Money and Meaning in the Modern Law Firm

Abstract

After the 2008 economic crisis, the legal profession in the US (and indeed in many Western economies) has found itself at an inflection point. Whereas prior to 2008, revenue and clients were fairly plentiful, the economic crisis brought a drastic reduction in demand for the services of large law firms. In order to adapt to a low to no growth market, many law firms have increased their focus on revenue generation and profitability. This change in environment has intensified concerns of some observers that law firms are becoming more of a business than a profession, which we believe is a false dichotomy. Drawing on interviews with over 250 large law firm partners conducted between 2009-2016, we explore how law firms and law firm partners seek to stay competitive while at the same time maintaining the professionalism that drew many to practice law in the firm place. We focus in particular on the role of compensation and how values and meaning are conveyed through an extensive, subjective process of partner evaluation. We explore the sense making process that occurs through compensation and the role of compensation systems in preserving or destroying the glue the holds these fragile partnerships together.