Measuring performance

  • December 07, 2011
  • Carol Neshevich

So your firm has decided it needs a new partner compensation system, and you’ve sat down and defined the firm’s core values and strategic goals. What’s the next step?

Determining exactly which behaviours you want to reward, and figuring out how to measure or evaluate them. According to U.K.-based consultant Nick Jarrett-Kerr of Edge International, the combinations of performance metrics could be endless.

“I’ve done some work on this, and so far I’ve uncovered something like 300 possible metrics,” he says, noting that there is a lot of work being done on figuring out ways to make the so-called “softer” areas — such as mentoring and teambuilding — more measurable these days. Finding the correct balance of qualitative and quantitative elements can be tricky, and it’s helpful to make the more qualitative criteria at least somewhat measurable so partners don’t feel they’re being arbitrarily rewarded or punished for no clear reason. Here are a few performance metrics that many firms commonly use:


Billable hours: A straightforward and traditional measurement of how much time a partner is putting into client work.

Realization rate: The percentage of billable hours actually collected as revenue from the clients. This is a good measurement to use for firms having trouble collecting their full fees, or firms that need to improve efficiency.

Seniority: More seniority means more money. This is the key factor in lockstep systems.

Origination: The amount of new business brought into the firm by a partner.

Firm ownership: Offering compensatory reward for the risks involved in having some financial ownership of the firm.

Leverage: Levering down work that can be done by more junior people. If higher-paid partners are spending time on work that associates could be doing, the firm won’t be as efficient and profitable as possible.


Associate training and mentorship: Rewarding those who train and mentor associates. This isespecially important for firms with many partners close to retirement.

Presenting a good public image: Doing charity work, attending high-profile events, sitting on industry boards can promote the firm’s image in the public eye and can attract new business.

Professional expertise: A lawyer who is a known specialist or go-to person in an area of law may bring in more work for the firm.

Management tasks: An effectively managed firm runs more smoothly. If partners are not being compensated for firm management tasks, nobody will put effort into these areas.

Client relationship management: How well a partner takes care of and treats clients. This helps with the firm’s reputation, which in turn helps bring in business.

Marketing: Actively promoting the firm in an attempt to drum up more work.

Team development: Working together and leading teams, rather than competing against fellow partners.

Recruiting: Making specific efforts to recruit talented young associates to help strengthen the firm’s future.