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September 2017

Sep 27, 2017

Associate Attorney Business Development – Becoming a Rainmaker

Question: 

I am an associate attorney in a ten attorney firm in Atlanta. The firm represents mid-size to small businesses – transactional as well as litigation. There are six partners and four associates in the firm. I graduated from law school two years ago and have been with the firm for two years. All of my work is given to me by the partners and since joining the firm I have not brought in any clients. When I joined the firm I was told not to worry about bringing in clients – the firm has plenty of work. I am paid a salary and a bonus if my billable hours are at a certain level. There appears to be no desire by the partners for me to spend time developing clients. I have talked with my peers in other law firms that tell me that this is short sided and that developing clients is a major factor in their firms for associates to be considered for partnership. I would appreciate your thoughts on what I should be doing and what direction I should take.

Response: 

I agree with your peers. Whether you are encouraged by your partners or not developing “rainmaking” skill is an important skill that you should develop and will be a major career success factor if you remain in the private practice of law. While your partners hired you to primary be a “worker bee” and work on their matters, down the road it will become more important for you to develop business. It takes time to develop “rainmaking” skills and a network of contacts and the sooner you start the better.

In spite of many of the marketing initiatives undertaken by law firms, a majority of the business that comes to many law firms is through personal and professional referrals – from people a lawyer knows. The more people you know the more opportunities you will get. The value of your network is worth more than the sum of its parts, and that value grows geometrically over time and with the size of your network.

Lawyers who consistently find a modest amount of time for client development and invests it wisely will have a much easier time later in their careers when they must bring in business to get promoted than those who wait.

One of the problems that many law firms are facing today is not enough business and not enough rainmakers. Don’t wait for your partners to encourage you or to be compensated or otherwise rewarded. Invest your time in developing your network of contacts even if it requires dedicating some personal time and consider it an investment in your career and future.

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John W. Olmstead, MBA, Ph.D, CMC

Sep 20, 2017

Compensating Your First Associate Attorney in a Law Firm

Question:

I am the owner of a law practice in Belleville, Illinois. My practice focuses on real estate, estate planning and administration, and bankruptcy. I have three legal assistants. While I have been in practice for ten years, I have never hired an associate. I have a busy practice and now is the time. I have identified a candidate with six years experience that I want to hire. He has business that he can bring with him. He has been working with a larger firm as an associate and has been paid a straight salary. My next step is to make him an offer but I am struggling with how to pay him. I would like to hear your thoughts.

Response:

Some small firms put associates on an eat-what-you kill system based upon fee revenue collected from clients they bring in and fee collections from other matters they are assigned. They are they paid a percentage – ranging for thirty to forty percent when the fees are paid. However, in most firms associates are paid a salary and possibly a bonus based upon performance. Bonuses may be discretionary or formulaic based upon performance factors such as billable hours, working attorney collected fees, client origination collected fees, goal attainment, signed engagements, etc. Personally, I think a salary plus and discretionary bonus is the best approach for new associates.

However, in your case with an associate that is more seasoned and that has a book of business I think you should consider a salary with a formulaic bonus based upon his working attorney fee collections and client originations. Here are the mechanics:

I would also set a minimum performance expectation of $240,000 for the salary that is being paid.

You could also include non-billable goal attainment bonus as well but you can always add that later.

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John W. Olmstead, MBA, Ph.D, CMC

Sep 13, 2017

Institutionalizing Your Law Practice

Question: 

I am the sole owner of a six-attorney estate planning practice in Phoenix, Arizona. The five associates have been with me from five to fifteen years. I just turned fifty-five and would like to retire when I am sixty-five either by selling my practice to another firm or to one or more of my associates. I would like to receive some remuneration for the sweat equity that I have invested (goodwill). I have tried over the years to setup my practice in a way that it is not “just me.” I changed the name of my firm to a trade name that does not include my name, arranged the lawyers names on our letterhead and website alphabetically, and eliminated designations such as principal and associate. I believe that I have made it difficult for clients and prospective clients to know who the boss is. I hope that this will make my firm more salable and appealing in the future. I would appreciate your comments.

Response:

I took a look at your website and thought it was pretty easy to see that you are the firm. For example:

I suspect that you are the rainmaker and in spite of any advertising that the firm does and your website most of the firm’s business comes from your referral sources, past clients, and your reputation.

I believe you have to do more than what you have done to institutionalize your practice. Here are a few suggestions:

  1. Motivate and push if necessary your associates to write and publish and get these works posted to the website.
  2. Motivate and push if necessary your associates to give presentations at bar and other professional association and community events.
  3. Motivate and push if necessary your associates to present firm seminars.
  4. Post your associates works to your website and to their bios.
  5. Require your associates to become certified as estate and trust attorneys with the Arizona Bar.
  6. Consider revamping your compensation system to motivate and reinforce the above activities.
  7. Incorporate the above as “performance factors” in annual performance reviews.
  8. As time passes if you find that your associates are unwilling to step up to the plate consider hiring different type of lawyers in the future.
  9. Do more advertising to increase the business that comes into the firm from other than your personal reputation.
  10. If you have not already, fully document your office procedures and automate your practice.

If you are able to accomplish many of the above suggestions you will be on your way to institutionalizing your practice.

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John W. Olmstead, MBA, Ph.D, CMC

 

 

 

 

 

Sep 05, 2017

Law Firm Key Financial Goals/Metrics

Question: 

I am a newly elected managing partner of a fourteen lawyer firm in San Diego. While I was elected to this position I feel handicapped since I don’t have a financial background. What metrics/measurements should I be looking at?

Response: 

Here are a few metrics that you might want to consider:

Once firm goals, financial and non-financial are formulated, either run reports that are available from your system or develop special Excel reports than measure goal accomplishment.

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John W. Olmstead, MBA, Ph.D, CMC

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