Partner compensation in professional firms: five real-world lessons for 2026

Partner reward is leadership’s realpolitik.  When partner compensation fails, strategy stalls. Trust erodes. Good partners leave.

Sound familiar? You are not alone.

In 2025, our clients did not come looking for optimization. They came to us when something fundamental no longer worked.

We offer 5 lessons from the most interesting partner compensation projects we’ve undertaken for professional services firms across the globe last year. 

1. Going international forces you to decide what you really value

A professional services firm with private capital backing opened its first international office.  Speed dominated early decisions. Personal credibility determined whether partners followed. Then partners pushed for upside and our client got concerned how to best incentivize integration. Pace stalled.

Early design choices in partner reward shape behavior for years. They either amplify collaborative growth or hard-wire tensions about “credit” or small compensation differences.

MHPR Advisors were engaged to design the firm’s international partner reward set-up. We also shaped the initial compensation for partners in the firm’s first international office and balanced out local decision-making with what needed parent approval.

By developing the rules together with partners of the legacy firm and the new local team, we helped our clients shape a sustainable set-up that ensured all partners were bought into how equity and profits would be allocated and how decisions were made.

Key takeaway:
The first international office is a game changer.  Going international is a unique opportunity to fundamentally reset what partners should expect from each other and how partners share in the firm’s financial success.

2. Compensation tests a merger of equals

Two UK professional services pursued a merger of equals. Strategic intent aligned early. Yet the details did not.

Both parties asked us to design the combined firm’s partner compensation and governance.  Initially this seemed straight forward, as the financials aligned better than in most mergers we have seen.  Once our workstream got underway, it became clear that the business case hadn’t been proven at service line level.

Key anchors for a meaningful partner reward system (what counts for how much?) and decision-making (who decides what?) evaporated. Partners started to focus on what they could lose, not what they could gain. Absent of a clear rationale for how 1 plus 1 equals 3, even small financial differences became unsurmountable. 

Our work surfaced misalignment early in negotiations and clarified what true alignment would require.

Key takeaway:
Partner compensation does not exist in a vacuum.  Use the three basic components of any partner compensation system (financial design, partner contribution management and compensation governance) to test fundamental strategic alignment as your merger negotiations get underway. (Learn more about our Partner Reward Trilogy™ here). 

3. Equity systems can fail slowly - until they fail fast

A professional services firm relied on an internal market for shares and an agreed valuation mechanism to allocate equity across its partnership. This worked well until share values started to rise quickly, making buy-ins out of reach for new partners. As the partnership grew, partners kept coming in on special deals. Confidence eroded. Senior partners entrenched. Lateral hires disengaged.

The system simply no longer served the partnership.

We helped reset the economics of this internal market from first principles.  We helped the partnership define what it means to contribute as a partner, redesigned the equity to incentivize domestic and international growth and added a short-term incentive scheme.

Our intervention restored liquidity. It re-established fairness. And it preserved partner commitment at a critical moment in the firm’s trajectory.

Key takeaway:
Reset partnership economics before confidence disappears. Delay compounds risk.

4. The symbiotic relationship between partner compensation and strategy

A global offshore services firm pursued international scale. Talent economics shifted. What worked domestically failed internationally.

Our initial brief was to redesign how partners share profits. Modernizing the tenure lockstep financial architecture was relatively straight-forward.

Yet the firm’s strategy couldn’t inform a substantial upgrade to the firm’s partner performance framework – an integral part of making a managed lockstep work. Taking a step back, we helped the firm clarify its strategy along with implementation priorities. Then we aligned local partner contribution to global ambition and completed our original engagement.

That alignment prevented fragmentation. It reengaged partners across markets to focus on what matters most. It allowed scale without losing control.

We rarely recommend developing both strategy and compensation at the same time – the change effort is just too big. Yet here the exception proved the rule.

Key takeaway:.

Reflect how sound partner compensation design and business strategy inform each other – before choosing which to change first.

5. Succession is more than just a timeline

Two partnerships – one in law and one in media services – faced succession to the next generation. In both firms, founders retained influence. Successors waited. Emotions intensified.

Equity partner compensation exposed every unresolved tension. And in the end, it’s almost always about the money. 

Without intervention, both situations risked long-term reputational damage and significant revenue losses.

We led both leadership successions. In one case, we negotiated a co-founder exit directly.

We created space for hard decisions. We protected dignity while securing outcomes. We allowed leadership transitions to move forward. 

Key takeaway:

Succession is not a retirement event, and frameworks alone will not move people.

Treat succession of your top leaders as a priority – from day one where leadership roles have a fixed term, and five years out for the founder.

Partner reward is leadership’s realpolitik.

P

Partner compensation never stands alone. Partner compensation, strategy and culture are symbiotic.

Most of our clients come to us to help them effect fundamental changes in how they think about and implement partner compensation in their firm. 

If any of our examples resonate, let’s start a conversation.

Enjoyed this insight into problems being faced by your peers? Sign up to receive regular briefings on partner reward straight to your inbox.