Welcome back to the Big Law Business column on the changing legal marketplace written by me, Roy Strom. Today, we look at what Big Law can learn from a PGA Tour effort to fend off outside competition that led to internal strife. Sign up to receive this column in your inbox on Thursday mornings. Programming note: Big Law Business will be off next week.
A rival had offers on the table rich enough to poach talent. Enough considered leaving that it could blow a hole in the incumbent’s business. To stem the departure, leaders bumped up pay only for the most important players. So far it’s worked. But it also bred criticisms of favoritism, secrecy, and discouraging collegiality.
Well, it’s not another Big Law recruiting battle. It’s the PGA Tour.
Big Law leaders can learn lessons from a bonus system the PGA Tour started this year to keep superstars from joining a rival golf league.
The Player Impact Program will dole out $40 million to 10 golfers deemed the most popular based on a slew of metrics such as their Google search results and social media mentions.
The golf bonus system, first reported in April, came as the Tour was fending off a start-up golf league reportedly willing to splash “hundreds of millions” to lure top names in the sport. The Tour announced severe penalties for joining the competition.
Paying top partners more money and using threats like clawing back compensation or delaying their capital repayments are strategies Big Law firms have employed when facing critical departures. Of course, it doesn’t always end well.
This week, the PGA Tour season culminates with a tournament that pays the winner $15 million for finishing on top in the season-long points competition. The Tour this year will also for the first time reportedly pay up to $8 million to the most popular player—determined via metrics wholly separate from their on-course performance.
PGA Tour Commissioner Jay Monahan said this week he won’t publicize who receives the bonus money or the formula for determining the payments. That’s right, Big Law aficionados, it’s a “black box” model.
The secrecy has drawn scorn from golf writers. And if PGA Tour players are anything like Big Law partners, I’m sure some players worry that favoritism or other biases will drive management’s decisions.
Pushback over the plan’s secrecy isn’t the only dilemma Monahan faced this week. He had to enforce a “no jerks” policy—to borrow the cringeworthy rule Big Law leaders like to cite as evidence of their firm’s friendly cultures.
Monahan attempted to tamp down a rivalry between two players, Brooks Koepka and Bryson DeChambeau, that has grown into a black eye for a sport with a long tradition of playing nice. Fans who shout “Brooksie” at DeChambeau—a taunt gone viral on social media—will be kicked out of this week’s tournament, Monahan said.
It’s hard to say whether a shot at $8 million is fueling the feud. But if the players are trying to “attract eyeballs,” it’s worked. The rivalry dominates golf headlines.
I don’t often write about law firm “collegiality,” but that’s what we’re talking about here.
Law firm compensation systems set the rules outlining how partners work together. Misaligned incentives can lead to bad behavior like hording work, being stingy with sharing credit, or the professional version of an ugly popularity contest—currying favor with powerful bosses.
Managing partners are often drawn into uncomfortable conversations with partners who abuse the system. If you’re in the position of kicking out “jerks,” you’re probably treating a symptom of a system that fostered selfish behavior.
The golf bonus system’s unintended consequences show how difficult it can be to manage a group of people when compensation structures reward only a select few—or when they encourage the wrong behaviors.
It’s a risk more Big Law firms face as the industry’s experience-based “lockstep” compensation system fades away in favor of bigger salaries for the most important lawyers.
The analogies may not be perfect, but the lessons are simple: The rules of the game are important, and people are good at exploiting them to their benefit. If you reward new objectives, be prepared for behavior you didn’t expect.
Worth Your Time
On New Offices: Latham & Watkins is the latest firm to enter the hot Austin, Texas legal market, hiring partners from DLA Piper and Wilson Sonsini.
On Big Law Pay: President Biden’s nominee for Justice Department antitrust chief, Jonathan Kanter, earned $20.3 million in two years from Paul, Weiss, according to federal financial disclosure forms. And Breon Peace, nominee for U.S. attorney in New York, earns just over $4 million a year through his Cleary Gottlieb Steen & Hamilton partnership, a federal disclosure form shows.
On Big Law Staffing: Meghan Tribe and Ruiqi Chen wrote about how Big Law is responding to a supply-chain problem. Chronic under-hiring of young associates in recent years led to a staffing shortage firms are plugging by hiring from new talent pools.
That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.