Byte of Prevention Blog

by Jay Reeves |

Business Originations and Lawyer Compensation

Many books about partner compensation are written from a BigLaw perspective. But authors Camille Stell and Brenda Barnes recognize that most lawyers work in smaller and mid-size firms where core values and personal relationships mean so much.

With RESPECT – An Insight to Attorney Compensation Plans, the authors have written a clear, straightforward guide to partner compensation for those law firms in which culture really matters, collegiality and client service are genuine priorities, and respect among professionals is meant to be strengthened every day. Partner compensation in smaller and midsize firms is about more than just money.

This guide to attorney compensation includes:

  • Compensation formulas
  • Origination credit and equity
  • The role of the Managing Partner, along with a job description
  • Compensation carve-outs such as paying non-equity partners
  • Compensation system biases
  • Trends in compensation 

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How to Handle Business Originations
Sneak Preview of RESPECT: An Insight into Attorney Compensation Plans

Below is an excerpt from RESPECT: An Insight into Attorney Compensation Plans, by Brenda Barnes and Camille Stell (reprinted with permission of the authors):

Businesses thrive only when they have sales – and lots of them. To increase top-line revenue, firms must continually generate new business. In professional service firms, sales, or business development, is generally referred to as Business Origination. 

Whether or not your firm tracks originated business or compensates attorneys for new business, it is vital to understand the importance of the top line. A healthy top line performance allows firms to consider strategic planning as opposed to focusing solely on attorney productivity. 

Deciding how to reward a partner for bringing in new business isn’t always straightforward. For example, what does it mean to originate business? Who gets the credit for a specific client or engagement? What about additional matters generated by other attorneys for the existing client? How long is it fair to compensate for this contribution: forever or through a certain period of time?

A book of business is the size of the client base that partners are responsible for managing and for which they receive credit in the firm’s partner compensation system. A book of business can either be originated (known as “finder” credit”) or inherited (known as “minder” credit). Many partner compensation systems pay attention to business origination as an important contribution to the success of the firm.

Many firms generate new revenue from referrals made either by clients or other external sources such as law school classmates, friends or family. Typically, the sales process is shorter. But it still requires effort to close the sale. Many firms treat referrals the same as finder sales because it does take additional effort to close the sale.

Often the best and easiest new revenue is from the existing client base. For example, if your client has generated a litigation matter, are there other litigation matters that can be generated? Another example would be additional trademark work for a trademark client. 

Source: RESPECT – An Insight to Attorney Compensation Plans


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About the Author

Jay Reeves

Jay Reeves practiced law in North Carolina and South Carolina. He was Legal Editor at Lawyers Weekly and Risk Manager at Lawyers Mutual. He is the author of The Most Powerful Attorney in the World, a collection of short stories from a law life well-lived, which as the seasons pass becomes less about law and liability and more about loss, love, longing, laughter and life's lasting luminescence.

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