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This article, part of an ongoing qualitative research project on law firm culture, analyzes the role of compensation in the modern law firm. At first blush, the significance of the compensation process may seem obvious: it represents an economy in which the firm distributes material rewards to its partners. From this perspective, disputes and dissatisfaction regarding compensation are simply attempts by partners to improve their financial well-being.

Our research suggests, however, that compensation serves to distribute not just money, but also respect. Compensation thus represents the operation of both a material and a moral economy within a firm. As a moral economy, the dynamics of partner compensation serve to both establish and express criteria of value—to define what it means to be a good lawyer in a given firm. The relative weight of these criteria has been changing in most firms over the past three decades or so. While traditional professional competencies and qualities remain important, greater competitive pressures have led firms to place increasing emphasis on business generation and client development. This means that the bases for conveying respect for partners through the compensation process are undergoing substantial change in many law firms.

Archetype theory provides some insight into the significance of this process. This theory suggests that professional service firms are constituted by organizational structures and policies, as well as by interpretive schemes that give those features meaning. Scholars in this vein suggest that as firms move from classical professional partnerships to “managed professional businesses,” their leaders must offer interpretive schemes that provide persuasive accounts of how such changes are consistent with a meaningful professional life. We argue that disagreements over compensation in law firms represent contests between competing interpretive schemes that represent different “orders of worth.” From this perspective, negotiation over compensation involves the question of how a firm should balance its identity both as a major business enterprise and an organization of professionals in an era of tumultuous competitive change.

Publication Citation

10 U. St. Thomas L.J. 74-151 (2012)