Redefining Compensation in 2025: An Analysis Across Work Models

Over the past two years, remote and hybrid work have evolved from temporary solutions into standard models across law firms. The conversation is no longer about whether flexible work can be successful. It’s about how these arrangements affect compensation, retention, and performance.

Data from the 2025 KHS People Curated Salary Data & Intelligence shows that hybrid work is now the dominant model, remote work remains steady, and full in-office setups continue to decline. These trends reflect a deeper shift in how firms value and reward their professionals.

1. From Preference to Requirement

In 2024, 62% of professionals preferred a hybrid setup. By 2025, that number increased to 67%. Firms are following the same path, with hybrid requirements rising from 73% to 78%. Hybrid has become both the preferred and expected working arrangement.

Remote work preferences have slightly decreased from 29% to 27%, while in-office preference has dropped from 9% to 6%. The message is clear: most professionals want flexibility, but many also want some level of in-person connection.

This balance suggests that flexibility is no longer a competitive advantage. It is now the foundation of a modern workplace.

2. How Working Arrangement Affects Compensation

Compensation patterns now reflect work arrangement as much as any other factor.

In-office professionals continue to earn the highest base salaries, but the gap is narrowing. Hybrid employees tend to fall within 5% to 8% of in-office salaries. Fully remote professionals average about 10% to 12% lower in base pay, although that difference is often offset by bonuses or non-financial benefits such as flexible hours or wellness stipends.

This shift highlights a broader change. Pay is no longer viewed as the only measure of value. Autonomy, balance, and trust have become part of the overall compensation equation.

Professionals are now assessing the total experience: how their time is managed, how they are supported, and whether they can perform at their best without unnecessary friction.

3. How Work Patterns Differ by Level

The data also shows how preferences and requirements vary by role.

• Chief Marketing and Business Development Officers (CMOs/BDOs) prefer hybrid work at 68% and are required to be hybrid at 73%, showing that visibility at the leadership level remains significant.

• Directors and Department Heads show strong hybrid preferences, at 72% and 82% respectively, but Department Heads have higher in-office requirements at 23%, reflecting greater oversight needs.

• Senior Managers and Managers have the highest hybrid requirements, at 85% and 86%, demonstrating that collaboration and mentoring still rely on shared time in the office.

• Specialists and Coordinators favor hybrid work as well, with 62% and 78% respectively, though these groups show the most openness to fully remote roles.

These differences reflect how responsibility and visibility influence expectations. Professionals at the Manager level and up remain more connected to in-person collaboration, while Pre-Manager professionals tend to prioritize flexibility and well-being.

4. Connection and Support Drive Retention

While pay matters, connection and team support determine who stays.

Professionals whose current working arrangement matches their preference report significantly higher satisfaction. Among these individuals, 65% rate both connection and support from their teams as above average.

Fully remote professionals also report strong satisfaction, with 66% rating connection and support above average. However, the number who rate these categories as below average doubles compared to their hybrid peers.

This difference shows that success depends on alignment. Employees who feel supported in the way they prefer to work are far more likely to remain engaged and committed. When preference and requirement conflict, no amount of compensation can fully resolve the friction.

Firms that align structure and flexibility are rewarded with stronger collaboration, higher morale, and lower turnover.

5. Flexibility Now Outranks Salary

The 2025 national data that covers all levels reveals a major shift in job-offer decision factors.

In 2024, professionals ranked their priorities as follows:

1. Salary

2. Working arrangement

3. Total compensation and benefits

By 2025, those priorities have changed:

1. Working arrangement

2. Total compensation and benefits

3. Salary

The order itself tells a story. Professionals are prioritizing control over their time and environment as much as, and sometimes more than, traditional compensation.

For hiring teams, this means that a strong salary offer alone no longer guarantees interest or acceptance. The ability to offer flexibility, respect autonomy, and demonstrate trust is now a key factor in closing a candidate.

6. Hybrid Becomes the Standard Across Firms

In 2025, nearly eight out of ten firms operate on a hybrid model, an increase from 73% in 2024. The three-day hybrid schedule is by far the most common, accounting for 64% of all hybrid structures. Two-day schedules account for 21%, while one-day and four-day models remain rare.

This consistency signals that hybrid work is no longer an experiment. It is now an established framework that balances collaboration and independence. Professionals and firms alike are settling into a rhythm that combines face time with flexibility.

The normalization of hybrid schedules has also reduced tension around expectations. When teams know that three days in-office is the standard, there is less confusion, fewer exceptions, and more focus on outcomes.

7. Salary Compression and Equity Challenges

With new working patterns come new challenges. One of the most significant is salary compression—when new hires earn as much as or more than current team members with similar experience.

This issue is increasingly visible as firms hire across multiple work types. For example, a remote professional hired at a new, updated rate may earn more than a long-term employee working hybrid under an older band. Even when unintentional, these differences can erode trust.

Addressing compression requires transparency and structure. Firms that clearly communicate how compensation is determined—based on scope, contribution, and measurable impact—build stronger engagement and reduce turnover risk.

The goal is consistency. Everyone should understand what factors shape pay, regardless of where they work.

8. The Future of Pay Bands

Looking ahead to 2026, compensation frameworks are expected to evolve in three ways:

1. Expanded Pay Bands: Firms will introduce broader, role-based salary ranges to reflect hybrid flexibility.

2. Stronger Focus on Total Rewards: Health, wellness, and work-life programs will become part of the pay conversation, not add-ons.

3. Performance-Based Clarity: Clear metrics tied to impact and leadership influence will replace outdated measures of presence or hours worked.

These changes point toward a more balanced and equitable approach to pay—one that reflects how people contribute, not just how they show up.

Self-Assessment for Managers and Up: Evaluating Alignment and Retention

Below are five questions to help managers reflect on their team’s structure, engagement, and compensation. Each question includes a suggested action to create meaningful progress.

1. Do your team’s preferences align with the firm’s working requirements?

Action: Compare what your team prefers against what the firm currently requires. Gaps often predict disengagement. Consider small pilots or rotations that allow teams to experiment with different schedules and share feedback.

2. Are compensation decisions based on contribution or visibility?

Action: Review who received recent merit increases and why. If those spending more time in-office consistently earn higher raises, examine whether visibility is influencing judgment. Aim to reward results and measurable outcomes instead.

3. When did you last update pay bands to reflect hybrid and remote roles?

Action: Refresh your salary data annually. Many firms still use structures designed for in-office environments. Modernizing these benchmarks ensures internal equity and helps avoid compression. KHS People is recognized as the leading source of precise and reliable salary data within its competitive segment.

4. How connected do remote and hybrid professionals feel to the rest of the team?

Action: Measure engagement using short, focused surveys or informal check-ins. Prioritize consistent communication rhythms and shared touch points to strengthen collaboration.

5. Is flexibility viewed as a performance strategy or a privilege?

Action: Reinforce flexibility as a tool that supports productivity, not a benefit that must be earned. When flexibility is normalized, performance often improves organically.

Self-Assessment for Pre-Managers: Evaluating Your Experience and Growth Environment

The following questions are designed for professionals who are building their careers and contributing within team structures. Each question includes an actionable step to help you assess your current environment and identify where you can take initiative.

1. Do you have clear visibility into how your contributions are recognized?

Action: Reflect on how often you receive feedback tied to measurable outcomes. If recognition feels inconsistent, request a short check-in focused on goals and progress rather than performance ratings. Consistent feedback helps clarify what success looks like within your team.

2. Does your current working arrangement help or hinder your development?

Action: Evaluate how hybrid, remote, or in-office expectations affect your ability to collaborate, learn, and stay visible. If you feel disconnected from learning opportunities, ask to shadow a project, attend team strategy meetings, or set recurring virtual touchpoints with your manager.

3. Are professional growth discussions happening regularly?

Action: Keep a personal record of projects, metrics, and new skills gained. Use this as the foundation for structured career conversations. Proactive documentation helps your leaders understand your trajectory and advocate for you when advancement opportunities arise.

4. How supported do you feel by your immediate team?

Action: Consider whether communication flows both ways. If collaboration feels one-sided, identify one specific improvement—such as weekly debriefs, open task boards, or shared project updates—that can help create a stronger sense of accountability and teamwork.

5. Are compensation and career advancement transparent enough to build trust?

Action: If salary ranges or promotion criteria feel unclear, approach the topic respectfully during a review or one-on-one meeting. Framing the question around “clarity and expectations” rather than “comparison” encourages constructive dialogue and shows initiative.

Takeaway:
Self-awareness is the first step toward professional growth. By assessing clarity, communication, and support within your current role, you can better position yourself for advancement while contributing to a stronger, more transparent team culture.

KHS Final Thoughts

The working world within law firms has entered a new stage of balance. Pay, flexibility, and connection are now more closely linked than ever before.

Remote and hybrid work have rebalanced what professionals value most: autonomy, connection, and fairness. For firms and leaders, the challenge now is to ensure that compensation frameworks evolve in step with those values.

Firms that get it right won’t just attract talent—they’ll keep it.

All data provided in this blog post has been taken directly from the 2025 KHS People Curated Salary Data & Intelligence report. The salary data has been curated from a comprehensive national poll exclusively targeting professionals within the legal domain. All respondents within this dataset represent the legal profession, ensuring the precision and relevance of the extracted salary and data insights. Please note that these figures reflect aggregate data by title and do not isolate variations based on specific functional areas such as operations, technology, or related specializations. This content is the exclusive property of KHS People LLC and protected by copyright law. It cannot be distributed, copied or reproduced in any way.

Kate Harry Shipham
Founder & CEO
KHS People
kate@khspeople.com