Key Takeaways:
- Corporate law leads all practice areas in partner pay—but raw dollars aren’t enough: Corporate partners average $1.92 million annually, the highest of any specialty. But mid-sized firms can’t win a bidding war against BigLaw. They win by designing compensation structures that reward the full spectrum of value creation—not just origination.
- Deal-driven revenue creates feast-or-famine cycles your comp model needs to survive: Global M&A deal volume hit $4.7 trillion in 2025—up 40% from the prior year. But deal work is lumpy, unpredictable, and unevenly distributed across partners. A compensation model built for steady-state billing will crack under that pressure.
- Clients are demanding more than hourly bills: Seventy-two percent of law firms now offer alternative fee arrangements, and partner billing rates have surged 36% since 2022. Firms that cling to pure hourly billing risk alienating the corporate clients who fund their compensation pools.
Corporate law is the crown jewel of legal practice—and the most expensive one to staff. According to the Major, Lindsey & Africa 2024 Partner Compensation Survey, average partner compensation has nearly doubled over the past decade to $1.41 million, rising 26% in just the last two years. Average originations have soared to $3.48 million. The average billing rate for all partners has surged 36% since 2022, now reaching $1,114 per hour.
Those numbers are extraordinary. They’re also misleading—because they describe a market dominated by Am Law 100 firms with the revenue to absorb eye-watering lateral guarantees and the deal flow to justify them. For mid-sized corporate practices, the compensation landscape is a different animal entirely.
You’re competing for the same talent that Kirkland & Ellis, Latham & Watkins, and Simpson Thacher are pursuing with eight-figure packages. You’re serving clients who increasingly demand alternative fee arrangements and pricing transparency. And you’re doing it all while M&A activity whipsaws between boom and bust—with global deal volume reaching $4.7 trillion in 2025, up 40% from 2024, according to Bloomberg Law league tables.
So how does a mid-sized corporate firm build a compensation model that retains top deal lawyers without bankrupting the partnership? One that aligns incentives with the behaviors that actually build a sustainable practice? Let’s dig in.
Why Corporate Law Firms Face Unique Compensation Pressures
Before we get into specific models, let’s be honest about what makes compensating corporate lawyers so difficult. The economics of corporate practice create pressures that don’t exist in litigation, regulatory work, or most other practice areas.
The Deal Cycle Problem
Corporate work is inherently cyclical in a way that creates havoc with compensation systems designed for predictable revenue. When M&A activity is hot—and it’s been scorching lately, with deal volume above $100 million increasing nearly 93% year-over-year in late 2025—corporate partners are printing money. When it cools, as it did in 2023 when total deal volume hit an eight-year low, those same partners are scrambling for work.
The Thomson Reuters Institute and Georgetown Law’s 2026 State of the US Legal Market report captured this tension perfectly: law firms celebrated 13% profit growth in 2025 while standing on “increasingly unstable ground.” Demand surged to its best year of growth since the global financial crisis, but the report warns that “the very forces creating today’s peaks are simultaneously undermining the ground beneath them.”
A compensation model that works in a boom year but collapses in a downturn isn’t a compensation model—it’s a time bomb. Your corporate partners need to feel secure enough to turn down marginal work during hot markets and motivated enough to develop new business during slow ones. That requires a structure with more nuance than “you eat what you kill.”
The Lateral Arms Race
Here’s the number that keeps mid-sized firm managing partners up at night: the MLA survey found that equity partners now earn an average of $1.94 million, with 42% earning over $1.5 million. Non-equity partners average $558,000. That’s a 247% gap between equity and non-equity tiers—and it’s driving an escalating lateral war.
BigLaw firms are hiring entire teams. In 2024 and early 2025, group lateral moves of 14, 17, even 30 attorneys at once became common as firms raced to build transactional capacity. Mid-sized firms are increasingly vulnerable to having their best corporate partners poached by firms that can guarantee multimillion-dollar packages. Over a third of Am Law 200 firms are planning to overhaul their compensation models specifically to compete more effectively for lateral talent, according to Fairfax Associates.
But here’s the thing: you don’t need to match BigLaw dollar-for-dollar. What you need is a compensation model that offers something BigLaw structurally can’t—transparency, autonomy, faster paths to equity, and a direct line between effort and reward. Mid-sized firms that get compensation right can attract corporate partners who are tired of being cogs in the BigLaw machine.
