Tuesday, September 1, 2015

Fair Share

Based on some recent comments, one of our readers wants to know what percentage an associate should get when they bring business to a firm? What does your firm do? Is it fair?

16 comments:

  1. It depends on the type of case. A bonus should clearly be looked at if a percentage is not considered or appropriate. Rainmaking is part of the job but it is always good to feel appreciated. I've done as high as 20% in some civil cases.

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  2. I guess my question would have to be once the case is brought into the firm, who does the work on it? If the salary is already based upon working a set minimum hours on firm work, and the associate works the case that they bring in without increasing their hours to cover the work they are already being paid for, isn't that not fulfilling the duties for the original salary, or in the alternative a form of double dipping?

    Now if as a result of bringing in the work, it provides work for someone else to do and increased revenue, then certainly they should receive additional compensation for that benefit

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  3. I'm an associate. I get 20%. The result is that I bust my ass to originate more work. Our firm has had to hire another attorney because of my marketing and may soon add another. Originally, I was the only one working on these cases, but as momentum has built, it's turned into a win-win for myself and the partners. They are making more money and I'm making more money. Aggressive marketing, however, is like having another part-time job, but well worth it.

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  4. At my prior firm (~10 attorneys in local office of ~400 attorney regional firm) it was 10% origination fee if the originator didn't do the work and 20% if the work was done by the originator.

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  6. It depends on a lot of things. If that associate is neglecting his other work in order to try to make rain, yet the associate only makes a drizzle, then why should he get paid more and get patted on the back?

    These big firm percentage structures often don't make sense. If an associate brings in a case or two over the course of the year, then take that into consideration in the associate's end-of-year bonus and potential raise in salary. But to create an incentive to bring in business when the associate otherwise sucks in that area and is better off billing out hours is nonsense.

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    Replies
    1. Classic fat cat partner-think. Why does an associate have to be neglecting his/her own cases to bring in work? Can't a young associate do the assigned work as well as bring in new business? Why shouldn't an associate be incentivized to bring in work just like partners are? Under your model, all associates would be paid the same amount (subject to a discretionary bonus) no matter the work they brought in. You wouldn't do that to a partner, so you shouldn't do it to your associates. If your firm is so busy that there is no way that an associate can handle even one more case, you need to hire someone. Stunting an associate's growth may make it easier to justify paying your associates less and may make them less marketable to another firm, but it is a terrible way of doing business.

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    2. 10:47 here.

      OP sounds like someone I would never consider working for. As an associate, I will originate almost $300,000 of collected, billable work this year. I realize there are partners and solos who dwarf that number, but I feel pretty good about it. And the partners I work for are pretty happy because I more than pay for myself, they've made bank off me this year. And their loyalty to me strengthens my loyalty to them. OP sounds like a zero sum game thinker. 1:00 PM is right. There's no reason why an associate can't hit their billable AND market. It's 1.5 full time jobs, but for me, it's worth it. It means that I go in early and stay late so that I can use my lunch hour to attend events and develop business. I spend quite a bit of time at home in the evenings working on marketing too. No one makes me do it, I've been incentivized. The sky is the limit for me and for the dudes I work for.

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    3. Congrats to 1:20. But I do want to point out that, when I worked at one of the Las Vegas "BigLaw" firms, I saw a lot of associates that 12:37 describes, and they were all let go. At least where I worked, the type of company that can afford Ballard Spahr/LSC/Greenberg Traurig/Akerman/etc. generally wants an "experienced" (read “old”) lawyer working on their case. Based on this generalization, partners at the big firm I was at started thinking that anyone willing to talk to a junior associate about their work couldn’t afford our rates. I had some friends that were multi-millionaires in their later 20s and had very successful businesses. Even when my friends got over their justified “why would I pay you $350 an hour when I can pay the experienced solo down the road $200” concern, and they finally came in the door, several partners refused to help because they looked at my clients as second-tier and unlikely to pay. I got a tiny bonus that wasn’t worth the effort of convincing my friends to come in and then lying to my friends about why the partners ignored their calls. I figured fuck it, and I stopped trying to bring in work. Other associates I worked with weren’t as easily persuaded. They worked hard at getting their names out there—all making the superlawyer-type lists. They put serious effort into bringing in work and eventually brought in some relatively small cases, which were all treated as low priority. They struggled to hit the unstated, but well-known 2000 billables requirement. They also had some negative reviews, which I think would have turned out differently if they weren’t out spinning their wheels chasing work without the support of the firm. They were all canned very early in their careers.

