Our latest Reward Networking event, hosted by Innecto and People in Law, brought together reward, benefits and HR professionals from across the legal sector. The discussion revealed a common challenge: how can firms use reward to reinforce performance while maintaining fairness, meaningful differentiation and a compelling employee proposition? Four themes emerged—redesigning bonus schemes, responding to pay compression, strengthening the wider reward offer and preparing for greater pay transparency.
Bonus schemes need broader measures of performance
Bonus design was the event’s most debated topic, particularly the measures used to determine outcomes. Several firms reported that only a relatively small proportion of fee earners achieve their targets. This raises an important question: do those targets identify exceptional performance effectively, or have traditional quantitative measures become too narrow? The discussion suggested the latter. There is growing concern that where targets feel unattainable or disconnected from valuable contribution, fee earners are disengaging from the scheme rather than respond to it as an incentive.
Billable hours remain central to many schemes, but attendees increasingly recognise that hours and other financial metrics cannot capture high performance on their own—particularly as AI changes how legal work is delivered and creates scope for greater efficiency. Firms are therefore considering using broader metrics to include such as innovation, efficiency and talent development. The challenge many in the room recognised however is how to define these contributions clearly and assess them consistently.
Firms are also exploring ways to support performance beyond the bonus scheme. One participant described aligning its wellbeing strategy more closely with performance by giving managers and employees additional training and support to build resilience. This approach treats wellbeing as part of a sustainable performance environment, rather than relying on financial incentives alone.
Pay compression is increasing the importance of variable reward
Pay compression remains a significant challenge at both early-career stages and the level immediately below partner. With limited scope to increase base pay while protecting partner earnings, firms are looking to other levers to distinguish performance, career level and critical talent. One option being adopted is increasing bonus opportunity for top performers, particularly below partner level. Many schemes do not currently vary bonus opportunity by level, but some firms are reviewing this approach where constrained base-pay increases provide too little differentiation.
When cash differentiation is constrained, the wider employee proposition carries more weight. Firms are reviewing whether benefits provide distinctive value at different career stages, remain competitive with the market and strike the right balance between global consistency and local relevance.
This makes communication of the wider employee proposition increasingly important. Firms are placing greater emphasis on the total reward package, long-term career opportunities and the role of managers in explaining their value. Management coaching can help leaders hold more credible retention conversations, while benefits platforms can make the offer easier for employees to understand and use. Several firms are either introducing such technology or reviewing existing platforms to increase their impact.
Firms are preparing for greater pay transparency
Pay transparency remains a priority, although most firms are currently focused on building the structures and governance needed for greater disclosure in the future, particularly in the UK. Firms with a European presence are addressing immediate legislative requirements and often taking a cautious approach—for example, sharing pay information at interview rather than in job advertisements. They are also considering where pay structures should be harmonised across offices and where local market differences must remain. Bonus transparency presents a further choice: views differ on the appropriate level of disclosure, but the direction of travel is towards sharing at least high-level information about payments, decision criteria and the boundaries of managerial discretion.
2027 the role of Performance
Discussion on the day highlighted many attendees were looking at the role of Performance in Reward – what drives it, how to measure it and how outcomes are used. Innecto will be developing a survey for Forum attendees to explore this topic further in the new year so watch this space!
Thank you to attendees for a great discussion and as always, please do reach out if you wish to discuss any of the topics further
