinson Dees for example. For the last few years their PEP has been 4th to 5th highest in Newcastle.
This must rankle as they're probably the 3rd best law firm in Newcastle. Therefore Dickinson Dees ought to be 3rd in the PEP charts.
A firm like Muckle, who comes in ahead of Dickinson Dees must feel content. Hence the 50% figure is about what one would expect.
Unsuitable or offensive? Report this comment