The Client Pushback Problem
While firms have been raising rates at record pace—worked rates jumped 7.4% in Q3 2025 alone—corporate clients aren’t taking it lying down. A 2025 Best Law Firms survey found that 72% of U.S. law firms now offer AFAs, with the figure rising to over 90% for firms with 50 or more attorneys. Yet most firms apply AFAs unevenly, using them on fewer than 40% of matters according to BigHand’s 2025 Pricing and Budgeting Report. That gap between “offering” and “actually using” AFAs matters for compensation because it means your attorneys are caught between two economic realities—hourly billing that’s under pressure and alternative arrangements your comp model doesn’t know how to reward.
Meanwhile, Thomson Reuters reports that corporate general counsels’ net spend anticipation—the percentage planning to spend more on outside legal services—slid throughout 2025. Translation: your clients are tightening budgets even as your costs rise. If your compensation model doesn’t account for this reality, your partners will do what any rational economic actor would: prioritize short-term billing over long-term client relationships.
The Major Compensation Models: What Works for Corporate Practice
Let’s walk through each model and be candid about where each one excels and where it falls apart for corporate firms specifically.
1. Eat What You Kill
Pure production-based pay. You originate the deal, you staff it, you collect the fees, you keep the lion’s share. It’s the most common model at small corporate boutiques and some aggressive mid-sized firms.
Where it works: For firms built around a handful of star rainmakers who each control their own client relationships. If your corporate practice is really three or four independent deal practices under one roof, this model is brutally efficient. It attracts entrepreneurial partners who back themselves to produce.
Where it fails: Corporate deals require teams. A single M&A transaction might need specialists in securities, tax, employment, real estate, and regulatory work. Under an eat-what-you-kill model, the partner who owns the client relationship has zero incentive to bring in those specialists—because every dollar of credit shared is a dollar lost. Cross-selling collapses. Knowledge sharing evaporates. And your firm functions as a collection of silos rather than an integrated platform. For mid-sized firms trying to compete with BigLaw on deal execution, that fragmentation is fatal.
2. Lockstep (Equal Partnership)
Everyone at the same seniority level earns the same share, regardless of individual production. The theory: eliminate internal competition and promote the collaborative culture that complex deal work demands.
Where it works: In tight-knit corporate firms where partners genuinely cross-refer work and share client relationships. It removes the politics of origination credit and lets lawyers focus on the work. Wachtell, one of the most profitable firms in the world with profits per equity partner consistently above $7 million, uses a modified lockstep system—proof that the model can produce extraordinary results.
Where it fails: It punishes your best performers during hot markets. When one partner closes a transformative deal and another has a quiet quarter, identical paychecks breed resentment. For mid-sized firms, the bigger problem is recruiting: lateral candidates with portable books of business simply won’t accept lockstep. If you’re trying to grow your corporate practice through lateral hiring—and in this market, most mid-sized firms are—lockstep is a deal-breaker.
3. The Finder-Minder-Grinder Formula
Revenue gets split among the partner who brought the client (Finder), the partner who manages the relationship and oversees quality (Minder), and the attorneys who execute the work (Grinders). A typical allocation might be 40% Finder, 30% Minder, 30% Grinder—though firms vary widely.
Why it works for corporate practice: M&A and capital markets work is genuinely collaborative. The partner who lands a private equity sponsor relationship (Finder) isn’t necessarily the one managing a specific portfolio company acquisition (Minder), and the associates drafting the purchase agreement are doing the grinding. This model recognizes those distinct contributions.
The critical caveat: the formula only works if it’s tracked with modern accounting tools. As LeanLaw has seen across hundreds of firms, “a fancy Excel sheet or manual documenting is not going to cut it.” Two lawyers need the ability to negotiate credit on a particular client or matter, and the system must accommodate those agreements without breaking down. The biggest risk is overcomplicating the formula. Define the roles clearly, document exceptions, and use technology to track it all automatically.
4. Hybrid Performance-Based Models
The approach that the most sophisticated mid-sized corporate firms are adopting: a competitive base salary plus performance incentives tied to multiple metrics—not just billings and origination, but cross-selling, client satisfaction, mentoring, business development, and strategic contributions.
Industry research shows that firms using hybrid compensation models that blend base salary with performance incentives report 30% better retention and 40% higher partner satisfaction compared to pure salary models. For corporate practices, this model is powerful because it can flex with the deal cycle. In boom years, performance bonuses surge. In lean years, the base provides stability. And throughout, the metrics can be tuned to reward whatever behaviors the firm needs most—whether that’s business development in new industries, cross-selling to the litigation department, or mentoring the next generation of deal lawyers.