      This is all to say that, if you work at 1:20’s firm: go out and try to bring in work for the firm. If you work at my old firm, I wouldn’t bother. I didn’t see it work out well for anyone.

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    4. 10:37 here. I think 1:00 is assuming some sort of small associate pay. I didn't say that. I pay them very nicely. And it's a team effort. If I can hand huge, large-paying matters to the other attorneys at my firm, and I pay them well and bonus them more when we do well, then why on earth would I want that associate (or partner) wasting time trying to find new business when I can hand that attorney large-scare, profitable business. This is a team-effort, not a blog discussion about why associate attorneys are underpaid.

      Yes, I want them to develop reputations so they get big referrals which ultimately help the firm, but if they're hanging out at Toastmasters and Boy Scout meetings try to mingle and get small-scale work rather than billing large matters that I'm handing them all day long, then they're not working for the benefit of the team. It's that simple. And my financials agree with this approach.

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    5. To 6:00 pm:

      2:36 here - this approach works fine for an employer. And god knows there will be plenty of associates willing to jump in the job line no matter how what. That said, young attorneys feel more secure if they have a book of business that they can rely on if the firm doesn't work out. If they aren't getting that, they might look for the exits. I did. I didn't go to a firm where I could build a book of business. Instead I figured if I'm going to be a cog, I'm going to be the highest paid cog possible and I moved to an even higher paying firm.

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    6. I applaud an associate originating $300k in work in a year. But let's not get ahead of ourselves and call that a "book of business." A book of business generally means repeat work that is portable. If you handled a bunch of one-time cases for individuals not likely to need help again in the near future that's not a book of business. I definitely think it's better than originating none, and it does show a future employer that you hustle and have the ability to originate. But $300k in originations one year doesn't necessarily mean $300k in originations the next year.

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  7. 10-20% will usually incentivize an associate to work on business development while also hitting his/her expectancies.

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  8. Discretionary bonuses are all bullshit. That's where you bill 2400 and get a $10,000 bonus and the other associate bills 1800 and gets $5,000. Why the hell would you do the extra 600 hours? My old firm was super fair and had a formula for bonuses, which I implement in my own firm today.

    As for origination, young associates should always focus on marketing. If/when layoffs happen, you need your book of business. The guy originating $300k worth of work can likely move with his book to another firm in a heartbeat if he stops feeling the love. But I agree that some firms are condescending when you start trying to build your book and they lack any support. In that context, you should still try to bring in your own clients and work those cases yourself.

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  9. 10:32 here.

    I completely agree with what 2:50 says. Activities that benefit the firm above what the salary was intended to cover should be rewarded. Even if marketing replaces a certain amount of work such that the combined efforts don't exceed the firm benefit intended by the salary, its still worth doing without additional compensation at the present time. It has future benefits that compound over time far more than the simple hour compensation model.

    If the combined benefit exceeds the value to be compensated by the salary, and there is no recognition of that fact by the firm, then it may be time to re-evaluate your relationship with that firm.

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  10. I think the common thread with every option I've heard above is that you need the firm and the associate on the same page as to what's valuable and worth pursuing and what's not, and that their compensation model needs to reflect their shared priorities. If they don't have shared priorities, it doesn't really matter how well the model works in cases where they do, it's going to suck in that case for both firm and associate.

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