Tuesday, November 18, 2003

Compensation Trends for Law Firm Staff I just sat in on an IOMA audio conference on compensation trends for law firm staff.  Here's what I picked up that marketers would want to know: Employee compensation is the biggest single expense of a law firm, bigger than even real estate leases.  Salaries account for an average of 14% of law firm expense budgets, according to William Brennan of Altman Weil. Law firm staff are suffering "salary compression" because of the salary inflation in the late 1990s, which ended with the "dot-bomb," and the lower starting salaries being paid today.  So, someone hired three years ago isn't making that much more than someone just hired. Salary increases are a lot smaller now than they were only a few years ago.  Some firms are not giving raises at all. Firms are moving away from "entitlement bonuses," in which an employee could count on a big chunk of cash all at once every year.  A survey in SFO found that 80% of law firms gave bonuses.  Employees typically view the bonuses as deferred compensation. Firms are moving toward "performance based" bonuses, where you only get a bonus if you do something great. Firms are looking for non-cash ways to compensate employees, like with gifts (frozen turkeys at Thanksgiving, movie tickets on Secretary's day) and "recognition."  It goes without saying that you can't spend recognition. Firms are basing bonuses, and the size of the bonus pool, on overall firm financial results. Some law firms still pay bonuses on key anniversaries -- two weeks pay at the 5-year anniversary, three weeks pay at the 10-year anniversary -- but panelist Nancy Siegel of Siegel Management Strategies recommended against longevity bonuses, because they are discouraging to new employees. Firms are starting to give "spot" bonuses for high performance. Firms are starting to pay team bonuses.  So if your are on a team that upgrades the web site or develops all-new marketing materials, the team gets a bonus when it achieves the result. Law firms are relying on ALA salary surveys, which historically record marketing salaries at a very low level, much lower than LMA surveys. Firms are starting to write "results based" job descriptions, as opposed to "task based" descriptions.  An employee is evaluated on what they got done, not what tasks they are responsible for.   Job descriptions are to be reviewed at performance evaluation time. Law firms are hiring sales people and paying them what associates earn.   6:28:43 PM    comment []

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