The Law360 Pulse 2024 Compensation Report confirms that hybrid models are gaining ground: 22% of equity partners and 18% of non-equity partners now work under hybrid compensation structures, particularly at midsize and large firms. Expect those numbers to climb.
The Origination Credit Minefield in Corporate Practice
If compensation is the third rail of law firm management, origination credit is the electrified fence around it. And corporate practice makes origination even more contentious than other areas.
Consider a common scenario: Partner A plays golf with the CEO of a growth-stage tech company and makes the initial referral. Partner B spends three months doing a small equity financing that establishes the firm’s credibility. Eighteen months later, that client does a $200 million acquisition and a $50 million capital raise. Who originated that business?
The MLA survey data illustrates the stakes: equity partners reported median originations of $1.3 million, while non-equity partners reported $400,000. When you’re talking about that kind of money riding on credit allocation, small disagreements become existential conflicts.
The best corporate firms are solving this by moving to matter-level origination tracking instead of client-level tracking. Each engagement gets its own origination analysis, allowing credit to be shared based on actual contributions. The partner who made the introduction gets credit for the relationship. The partner who converted that relationship into the acquisition engagement gets credit for that specific matter. This is more granular, but far more equitable—and it eliminates the hoarding behavior where partners sit on dormant client relationships they’ve stopped actively servicing.
Progressive firms also build in sunset provisions: origination credit that decays over time unless the originating partner remains actively involved. This prevents the toxically common scenario where a semi-retired partner collects credit on a client they haven’t spoken to in years—a dynamic that’s uniquely destructive in corporate practice, where relationships evolve quickly as companies grow, merge, and change leadership.
Building Compensation for the AFA and AI Era
Two forces are converging to make traditional corporate compensation models obsolete: the rise of alternative fee arrangements and the arrival of AI. Both are compressing the link between time spent and value delivered—and any compensation model built on billable hours alone is headed for trouble.
The AFA Revolution
Data from Citi’s Global Wealth Hildebrandt advisory projects that AFAs will surge from roughly 20% of legal revenue to as much as 72% in the coming years. Firms that already offer flat fee or hybrid billing on transactional work are seeing the benefits: LeanLaw’s analysis of firms using AFAs shows 90–95% realization rates compared to 80–85% for hourly-only firms. That’s a 10–15 point improvement on the same work.
But here’s the compensation problem: if you’re billing a $150,000 flat fee for a mid-market acquisition and your partner closes it in 200 hours instead of 350, your hourly-based compensation system says that partner earned less. The economics say they earned more—delivering the same outcome more efficiently while preserving margin. Your comp model needs to catch up.
Corporate firms that link compensation to collected revenue per matter rather than hours billed create natural alignment between efficiency and reward. A partner who structures deals profitably on flat fees should earn more, not less, than one who overbills on hourly arrangements.
AI and the Efficiency Paradox
AI is already changing how corporate work gets done. Contract analysis, due diligence review, first-draft document preparation—tasks that once consumed hundreds of associate hours per deal—are being compressed dramatically. Yet according to BigHand’s 2025 report, only 34% of firms have updated their pricing models to reflect AI efficiencies. That means the vast majority of firms are rewarding attorneys who ignore AI—because using it reduces their billable hours and, under traditional models, their compensation.
The Thomson Reuters/Georgetown 2025 report called this moment “the beginning of the end for the traditional law firm business model.” That’s not hyperbole. Legal technology and knowledge management spending has skyrocketed—up nearly 12% year-over-year—but firms haven’t adjusted their compensation formulas to reward the efficiency those investments create. The firms that solve this paradox first will attract the best corporate talent. The ones that don’t will watch their best people leave for firms that value outcomes over activity.
Rewarding Non-Billable Value
Here’s a statistic that should reshape how you think about compensation: attorneys bill for just 37% of their workday. The other 63% goes to business development, mentoring, practice management, client relationship building, and administrative tasks. Most compensation models pretend that 63% doesn’t exist.
For corporate practices, this blind spot is particularly costly. The partner who speaks at a private equity conference and generates three new fund clients is creating enormous future revenue. The senior associate who trains junior lawyers on deal execution is building the firm’s capacity to handle more transactions. The practice group leader who implements systems to track deal pipeline and staffing utilization is improving profitability for every partner in the group. None of these activities generate billable hours. All of them are essential to a thriving corporate practice.
