Align or Decline: Making Partner Compensation Reflect Law Firm Objectives

Align or Decline: Making Partner

Compensation Reflect Law Firm Objectives

FEATURED FACULTY:

J. Mark Santiago, Member, KermaPartners

917-282-5326 [email protected]

Gary B. Fiebert, Executive Director, Schulte Roth Zabel LLP

Speaker Info

J. Mark Santiago, Member, KermaPartners

Mark is a member of KermaPartners and leads the United States practice. He is located in the New York City office. Mark has consulted to the legal profession for more than 25 years. He led successful project teams in the areas of outsourcing, mergers & merger due diligence, strategy development, firm restructuring,

financial management, partner compensation, shared service center feasibility studies and merger integration planning and implementation engagements. Mark led teams that developed the Business Case rational to out-source the administrative functions for the two largest law firm outsourcing projects in the United States. He conducted due diligence studies for some of the largest law firm mergers in the United States. Identified significant issues for the acquiring firm to consider in the merger value proposition.

He also led the restructuring of mid-sized law firm that identified non-strategic practices and attorneys, outsourced administrative functions and focused firm on core competencies. PPEP increased by 35 percent in one year. Mark managed the design and implementation of pay for performance Partner compensation systems featuring 360 degree performance feedback and linking partner compensation to firm strategy.

Gary B. Fiebert, Executive Director, Schulte Roth Zabel LLP

Gary B. Fiebert is an executive leader with over 20 years of experience in strategic business planning, finance, firm management, organizational change, human resources and marketing. In addition to his current position as Executive Director at Schulte Roth Zabel LLP, Mr. Fiebert has held senior management positions at a number of law firms, including KMZ Rosenman, Rosenman & Colin LLP and Mudge Rose Guthrie Alexander & Ferdon, as well as at national

management consulting firms, including Gilbert Tweed Associates, Gafrey Associates and Touche Ross & Company (the predecessor firm to Deloitte Touche Tohmatsu).

Mr. Fiebert holds a Bachelor of Engineering degree in Industrial Engineering from New York University and a Masters of Science in Management Engineering from Long Island University. He was certified as a Management Consultant, the Law Practice Management Section of the NYS Bar Association, the LFA Caucus of the Association of Legal Administrators and a member of the New York City

**Certificates of attendance and CEUs, when available, must be requested through the online evaluation.**

Evaluation for Live Event:

We’d like to hear what you thought about the audio conference. Please take a moment to fill in the survey located here:

http://www.c4cm.com/handouts/making-partner-compensation.htm

Requests for continuing education credits and certificates of attendance must be submitted within 10 days of the live event.

Evaluation for CD Recording:

Please use the following link to submit your evaluation of the recorded event:

http://www.c4cm.com/handouts/CDEval.htm

Please note: All links are case sensitive

CLE:

C4CM provides audio conference attendees with CLE credit processing services. To expedite C4CM processing your CLE request, please complete and submit the evaluation form available from C4CM at the conclusion of the audio conference. It will be necessary to enter the following information: name of each attorney requesting CLEs with full contact information, including e-mail address, bar number, and the state in which the attorney wants credits. Each attorney requesting credits must submit an evaluation.

Please be advised C4CM audio conferences are subject to approval from each CLE issuing organization and approval is not guaranteed (state bar associations in Delaware, Indiana, Kansas, Ohio, and

Pennsylvania do not grant CLE credits for audio conferences). The approval process takes approximately 6 - 8 weeks for most organizations but can take as long as 3 - 4 months. You will be notified via e-mail with the final status of your CLE application.

Any person applying for CLE credits must attend the audio conference from start to finish (attendance will be taken for compliance reasons). Requests for CLE credits must be received no later than two weeks following the conclusion of the audio conference or live conference. CLE credits are not available for CD recordings.

Align or Decline:

g

Making Partner Compensation

Reflect Law Firm Objectives

Worldwide Advisors to Professional Service Firms

Contents

•

History of Law Firms

•

Objectives of Law Firm Compensation

•

Guidelines for a Partner Compensation

system

d l

i

“

All l

fi

di id d i t

“

All law firms are divided into

three types”

Julius Caesar XXXIX BC

Worldwide Advisors to Professional Service Firms 3

I. Those that lose money . . .

and CLOSE

II. Those that make a little money . . .

and EXIST

III. Those that make a lot of money . . .

and PROSPER

Firms That Make Money

•

Recruit and retain the best attorneys.

