The midsize Manhattan firm Morrison Cohen is making transformations, altering its pay system after several partner departures, reports Bloomberg Law . Both Co-Managing Partners, Y. David Scharf and Steve Cooperman, are undertaking painful measures to uphold the status of the establishment. The new measures, which they admit may feel disruptive, have entailed modifying a long-standing “eat what you kill” pay system. This modification has led to minimizing the much-coveted “origination credit” rewards for rainmakers, allowing for investment into other attorneys and the overall firm infrastructure.
Such changes stand in contrast to several prominent law firms, which have recently recalibrated their pay formats to compensate originators in return for attracting new firm clients. Around nine partners have already exodus for arch-rival firm Loeb & Loeb, in just two months. Cooperman indicates that further fallout may well occur in the near future; with discussions often taking place behind closed doors.
2019 saw Cooperman and Scharf take charge of the now 120-attorney firm. Preceding their ascension, they had realized the need to reorient the firm’s compensation priorities, as suggested by legal talent scouts, who reported that the percentages paid to “originators” were greater than market averages.
To counter this, they have reduced these percentages by 3% to 5% in particular cases, transferring the revenue to other attorneys. According to Cooperman, the revised compensation model also includes factors such as “financial performance, hours, fiscal responsibility, maintaining and growing existing client relationships as well as developing new ones, hard work,” and also demonstrating the firm’s values.
Alongside this, Morrison Cohen is diverting its attention towards “reinvesting” in its business operations via augmenting its “infrastructure”. A new Chief Operating Officer and a Diversity, Equity, and Inclusion Director were among the additions to the firm teams in 2023, amongst several other hires.
Last year saw the firm reporting $122 million in gross revenue, a rise of 10% from 2022. Profits per partner slightly rose exceeding $1 million. The firm has also boosted its collections by 20%. However, representatives from the partners who departed for Loeb & Loeb, Baker & Hostetler and Tarter Krinsky & Drogin were unavailable for comments.
The revised compensation plans emphasize lawyer collaboration over individualistic client acquisition. Scharf states, they anticipate growth in profits and partners’ client books as they focusing more on supporting and growing existing business relationships within the firm. Cooperman, on the other hand, hopes these new measures will reward “skilled lawyers,” who, though not specialists in bringing in new business, play a critical role in retaining it.