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Law Firms
Bonuses structured as forgivable loans are being used for partner retention
Some law firms are using forgivable loans to retain valuable partners and keep newly promoted partners happy. (Image from Shutterstock)
Some law firms are using forgivable loans to retain valuable partners and keep newly promoted partners happy.
New York recruiter Alisa Levin, a principal at the Greene-Levin-Snyder Legal Search Group, described two kinds of forgivable loans in an interview with Law.com.
Firms trying to retain a partner may give that person a forgivable loan that has to be returned if the lawyer doesn’t stay for a set time period, Levin told Law.com. In at least one instance, the article says, a BigLaw firm offered forgivable loans to retain partners during merger talks.
Firms also use forgivable loans to address “the challenges of a transition” when a lawyer used to getting money on a regular basis becomes a partner, Levin said.
One benefit of forgivable loans is their “stealth quality,” the article says. Firms generally don’t report such loans in a partner’s compensation schedule. That keeps other partners from seeking a payout.
“When a firm wants to respond to productive partners who are threatening to leave without disturbing the existing compensation system, a forgivable loan, which is generally not disclosed to the whole partnership, is a way of indirectly black-boxing compensation,” said recruiter Matthew Bersani, a founding partner of the Cliff Group, in an interview with Law.com.
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