By: Julia Bennett, Chief Marketing & Business Development Officer at Davis Wright Tremaine LLP and Neel Lilani, Managing Director at Orrick
New strategies help firms attract, reward, and retain top talent by promoting fairness, transparency, and collaboration in business development compensation.
As law firms become increasingly dependent on business development and sales professionals, senior leaders are spending more time grappling with a difficult question: how should these professionals be paid?
The answer is rarely simple. Ethical rules governing fee-sharing with non-lawyers, the team-based nature of client development, and ongoing debate about when revenue should “count” all complicate compensation decisions. Any plan must be carefully structured to avoid regulatory pitfalls, particularly in jurisdictions where non-lawyer fee-sharing is prohibited. At the same time, compensation must meaningfully motivate professionals to pursue new opportunities and deepen existing client relationships. Balancing compliance, fairness, and incentive alignment sits at the center of this challenge.
Common Compensation Models
Law firms have adopted several approaches to compensating sales professionals. Each model has advantages and drawbacks, and the right choice depends on firm culture, the maturity of the sales function, and overall risk tolerance.
Salary Plus Bonus
Sales professionals receive a base salary and are eligible for bonuses tied to performance goals such as pipeline growth, win rates, or client development activity. Metrics may include opportunities created, client meetings, or progress on active pursuits. This model works well in long sales cycles and team-based environments and can help reduce disputes over individual credit.
Salary Plus Commission
A base salary is paired with additional compensation triggered by defined milestones, most often tied to revenue collection. While appealing to experienced hires, this approach requires clear rules. Firms must define what triggers commission—such as collected fees—and how credit is allocated when multiple contributors are involved. Firms need to use caution with this model alone to avoid running afoul of any state bar association rules.
Target-Based Incentives
Bonuses are awarded for meeting or exceeding quarterly or annual targets. Tiered payouts can reward exceptional performance, but this model can create pressure if goals are not fully within the individual’s control. Targets must be realistic and supported by appropriate resources.
Team Bonus Pools
Groups that contribute to growing clients or practices share a bonus pool. This approach promotes collaboration and cross-practice engagement, but it requires clearly articulated standards to ensure fairness. Allocation methodologies should be documented and reviewed regularly.
Milestone Payments
One-time bonuses tied to specific achievements—such as securing key meetings, advancing proposals, or opening new matters—help align incentives with the slower pace of legal sales. Sign-on bonuses and deferred awards can also support retention of high-value talent.
Sales Compensation in Practice: Recognizing Contributions to New Opportunities
One firm addressed fairness and transparency by clearly defining how sales professionals’ contributions to new opportunities are recognized. Each opportunity is evaluated based on both its quality and the level of effort and impact provided by the sales professional. Contribution varies depending on who sourced the opportunity, how it was developed, and the role the sales professional played over time. Opportunities are assigned a contribution level, and that level determines the compensation band available, subject to firm policy and ethical requirements.
Level 1: Sales Professional–Driven and Sourced
The sales professional is the primary driver and originator of the opportunity. They identify and qualify the prospect, initiate the first meaningful client engagement, shape the pursuit strategy, coordinate partner involvement, and guide the opportunity through the win and early handoff. This level reflects full ownership of sourcing and development and typically carries the highest level of recognition.
Level 2: Collaboratively Sourced with a Partner
The opportunity is sourced jointly by a partner and a sales professional, or it is partner-sourced with early and material sales involvement that meaningfully shapes the win. The sales professional plays a significant role in strategy, messaging, and execution, with shared ownership of the outcome.
Level 3: Supportive Contribution
The sales professional supports an opportunity already in progress, contributing targeted value such as messaging development, coordination, pricing input, or process management. Recognition acknowledges the value added while clearly distinguishing this role from sourcing or co-sourcing.
Bonus Determination: Putting Contribution in Context
Opportunity-level recognition alone does not determine bonus outcomes. Instead, bonuses reflect a holistic assessment of impact, quality, leadership, and alignment with firm priorities. Firms consider the number and quality of opportunities influenced, the maturity and strategic importance of those opportunities, the degree of cross-practice involvement, and the revenue influenced over time. Team and firm performance also play a role.
Qualitative factors matter as well. Leadership demonstrated relative to seniority, the quality of strategy and judgment applied, ambassadorship on behalf of the firm, and perceptions of peers, partners, and leadership all inform bonus decisions. No single factor is determinative, and when roles and recognition are clearly defined, collaboration between sales professionals and partners is strengthened rather than undermined.
Building a Compensation Plan That Works
For compensation plans to be perceived as fair, firms must establish clear standards for what constitutes success. Early-stage activity—such as account planning and client meetings—should be tracked alongside outcomes like new matters and collected fees. Firms also need clear rules governing who receives credit, how credit is divided, and how long payments continue.
Compliance with ethical guidelines is essential, as is transparency. Written policies describing eligibility, credit allocation, and payment timing help manage expectations and reduce ambiguity. Reliable data is equally important. CRM systems and reporting tools enable firms to track business development activity and outcomes accurately, while regular review and feedback allow plans to evolve over time.
Recognizing All Contributions
Not all contributors to business development have “sales” in their title. Marketing, client service, and administrative professionals often play important roles in winning and growing client relationships. Firms should recognize these efforts through fixed or milestone bonuses, scorecards, or inclusion in bonus pools. Clear eligibility criteria, documented contributions, and consistent standards are essential for maintaining fairness and reinforcing a culture of shared success.
Avoiding Common Pitfalls
Launching a compensation plan requires alignment among partners, HR, finance, and compliance. Firms should rely on accurate data and consider piloting new plans before broader rollout. Common mistakes include overly complex structures, retroactive decisions, rewarding uncollected revenue, and misalignment with partner compensation systems.
Balancing individual and team incentives is another recurring challenge. Over-reliance on individual metrics can undermine collaboration, while poorly structured team incentives can obscure accountability. Written guidelines, regular reviews, and periodic audits help ensure plans remain effective and compliant as the sales function matures.
Key Takeaways for Law Firm Leaders
Compensating sales professionals effectively is central to growth and retention. The strongest plans are clear, fair, and transparent. They recognize both individual and team contributions, comply with ethical requirements, and reward the demanding work involved in building client relationships.
When viewed as a strategic tool rather than an administrative exercise, compensation can help firms attract top talent, align business development with firm priorities, and drive sustainable success in a competitive market.