•

Attract the best clients with the most

challenging matters.

•

Create the most robust administrative

support infrastructures

support infrastructures.

Worldwide Advisors to Professional Service Firms 5

What type of firm do you want to

be?

To Be One of the Best,

You Must:

•

Develop a focused Business Strategy.

•

Implement a supportive Marketing

Plan.

•

Drive your Business Strategy and

Marketing Plan with a comprehensive

Marketing Plan with a comprehensive

Compensation Program.

Worldwide Advisors to Professional Service Firms 7

“

Having lost sight of our

objectives, we redoubled our

efforts.”

P t D k Peter Drucker

Objective

Create a Partner Compensation

Program that links individual Partner

pay to their achievement of specific

financial and strategic objectives

th t b

fit th Fi

h l

that benefit the Firm as a whole.

Worldwide Advisors to Professional Service Firms 9

Guidelines:

•

Clear, transparent process.

•

Evaluative criteria supports strategy.

•

Partner goals support the strategy.

•

Compensation has identifiable parts.

Compensation has identifiable parts.

Components: Process

Worldwide Advisors to Professional Service Firms 11

Partner Business Contracts

Components: Process

Firm Strategy

Compensation Philosophy

– What a firm pays for and why

•

Partner Business Contracts

Indi id al specific meas rable commitments

– Individual, specific, measurable commitments

Components: Process

•

Departmental Plans:

“R ll

” f i di id

l

t

t

t

–

“Roll up” of individual partner contracts.

Reviewed & approved by department

leaders.

–

Annual performance reviews conducted

by Compensation Committee.

I di id

l P f

R i

•

Individual Performance Reviews.

•

Individual compensation decision

explanations.

Worldwide Advisors to Professional Service Firms 13

Components: Criteria

Native American wisdom holds that

h

di

th t

when you discover that you are

riding a dead horse, it is best to

dismount the dead horse and find

another one!

Components: Criteria

•

Change riders.

This is the way we have always ridden

•

This is the way we have always ridden

this horse!

•

Dead Horse? What dead horse?

•

Appoint a committee to study dead

horses.

•

See how other firms ride dead horses.

•

Harness several dead horses together

for increased speed.

Worldwide Advisors to Professional Service Firms 15

Components: Criteria

Thou shall not:

–

Measure what you do not want done!

Change the goal posts for anyone!

Measure what can’t be accurately

reported!

reported!

Components: Goals

•

If you want to strengthen/expand

i ti

li

t

l ti

hi

i l d

existing client relationships include

team success and cross-selling as a

measure in the partner contracts.

•

If you want to build team work

i i

ti

t th

t

measure originations at the team

not individual level.

Worldwide Advisors to Professional Service Firms 17

Components: Compensation

Client Service

•

Client Development Activities

•

Associate Development

•

Firm Administrative Service

Firm Administrative Service

Components: Rewards

•

All components are not equal! Some

t ib ti

(

t

t ib ti

contributions

(partner

contribution

roles) are move valuable than others.

•

Beware of the “halo” contribution

effect.

Reward

based

on

role

d fi iti

t j t

i l

lt

definition, not just numerical results.

•

Do not overcompensate to “make-up”.

Worldwide Advisors to Professional Service Firms 19

360-Degree Performance

Feedback System

Vision and Strategy Development Vision and Strategy

Development Assessment and Evaluations Assessment and Evaluations Compensation Philosophy Compensation Philosophy Firm Vision and Strategy Documents and Departmental Business Plans Role Definition and Performance Measurement Criteria Individual Partner Strategic Plans Individual Partner Self-assessment Forms Firm-level Assessment of Partner Performance Performance Data Goal Setting Goal Setting Communications Communications

Questions?