Technology: The Infrastructure That Makes Modern Compensation Possible
Every compensation model we’ve discussed requires one thing to actually work: data. Real-time, accurate, transparent data on revenue by partner and matter, origination credit allocations, collection rates, realization rates, cross-selling activity, and non-billable contributions. Without it, you’re making compensation decisions in the dark.
The MLA survey found a striking correlation: 80% of partners in firms with fully transparent compensation systems reported being satisfied with their pay, compared to just 63% in closed systems. For analytically minded corporate attorneys accustomed to working with precise financial data, a black-box compensation system breeds distrust faster than almost anything else.
Automated compensation tracking reduces the administrative burden by 60% while delivering the transparency attorneys demand. For corporate practices specifically, where compensation might need to account for matter-level origination credits across overlapping client relationships, multiple billing arrangements running simultaneously, deal bonuses tied to transaction outcomes, and cross-selling credits between transactional and litigation departments—manual tracking isn’t just inefficient. It’s impossible to do well. One LeanLaw client reported that automated attorney compensation reports shaved 15 hours per month off their workflow.
The right technology doesn’t just track compensation—it changes behavior. When partners can see in real-time how their activities translate to pay, they naturally gravitate toward the activities the firm values most. That’s the difference between a compensation system that reports results and one that drives them.
Practical Steps: Implementing a New Corporate Compensation Model
Theory is nice. Execution is what matters. Here’s a practical roadmap for mid-sized corporate firms ready to make the shift.
Step 1: Audit Your Economics
Pull the data. Revenue by practice area and matter type—M&A, capital markets, fund formation, securities compliance, general corporate. Collection rates and realization rates by partner and by billing arrangement. Origination patterns: who’s generating business, who’s executing it, who’s managing the client relationships? Non-billable contributions: business development, mentoring, management. Attorney satisfaction and retention trends. If you’re tracking this in spreadsheets, that’s the first thing to fix. You need reliable, real-time financial data to design a model that reflects reality.
Step 2: Define What You’re Incentivizing
This is where most firms stumble. They design compensation models that reward what they’ve always rewarded rather than what they need. Ask yourself: Are you trying to grow deal volume? Then weight origination heavily. Do you need deeper bench strength? Then reward mentoring and associate development. Are clients asking for alternative fee arrangements? Then build metrics that reward profitable AFA delivery rather than hourly billing.
The Rule of Thirds offers a useful starting framework: one-third of revenue to direct compensation, one-third to overhead, one-third to profit. But for corporate firms, the critical question is how that compensation third gets allocated across different value-creation activities and deal types.
Step 3: Build in Transition Protection
Any compensation overhaul creates short-term winners and losers. Successful transitions include a two- to three-year phase-in with guarantees that no partner’s compensation drops more than 10–15% in year one. This gives high billers time to develop other valued activities—business development, mentoring, cross-selling—while protecting partners who have been doing those things without recognition.
Step 4: Invest in the Technology
You need tools that handle time tracking across hourly, flat-fee, and hybrid billing arrangements simultaneously. Matter-level origination and supervision credit allocation. Automated compensation calculations and reporting. Real-time dashboards so partners can see how their activities map to compensation. Integration with your accounting platform for seamless disbursement. This isn’t optional. It’s the infrastructure that makes a sophisticated compensation model operationally viable.
Step 5: Review Annually and Adapt
No compensation model is perfect on day one—especially for corporate practices where market conditions shift rapidly. Build in an annual review process: Is the model driving the behaviors you intended? Is compensation competitive with market benchmarks? Have unintended consequences emerged? Does the model still align with your strategic direction as the deal market evolves? The best compensation models are living documents that evolve with your practice.
The Bottom Line
The corporate legal market has never been more lucrative—or more volatile. Profits per equity partner at Am Law 100 firms have risen nearly 54% since 2019. Global M&A deal volume surged 40% in a single year. But as the Thomson Reuters/Georgetown report warns, “the legal industry has a peculiar historical habit of surging just before it stumbles.”
In this environment, your compensation model isn’t just an administrative exercise—it’s the mechanism that determines whether your firm can attract, retain, and motivate the corporate lawyers who generate your most valuable revenue. It’s the system that either encourages cross-selling and collaboration or drives your best partners into silos. And it’s the structure that positions your firm to thrive through the next market correction—not just the current boom.
Mid-sized corporate firms have a unique advantage in this equation. You’re nimble enough to redesign compensation quickly. You’re close enough to your partners to understand what they actually value. And you can offer something BigLaw structurally can’t: a direct, transparent connection between what attorneys contribute and what they earn.
