Attorney Compensation

Hi there, Linda Artesani, Artesani Accounting. This week it's all about attorney compensation. Yes, we've covered this topic before, but this time we're gonna talk about it as far in the aspect of firm growth and maybe a few metrics you haven't thought about. If you're a lawyer that runs a profitable firm and you're in growth mode, we have a lot of clients like that, which is fantastic. It's a lot about just not so much about growing your firm with gathering more clients, but also gathering the team behind the clients, the team that's going to support your firm growth and support you in providing great service. And ultimately, at the end of the day, it's all about client experience and how your clients really feel about working with your firm. Most firms, if you ask them today what's their number one marketing tip, and they're going to say it's referral-based. I get all my clients based on referrals, and that's a wonderful thing. But have you ever been in a place where you're getting all these referrals and you don't have the manpower behind it to provide that good service? Are you overworking the clients, overworking the attorneys that you have today? And maybe that's part of it. So there's a couple of models, compensation models that we see all the time. And depending on the size of the firm, depending on how old the firm is, you might experience one that rewards on tenure. So the longer the people work at the firm, I'm sure you've all heard climbing the ladder, getting yourself to the partner position, a great goal to have if you're working at a firm, but sometimes that backfires. And especially with today's, Young people coming into the firm, your millennials, your Gen X, even your Gen Z coming in to work at the firm, they like to be rewarded. Thank you, baby boomers, of which I'm one. We've grown this group of people that expect instant gratification. Also, I think technology has created that scenario. So they don't— they get impatient. They don't really want to grow with a firm, and they don't even see themselves as working at a firm for 20, 30 years. Like, that would be like wearing the crown jewel. when I was growing up, but now people are literally looking at how can I use this job as a stepping stone to move on to maybe my own firm or move up the ladder rather quickly, and they're looking at it from that way. So that traditional model, you know, they call it the lockstep, the seniority model. You know, you work hard, you get bonused out for your efforts and eventually become partners. Sometimes that doesn't work. A lot of Gen Xers or Millennials will look at working in a firm from that aspect as the person bringing in the work is bringing in the work, the rainmaker, but then we're working hard, we're the grinder, we're the one working really hard, and we're not really being compensated. The person bringing in the job brings in the job and they're done. And they tend not to like that. They like to be rewarded for their efforts. So that's where that model might backfire. So if you're a firm looking at compensation models, you might want to bypass the tenure model only because that may not be the way to work for gathering great young talent, and we need that to thrive and survive today. You've probably heard the term finder, minder, grinder. Finder is the originator. They get that 10%, usually across the industry. That's pretty fair. They get 10% for bringing in the work. The minder position, I think, is one that seems to be forgotten in the mix. It's the person who kind of massages the relationship of the client and the firm, and I think it's an important relationship to have, and it's probably not rewarded enough. And then of course the grinder is the one doing all the legwork, doing all that work behind it. So all 3 positions are definitely important. If you don't have the rainmaker, you're not going to have the work. If you don't have the minder, you're not going to get the referral work. You know, the grinder, the work doesn't get done. So those are all important. But if you're looking at the lifetime value of a client and maybe looking at how the referrals will be brought in. Sometimes that minder is really important. And being that type of firm that's finding the client-centric model where you're rewarding the person bringing in the work, we see that as well around law firms, that that person's really treated as the best. It depends on the practice area. Sometimes it's necessary, but that person finding the work and maybe not delegating it out or giving it to the right attorney on staff doesn't make for that team we're all working for that same firm. It actually encourages some competition in the firm, and maybe somebody getting it wants the bonus, so they're not going to hand it off to the attorney that might be the best one. So that's one thing to think about if you're trying to grow your law firm the smart way. I think the best way to look at becoming that future-ready firm is to come up with more of a hybrid model. Maybe reward the attorneys on staff that actually come forward and embrace technology. Technology is really the way we're all going to survive through a lot of the changes in the world, and it's something we should be embracing. We've worked with many firms where we've done a lot of data migration and taking them off of some of the antiquated systems like Juris or PC Law, Abacus. Just the name Abacus alone will tell you how it's an antiquated system. It's desktop, it's siloed. Maybe the firm hasn't started to think about adding QuickBooks Online Advanced and getting the power behind that product. but they're still sitting in some kind of a desktop-type scenario with their time and billing, and then metrics that they get out of that are just sitting in a desktop program. The 2 systems don't talk. And that's where you're going to see that technology is failing that firm, and it's not really something sustainable. We want to see people really move towards a workflow that works in synchrony. All the pieces kind of work, and we do have that workflow in place. Last week's article kind of shows and gives you a little taste of that. So ultimately attorneys, the product they sell is lawyers doing good work. That is the law firm's product. And I think that if you're looking at growing your firm, maybe start to look at embracing technology, rewarding attorneys and people on staff, maybe even the paralegals or legal assistants, all the people, everybody's important to that work getting done and reward getting the matters done efficiently. That might be the best driver of your compensation plan. I hope this article is helpful. And if you want to stay in tune with more of my articles, we dive into a lot of those important topics for mid-market law firms or small firms that are growing. Just subscribe and you'll— you won't miss an article. So on that note, I hope you'll have a wonderful, wonderful day. Bye now.