--- name: efirm-finance-partner-comp-allocator description: Use when a law-firm administrator or managing partner needs to model, allocate, or review partner compensation for a period. Covers the full input set (billable hours, origination credit, working credit, supervision credit, firm contributions), all major allocation models (lockstep, eat-what-you-kill, hybrid), and outputs a structured recommendation with sensitivity analysis and benchmarks. Designed for multi-jurisdiction law firms including MENA practices. license: MIT metadata: id: efirm-finance.partner-comp-allocator category: efirm-finance jurisdictions: [__multi__] priority: P2 intent: [comp, partner, compensation, allocation, PEP, origination] related: - efirm-finance-realization-rate-tracker - efirm-finance-utilization-dashboard - efirm-finance-wip-aging-report - efirm-finance-collection-rate-tracker source: Louis — HAQQ Legal AI (github.com/sboghossian/mini-claude-for-legal) version: "1.0" --- # Partner Compensation Allocator ## When to use this Use this skill whenever: - A managing partner or compensation committee is preparing annual or periodic partner draws. - A firm wants to model compensation under a new allocation policy before implementing it. - A partner disputes their allocated credit and a structured breakdown is needed. - The firm is benchmarking total compensation against peer PEP (Profits per Equity Partner) figures. - A newly promoted partner's first-year comp structure needs to be designed. Do **not** use this as the sole basis for compensation decisions — it is a structured recommendation tool. Final decisions require human judgment and governance review. ## Required inputs | Input | Why it matters | Default if missing | |---|---|---| | Partner name / ID | Links output to the individual | Required; no default | | Period (e.g., Q1 2025 or FY 2024) | All metrics must share the same denominator | Current fiscal year | | Billable hours worked (own) | Direct revenue generation baseline | Pull from time records | | Standard hourly rate | Converts hours to revenue value | Firm rate card | | Allocated model | Determines weighting formula | Hybrid 50/30/20 | | Originating client list | Credits the partner who brought in the client | Matter origination register | | Working matter list | Credits active management of matters | Matter responsibility register | | Supervising timekeeper hours | Credits oversight of associates | Time records by supervisor | | Firm contribution activities | Training, BD, recruiting, committees | Self-report + HR records | ## Optional inputs - **Collected realization rate per partner** — adjusts comp for write-downs attributable to the partner's billing decisions; pairs with [[efirm-finance-realization-rate-tracker]]. - **WIP at period end** — factor pending billing into projected comp for accrual-basis firms. - **Peer benchmarks** — external PEP data from surveys (Am Law 100, LACCA, LegalWeek) for context. - **Lockstep seniority tier** — required if model = lockstep or hybrid. - **Non-equity partner adjustments** — separate pool and formula for income/salaried partners. ## Allocation models ### 1. Lockstep (seniority-equal) All equity partners at the same seniority tier receive equal draws from the profit pool. No explicit origination or working credit. - **Best for**: Long-established firms with deep institutional client relationships, or where teamwork culture is paramount. - **Risk**: Reduces incentives for business development; younger partners may defect. - **Calculation**: Total profit pool ÷ total lockstep units × partner's units. ### 2. Eat-What-You-Kill (originator-heavy) Compensation driven almost entirely by origination credit — the partner who brought in the client keeps the lion's share. - **Best for**: Lateral-heavy, entrepreneurial practices. - **Risk**: Hoarding behavior; refusal to collaborate; client ownership disputes on departure. - **Typical weighting**: 70–90% origination credit, 10–30% working credit, minimal firm contribution credit. ### 3. Hybrid (most common — recommended default) **Default formula**: 50% originating + 30% working + 20% firm-contributions. Sub-components: | Credit type | Calculation | |---|---| | Originating credit | Revenue collected on matters the partner originated × 50% weighting | | Working credit | Revenue worked on matters the partner was responsible attorney × 30% weighting | | Supervision credit | Associate hours billed under partner supervision × blended rate × supervision factor (typically 0.15–0.25) | | Firm contribution | Scored on 1–5 scale across: training sessions, BD pitches, recruiting hires, committee participation × 20% weighting | ## Output format The skill should produce a structured report for each partner covering: ``` PARTNER COMPENSATION RECOMMENDATION — [Partner Name] — [Period] 1. INPUT SUMMARY Billable hours (own): [X hrs at $Y/hr = $Z] Originating revenue collected: $A Working revenue collected: $B Supervision hours: C hrs Firm contribution score: D/5 2. ALLOCATION (Hybrid 50/30/20) Originating credit: 50% × $A = $A1 Working credit: 30% × $B = $B1 Firm contribution: 20% × (D/5) × [pool share] = $C1 Supervision bonus: C × rate × factor = $D1 ───────────────────────────────────── TOTAL COMP RECOMMENDATION: $T 3. BENCHMARKS Firm average partner comp (period): $X PEP (firm-wide): $Y External benchmark (survey): $Z range 4. SENSITIVITY ANALYSIS If origination weight ↑ to 60%: comp = $T2 If working weight ↑ to 40%: comp = $T3 If firm contribution dropped: comp = $T4 5. FLAGS [Any anomalies: realization below avg, origination credit dispute, etc.] ``` ## Jurisdictional notes | Jurisdiction | Specific considerations | |---|---| | US (Am Law) | PEP is the primary external benchmark. Lockstep largely abandoned at most firms post-1990s. Non-equity partner tier is common; distinguish equity vs. income. | | UK (Magic/Silver Circle) | Modified lockstep still common; "black box" discretionary element at most firms. Salaried partner tier widely used. | | MENA (GCC) | Partnership structures vary; some Gulf firms operate as sole practitioner or corporate entities under national law — formal equity partnership may not exist. Track profit distributions per ownership %. KSA firms may operate under a licensed professional company structure. | | UAE onshore | UAE Federal Law on Commercial Companies governs; professional companies have specific requirements. | | DIFC / ADGM | Partnerships possible under DIFC/ADGM partnership law; distributions governed by partnership agreement. | | Lebanon | Bar affiliation required; partnership structures informal. | | France | SCP/SEP/SELARL structures; remuneration governed partly by partnership deed and partly by CNBF (Caisse nationale des barreaux français) contributions. | ## Common mistakes - **Double-counting origination and working credit** when one partner does both — set firm policy on split. - **Ignoring realization** — a partner originating large volumes of uncollected debt should not receive full origination credit. - **Static benchmarks** — PEP data from prior years is not comparable to current performance; use same-year surveys. - **No supervision credit formula** — without it, senior partners avoid associate delegation, harming leverage ratio. - **Failure to document** — comp decisions without a written formula invite disputes and bar complaints (in some jurisdictions, partners are entitled to see the formula under partnership law). ## Related skills - [[efirm-finance-realization-rate-tracker]] - [[efirm-finance-utilization-dashboard]] - [[efirm-finance-wip-aging-report]] - [[efirm-finance-collection-rate-tracker]] - [[efirm-matter-creation-flow]]