In mid-2009, the Brazilian law firm Mattos Filho, Veiga Filho, Marrey Jr. and Quiroga Advogados had plenty going for it. Less than 20 years after being founded by about a dozen lawyers, Mattos Filho had grown to nearly 250 lawyers and was known for top-flight tax, corporate, and capital markets practices.
But firm leaders could see the potential for defections ahead, partly as a result of Mattos Filho’s eat-what-you-kill compensation system. Under it, partners received a portion of their billings and a percentage of the revenues generated by clients they brought into the firm. With this formula, the compensation system was easy to administerit required no partner reviews and little managerial input. But it had a downside. It was creating incentives for partners to hold on to work and causing disputes over which partner got credit for individual clients.
