Law firms are adjusting their compensation structures for partners by creating new tiers and increasing shares for top performers. This trend aims to provide greater certainty in earnings and link higher compensation to equity. Paul, Weiss has revised its compensation system to award more shares while reducing bonuses. Latham & Watkins also created higher point tiers for its compensation model. While increasing base pay for top performers can benefit the bonus pool for others, it may lead to grade inflation, necessitating clear performance criteria to attain top levels.
Some law firms are enhancing compensation structures for top rainmakers by introducing new tiers or increased equity, aiming to provide more certainty and predictability.
The changes in compensation are described as one of the most pervasive trends in the legal sector, with several firms modifying their systems to boost base pay.
A key example involves Paul, Weiss, which adjusted its compensation model to award top partners more shares, thereby tying higher earnings to equity.
Similarly, Latham & Watkins created new points tiers, allowing top performers higher points to boost their base pay while impacting the overall bonus pool.
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