Start with the data, define what you want to incentivize, and build a model that reflects the deal-driven, cyclical, increasingly AFA-influenced economics of modern corporate practice. Pair it with technology that tracks everything transparently, and you’ll have a compensation structure that doesn’t just survive the next market shift—it capitalizes on it.
The firms that get this right will define the next era of corporate law. The firms that don’t will spend it watching their best people walk out the door.
Frequently Asked Questions
Q: How do we compete for lateral corporate partners when we can’t match BigLaw compensation?
A: You compete on structure, not just dollars. Offer faster equity paths, higher origination percentages, real management influence, and transparent compensation systems. Many corporate partners at BigLaw are frustrated by opaque compensation committees and limited autonomy. A mid-sized firm that offers $800,000 with 40% origination credit, full transparency, and a named seat on the management committee can beat a BigLaw firm offering $1.2 million with a black-box formula and no governance input. Pair that with a clear value proposition around client access, work-life flexibility, and entrepreneurial freedom.
Q: How should we handle compensation during M&A market downturns?
A: Build counter-cyclical incentives into your model. During slow deal periods, increase the weight given to business development metrics, client relationship deepening, and practice development. Some firms create “deal pipeline bonuses” that reward partners for bringing clients to engagement-ready status, even before revenue materializes. A hybrid base-plus-performance model provides the stability that pure eat-what-you-kill doesn’t—ensuring your best partners don’t jump ship during the first slow quarter.
Q: Should our corporate partners and litigation partners be on the same compensation model?
A: Same philosophy, different metrics. Corporate partners generate value through deal origination, execution speed, and relationship depth. Litigators generate value through case outcomes, hourly production, and risk management. A hybrid model with shared principles but practice-specific performance criteria accounts for these differences while maintaining firm-wide fairness. The key is ensuring cross-departmental collaboration is explicitly rewarded—the corporate partner who refers a litigation matter should get credit, and vice versa.
Q: How do we compensate partners for alternative fee arrangement work?
A: Measure collected revenue per matter, not hours billed. When a partner delivers a $150,000 flat-fee acquisition in 200 hours, that’s $750 per hour of effective billing—higher than most hourly rates. Your compensation model should recognize that efficiency premium. Some firms create an “AFA profitability multiplier” that adjusts compensation credit based on the effective hourly rate realized on flat fee matters, rewarding partners who deliver deals profitably regardless of billing structure.
Q: How important is transparency in compensation?
A: The data is unambiguous. Partners in open compensation systems report 80% satisfaction rates versus 63% in closed systems. For corporate lawyers who spend their days analyzing financial data and deal economics, a compensation system they can’t audit feels like a contradiction. Invest in technology that gives every partner real-time visibility into their metrics and how those metrics translate to pay.
Q: What’s the biggest compensation mistake mid-sized corporate firms make?
A: Trying to replicate BigLaw economics at mid-sized scale. You don’t have the deal volume to support the same spreads between top and bottom earners, and extreme pay ratios create cultural toxicity in smaller partnerships. Instead, build a model that leverages your advantages: flatter hierarchies, greater transparency, higher per-partner origination opportunities, and closer client relationships. The most profitable mid-sized corporate firms aren’t the ones that look like miniature BigLaw—they’re the ones that have built compensation models uniquely suited to their own economics.
Sources
- Major, Lindsey & Africa. “2024 Partner Compensation Survey.” mlaglobal.com
- Bloomberg Law. “2025 League Tables: Top 20 M&A Law Firms.” pro.bloomberglaw.com
- Thomson Reuters Institute and Georgetown Law. “2026 Report on the State of the US Legal Market.”
- Thomson Reuters Institute and Georgetown Law. “2025 Report on the State of the US Legal Market.”
- BCG Attorney Search. “Law Firm Partner Compensation by Practice Area: 2024–2025.” bcgsearch.com
- Law360 Pulse. “2024 Compensation Report: Law Firms.”
- Fairfax Associates. Research on Law Firm Compensation Trends and Lateral Hiring.
- Best Law Firms. “Law Firms Embrace AFAs, But Clients Want More Flexibility.” November 2025. bestlawfirms.com
- BigHand. “2025 Annual Legal Pricing and Budgeting Trends Analysis.” bighand.com
- Citi Global Wealth. “2024 Client Advisory.” Hildebrandt Consulting.
- Chambers and Partners. “Corporate M&A 2025 Global Practice Guide.” practiceguides.chambers.com