Worldwide Advisors to Professional Service Firms 21

J. Mark Santiago

Phone: 917-282-5326

Email: [email protected]

Reproduction of any or all of the slides in this presentation are prohibited without the express written consent of KermaPartners U.S.A. t out t e e p ess tte co se t o e a a t e s U S

Align or Decline: Making

Partner Compensation Reflect

Partner Compensation Reflect

Law Firm Objectives

Presented by Gary B. Fiebert Executive Director Schulte Roth & Zabel LLP

Center for Competitive Management Webinar

Gary B. Fiebert

Gary B. Fiebert is an executive leader with over 20 years of experience in strategic business planning, finance, firm management, organizational change, human resources and marketing. In addition to his current position as Executive Director at Schulte Roth Zabel LLP, Mr. Fiebert has held senior management positions at a number of law firms, including KMZ Rosenman, Rosenman & Colin LLP and Mudge Rose Guthrie Alexander & Ferdon, as well as at national management consulting firms, including Gilbert Tweed Associates, Gafrey Associates and Touche Ross & Company (the predecessor firm to Deloitte Touche Tohmatsu).

Mr Fiebert holds a Bachelor of Engineering degree in Industrial Engineering from New York University and a Mr. Fiebert holds a Bachelor of Engineering degree in Industrial Engineering from New York University and a Masters of Science in Management Engineering from Long Island University. He was certified as a Management Consultant, the Law Practice Management Section of the NYS Bar Association, the LFA Caucus of the Association of Legal Administrators and a member of the New York City Executive Directors' Group.

Agenda

•

Who Are We?

•

What Are Our Business Objectives?

•

A Client-Focused Strategy

•

Keys to Success

Align or Decline: Making Partner Compensation Reflect Law Firm Objectives

•

Partner Performance & Compensation

Who Are We?

•

Personality of the firm is an amalgam of the

personality of our partners

personality of our partners

•

Strive to be a destination firm, not just a

provider of legal services

Who Are We?

•

SRZ’s differentiation in the marketplace is

based on guiding principles:

based on guiding principles:

– We don’t want to replace local counsel or advisers

– We don’t want all the work — just work to which we provide value

Align or Decline: Making Partner Compensation Reflect Law Firm Objectives

– We don’t want to be everything to everybody

What Are Our Business Objectives?

•

Revenue generation

•

Increased profitability

•

Sustained growth

A Client-Focused Strategy

•

Focus is on the

financial services

financial services

industry

•

Growth of firm based

on needs of clients

•

Neither a

“

Global

”

Align or Decline: Making Partner Compensation Reflect Law Firm Objectives

•

Neither a Global

nor

“

National

”

firm

A Client-Focused Strategy

•

Capitalizes on strengths

•

Addresses weaknesses

•

Reflects clients’ needs, priorities and

expectations

•

Reflects growth opportunities

Reflects growth opportunities

Keys to Success

•

Firm does not track origination

Client focus is natural outgrowth of service

– Client-focus is natural outgrowth of service standards

– Allows us to build multi-disciplined client teams organically

– Encourages collaboration and communication

– Clients benefit:

Align or Decline: Making Partner Compensation Reflect Law Firm Objectives

• Keeps service quality high and bills reasonable • Ensures the right lawyer and legal resources are

employed on any given matter

Keys to Success

•

Client service teams

are multi functional

are multi-functional

– Apply a multi-disciplined approach/perspective to every transaction and case

– Identify opportunities easily

easily

– Expand depth and breadth

Keys to Success

•

Maintain our culture: client-focus and

teamwork

teamwork

•

Listen and respond to our clients

•

Manage our service portfolio effectively for

the future

Align or Decline: Making Partner Compensation Reflect Law Firm Objectives

•

Nurture younger partners and future leaders

Partner Performance & Evaluation

Partner Personal Overview (PPO)

“Self evaluation to provide the Compensation

Committee an accurate appraisal of a partner’s actual contribution and views on the contributions of others”

Partner Performance & Evaluation

– Principal mattersp – Non-billable matters

– Business origination efforts – Business referral efforts – Strategic initiatives – Minder relationships

– Particular accomplishments, awards and recognitions

– Negatives

Align or Decline: Making Partner Compensation Reflect Law Firm Objectives

– Negatives

– Others who have helped

– Contributions to morale

– Views on current point allocation

C4CM Upcoming Events

T

i

C4CM L

U

i

E

t

l

•

To view C4CM Law Upcoming Events please

visit:

http://www.c4cm.com/lawfirm/audioconferences.htm

•

To view C4CM Law CD Recording please

i it

Align or Decline: Making Partner Compensation Reflect Law Firm Objectives

visit: