中國律師事務所創收分配模式與績效研究

Abstract

In recent years, the legal profession in China has made significant progress, with a large number of outstanding lawyers and law firms emerging. They have promoted the enhancement of the rule of law concept among the entire population and the construction of China’s rule of law society by serving the people and economic development. The current economic and social development pattern is undergoing profound changes, and the legal service industry is also facing new opportunities and challenges. With the continuous advancement of the rule of law and the rapid development of the socialist market economy, the demand for legal services is growing, providing a broad market space for the development of law firms. However, factors such as technological innovation, market competition, and customer needs also pose challenges to the traditional operation models and service methods of law firms. Law firms must adapt to the new situation and meet new challenges to achieve sustainable development.

As a core component of the legal service industry, the partner compensation system of law firms directly affects the work enthusiasm of lawyers and the overall performance of the firm. A reasonable distribution system can fully mobilize the work enthusiasm of lawyers, stimulate their potential, and promote the healthy development of the firm. On the contrary, an unreasonable distribution system may lead to a decline in lawyers’ enthusiasm, damage the firm’s performance, and even cause internal conflicts and talent loss. Therefore, in-depth discussion on the impact of law firms’ partner compensation system on lawyers’ enthusiasm and firm performance is of great significance for the management and development of law firms.

At present, Chinese law firms mainly adopt three main partner compensation systems: Eat what you kill, Lockstep, and the hybrid mode between Eat what you kill and Lockstep. Each system has its advantages and disadvantages. Eat what you kill directly links lawyers’ individual performance with their income, effectively motivating individual performance, encouraging them to actively develop business, and improve work efficiency. However, overemphasizing individual performance may lead to cutthroat competition among lawyers, neglecting their comprehensive abilities, and ignoring team collaboration and resource sharing. Eat what you kill is difficult to adapt to the new requirements of law firm development and is not conducive to the improvement of the firm’s overall service capabilities and long-term development. Lockstep overcomes the limitations of Eat what you kill to a certain extent by introducing comprehensive assessment indicators to evaluate lawyers’ performance in business ability, management contributions, team collaboration, etc., which is conducive to promoting the comprehensive development of lawyers and the long-term interests of the firm. However, it poses higher demands on the firm’s management capabilities, may affect the enthusiasm of new lawyers, and has issues such as high implementation costs.

This study is based on the partner compensation system practice of Chinese law firms, focusing on the two mainstream distribution modes of Eat what you kill and Lockstep. It uses literature review, questionnaire surveys, and empirical analysis to deeply explore the impact mechanism and boundary conditions of partner compensation system on law firm performance. The study selects law firms with a certain management scale nationwide as the research subjects, collects 126 valid samples, and finds through multiple regression analysis and bootstrap analysis that: (1) Compared with pure Eat what you kill and Lockstep, the hybrid of Eat what you kill and Lockstep is more conducive to enhancing the performance of law firms. (2) Compared with pure Eat what you kill and Lockstep, the hybrid of Eat what you kill and Lockstep is more conducive to enhancing the human capital development of law firms. (3) Human capital development plays a mediating role in the relationship between the hybrid partner compensation system of law firms and their performance. (4) The impact of the hybrid partner compensation system of law firms on their performance is moderated by organizational culture. Ceteris paribus, compared with law firms with weaker customer-oriented culture, those with stronger customer-oriented culture have a weaker positive impact of the hybrid partner compensation system on performance; compared with law firms with weaker cooperation-oriented culture, those with stronger cooperation-oriented culture have a weaker positive impact of the hybrid partner compensation system on performance; compared with law firms with weaker innovation-oriented culture, those with stronger innovation-oriented culture have a weaker positive impact of the hybrid partner compensation system on performance. (5) Heterogeneity analysis shows that law firms located in the eastern region, with larger scale and more diversified business, adopting a hybrid partner compensation system, are more conducive to improving the performance of law firms.

This study indicates that the hybrid partner compensation system has a significant positive impact on improving the performance of law firms. By integrating the advantages of the commission system and the point system, this mode optimizes the relationship between individual performance and team collaboration, and promotes the harmonious unity of individual incentives and collective interests, thereby significantly enhancing the overall performance of law firms. In addition, the hybrid mode also helps to improve financial performance, and demonstrates its unique advantages at the talent management level, laying a solid talent foundation for the long-term development of law firms. Meanwhile, the mediating role of human capital development in the relationship between the hybrid partner compensation system and the performance of law firms cannot be ignored. By enhancing lawyers’ professional skills and team collaboration capabilities, law firms can achieve the improvement of intellectual capital and market competitiveness. Moreover, the moderating role of organizational culture shows that long-term investment in organizational culture building is still regarded as an effective strategy to improve the performance of law firms, which requires the management of law firms to have a long-term vision and balance short-term and long-term interests to achieve sustainable development.

To further improve the performance of law firms, this study puts forward research implications in three key areas. Firstly, law firms should integrate individual and team incentive mechanisms and optimize the hybrid partner compensation system. This includes setting flexible ratios, adjusting the weights of the commission system and the point system according to lawyers' professional fields and team collaboration situations, and introducing a bonus system to strengthen the spirit of team cooperation. Secondly, law firms need to strengthen human capital investment and enhance lawyers' professional skills and team collaboration capabilities. This involves continuous professional training, case studies, knowledge sharing activities, as well as encouraging knowledge sharing and experience inheritance, and providing lawyers with personalized career development plans. Finally, law firms should attach importance to the role of organizational culture and create a favorable atmosphere conducive to the development of law firms mode. Through these strategies, law firms can better balance the interests of individuals and teams, improve overall performance, and lay a solid foundation for long-term development.

This study demonstrates certain innovation in research themes, perspectives, and methods. First, it focuses on the frontier and practical issue of law firm partner compensation system, answering the practical question of “What kind of partner compensation system should law firms choose to promote organizational performance improvement in the new era” with a distinct problem awareness and frontier. Second, it proposes an “impact mechanism—boundary conditions” analysis framework to clarify the impact mechanism of partner compensation system on law firm performance. In terms of “impact mechanism”, this study focuses on examining the mediating effect of partner compensation system on performance through human capital development as a mediator. In terms of “boundary conditions”, this study includes organizational culture to examine their impact on the relationship between partner compensation system and organizational performance. Third, it adopts the method of small sample pilot study and large sample formal study, combining questionnaire surveys and interviews to enhance the reliability of research conclusions. Previous studies on law firms mostly remained at the theoretical analysis stage, without conducting large-sample data collection and scientific empirical analysis. This study uses questionnaire surveys, employing reliability and validity analysis, descriptive statistics, correlation analysis, regression analysis, bootstrap, and other data analysis techniques to reveal the impact of partner compensation system on performance, the impact mechanisms, and boundary conditions, providing a scientific and reliable basis and practical guidance for optimizing law firm partner compensation system.

At the theoretical level, this study enriches and develops law firm management theory, promotes in-depth and expanded research on law firm management, and provides theoretical guidance for law firm management practices. At the practical level, this study provides decision-making references for law firms to optimize their partner compensation system, provide ideas for law firms to improve their internal governance structures, and provide empirical support for promoting the healthy development of China’s legal profession. As China’s rule of law process continues to advance, law firms will play an increasingly important role in economic and social development. This study is of great theoretical and practical significance for promoting the standardized, specialized, and international development of law firms, safeguarding the legitimate rights and interests of the parties, and advancing the construction of the rule of law.

Date of Award	15 Apr 2025
Original language	Chinese (Traditional)
Awarding Institution	City University of Hong Kong
Supervisor	Yuanxu LI (External Supervisor) & Jane LU (Supervisor)