what is the lehman formula 
the lehman formula is a compensation formula developed by lehman brothers to determine the commission on investment banking or other business brokering services lehman brothers developed the lehman formula also known as the lehman scale formula in the 1960s while raising capital for corporate clients understanding the lehman formulaas a provider of global investment banking services lehman brothers needed a way to clearly convey to its potential clients the fees they would charge for their services it typically involved a sliding scale of percentages applied to different dollar amounts so that different tiers of money would receive different rates the advantage of the lehman formula is that it s easy to understand and easy for the client to quickly get a ballpark estimate on how much their transaction might cost them in fees it s not uncommon for large investment banking firms to assist clients with transactions worth hundreds of millions or billions of dollars the lehman formula structures the investment banking fee on a percentage of the transaction amount with a set of tiered fees 