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Introduction

Let me just state the obvious: don't get obsessed with money. I hate the way some people are with money, and I'm sure a fair number of people feel the same way. But you want to be sure that you are paid within a reasonable range of what your services are worth. For this need, I recommend a professional executive compensation expert who can assess a person's compensation and skills, and value to the employer. But if that is not an option, there are other ways to justify fair compensation.

Contractual Compensation

The person with the clients calls the shots...it's that simple. Your best bet in terms of making money is to develop your own business opportunities and bring those to your firm under whatever contract or arrangement you have with your firm. Ideally, you're already a partner, because partners can always justify origination bonuses or larger percentages if the numbers make sense. I would stay away from the idea that the originating attorney "owns" the case or cases that come in. The portable book of business that the partner "owns" is not how you build a viable law firm; it's how you build a fiefdom with a bunch of unrelated businesses under one roof that merely share common area expenses. On this point, I have to give credit to the big firms, where cases are simply too big for one person to handle or manage. Smaller firms should ensure that they provide appropriate compensation and incentives for lawyers to stay and bring in more cases, regardless of whether the lawyer bringing in the cases is a partner or associate. Associates should have clauses in their contracts that provide origination bonuses or additional compensation for bringing in actual cases, plus a marketing budget so they can go to events or participate in groups where clients are likely to be found.

Exploiting Opportunities

So far, I have found that Yelp and Nolo are the two most effective sources of new cases rather than in-person marketing opportunities. However, I recently expanded my efforts with a club membership and I will see how that goes. My point is that firms should budget generously for their members to do stuff like this, because new cases and a stream of business and satisfied clients are the root of additional compensation.

Greed

Over the years I have found that most firms are simply too greedy for their own good. For example, at one firm where I worked as a contract attorney, I was paid $85 per hour and billed out at $350 per hour. Honestly, that is obscene, but I wasn't in the best negotiating position (and that's how they get you). At a different, more appropriately compensated position, I was paid $75 per hour and billed out at $175 to $200 per hour. Although paid slightly less, that was a much better and more fair arrangement with better co-workers and just a better situation. I would be wary of any firm that doesn't pay at least one-third of the actual billable rate to a contractor, or slightly less to an employee to cover benefits. Also, you can usually tell in the interview whether a firm is run by a cheapskate or not by asking about how the attorney handles write-downs. Does the lawyer pay the contractor's bill in full and then absorb the write-downs the lawyer makes? Hopefully, because there is nothing worse for a contractor than having his contract attorney time written down by 40% due to the hiring attorney's greed. That happened to me once with a guy who turned out to be really sleazy, and it didn't work out. The better arrangement is where the hiring attorney pays the contractor's bill with essentially no questions asked, and covers the write-downs out of his own substantial profit. Another red flag to watch out for is the timing of payments to a contractor or employee. You want to avoid situations where the hiring attorney says that payment will be made as soon as the client pays. It is the hiring attorney's job to come up with the money to pay a contractor or employee. If a firm or sole practitioner can't withstand $2,500 every two weeks for a part-time contractor, they should really not be in business. What they are doing with a late-pay arrangement is advance their own business at the expense of the contractor or employee by effectively borrowing from them. That is a gross exploitation of people who need money, and would be illegal for non-professional employees.

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Last updated: July 6, 2018

© 2018 Andrew G. Watters

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