Attorney Compensation: Growing your Firm the Smart Way
If you are a lawyer that runs a profitable firm and is in growth mode, your compensation package will help you to gain and retain great staff. Remember, all law firms compete for staff and clients.
Our accounting firm has processed many compensation plans from the most basic to some that are seriously complex. Let’s unpack the pluses and minuses of two of the most common methods and how they are structured:
Reward rainmaker, i.e., Originator
Tenure or Seniority Model
With rewarding tenure, this is the traditional model. You worked hard, you hung on and the longer you stayed at one firm, you grow to become partner. I think this seniority-biased scenario worked great years ago. With Gen X and millennials, they don’t have the patience to wait that time out, and let’s face it, millennials want to be rewarded for their efforts.
The theory behind the tenure model is when you are hired in an established firm, you learn from the best and pay your dues, you get rewarded. Of course, the flip side is you leave the firm because there is no chance at partner.
With that thought in mind, there is an underlying idea that every attorney can do everything well, which we know is not always the case.
Originator or Rainmaker Model
The second method, the rainmaker, is based upon the belief that originating is the biggest driver of compensation. An originating attorney is held in the highest regard as they are bringing the work in. The originator gets a percentage of the revenue on the matter.
You may have heard the terms, “the finder, minder, and grinder”. That is typically a part of this method. The Finders are the rainmakers, they find the clients or work. The Minders care for the clients which can lead to repeat clients. The Grinders do the hard work. They are the responsible attorneys.
All positions are important, but you can see where resentment could build with this compensation model.
Being that rainmaker or originator is often the most touted, however, that minder position can result in good lifetime value (LTV). Firms that don’t have repeatable revenue streams need to lean into the finder role. A minder can lead to referrals.
Finding that client-centric model
I believe that the method that will be the most successful will be the “excellent client service” model. After all, great client experience is the number one key to success. Do you stay in touch with the client? How responsive are you?
Clients don’t care how you get there. But they do care how they are treated and ultimately, they care about the results. A profitable law practice puts client experience front and center.
Additionally, a modern law firm should reward staff for embracing technology. Reward getting the matters done efficiently. Make that the driver of your compensation plan.
If you make these changes over rewarding tenure, you will set your law firm up to be more efficient and hire proactive, forward-thinking attorneys for your staff.
Good lawyers doing the work, that is the law firm's product. A client doesn’t want to buy a law firm’s inefficiencies. They want to buy your expertise. Keeping that client front and center will allow for firm growth, happy clients, and a profitable law firm.