Best Practice #10: Designing a compensation system that does not penalize part-time partners

In some cities, the number of women partners who are working as part-time partners is fast approaching 20%. And although the numbers remain small, the number of partners working part time has almost tripled in the last 15 years. These numbers indicate an increasing demand for part-time work even at the partnership level and firms that support these flexible arrangements “are going to be able to hire from a larger pool of applicants, save recruiting costs by hiring fewer new lawyers, retain a diverse group of lawyers, reduce attrition costs, attract new clients, and increase the satisfaction of their current clients.” In addition, supporting part-time partners is often seen as a “powerful message of a firm’s commitment to diversity.” Given the increase in part-time work for law firm partners, coupled with the benefit that supporting it can bring to a firm, it is important that law firms understand how to design compensation systems for these part-time partners. It is also immediately relevant as 14% of part-time partners in one study felt that “their compensation was unfair” while a full 40% reported feeling stigmatized or devalued.

The essential goal of the firm should be to recognize part-time partners’ contributions fairly, since “[u]nfairness—whether real or perceived—will undermine the success of any part-time partner arrangement.” Suggestions for creating equitable systems that do not penalize these part-time partners include:

  • Avoiding the “haircut” scenario by making sure that compensation for part-time partners is proportional. The “haircut” occurs when there is a disproportionate differential in pay and part-time partners who work, for example, 80% in terms of hours receive less than that percentage in pay. A fair system would mean being paid proportionally to the number of hours billed, not awarding fractional shares to parttime partners, and not indexing compensation to the actual number of billable hours if there is a tiered system.
  • Compensating part-time partners for hours that they work in excess of those agreed upon. Similarly, if part-time partners end up having billings and/or originations that are comparable to full-time partners, they should be compensated accordingly. Ultimately, this means designing a system in which part-time partners’ compensation increases in conjunction with any increase in billable hours.
  • Taking into account the non-billable contributions that part-time partners make to firm life. Part-time partners are often highly involved in firm governance and serve as managing partners, on compensation and hiring committees, and in associate training and mentoring programs. These activities build a strong firm and should be both recognized as valuable service and taken into account in compensation decisions.