Law Firm Metrics for Solo Attorneys to Get Ahead of Your Competition

Want your solo firm to grow?

First, you’ll need to figure out what that means. “Growth” means different things to different people, doesn’t it? Some solo attorneys would like to build a firm. Others prefer to build a business that provides them with the opportunity to provide value and a comfortable lifestyle.

Goals aren’t created equal.

If you’d like to create growth, whatever that means, you’ll need to identify the law firm metrics that matter most for your business.

The law firm metrics that matter most

Here’s the problem.

If you’re like most solo attorneys, you don’t know which law firm metrics matter most. You’re not clear on a few variables, such as: (a.) which metrics do you track? (b.) when/how do you track them and (c.) why do these metrics matter?

Google isn’t much help either.

Search through Google and you’ll find there’s a significant amount of variance on the issue.

Should you track…

• Profitability per partner (just you)?
• Your overall utilization rate?
• Billing and collection realization rates?
• Timekeeping performance data?

Attorneys aren’t sure what they should be tracking. Even if they did know, they’re not sure on when to collect the data or why. What’s worse, there’s a significant amount of disagreement from the experts.

What are you supposed to do?

First things first, you’ll need to deal with the hidden assumptions that plague the process of performance improvement.

What am I talking about?

The vast majority of educational pieces that focus on a particular set of metrics begins with a specific set of (hidden) assumptions.

Here’s a quick example.

If firm profitability is your goal, you’ll want to focus your attention on financial metrics:

• Profitability by client
• Profitability by practice area
• Profitability by timekeeper (you)

If you’re interested in tracking profitability, it’s absolutely perfect! You simply dive into the list of metrics you need, iterate on your performance, keep/fire a few unprofitable clients and you’re all set.

What if profitability isn’t your focus?

See what I mean?

Which metrics are best for your law firm?

They all have value.

The vast majority of law firm metrics provide solo attorneys with an incredible amount of value. I’m willing to bet you’re looking for a specific set of metrics, am I right?

Most attorneys are.

Here’s what that means for you. You’ll need to identify the metrics that are most important to you. To do that, you’ll need to focus your attention on a few specific details.

1. Goals
2. Temperament

1. Goals: Clarify what you want

Your goals determine what you want. Your metrics show you whether you’re on track and making progress towards your goal.

• Increasing your profit per client is a goal
• Increasing your profit per client by a minimum of 30 percent is a good goal
• Increasing your profit per client by a minimum of 30 percent in 120 days is an excellent goal

If you don’t have a goal, or you’re focused on the wrong goal, your metrics can’t provide you with the value you need to produce the progress you want.

Goal setting is important because it shows you:

• Where your focus really lies (e.g. financial, productivity, time management, freedom, etc.)
• Whether your current focus is in line with what you want
• What you’ll need to change to get what you really want

It sounds like an unproductive exercise to many, but it isn’t. It’s the foundation you need to produce the results you want in your solo practice.

2. Temperament: A filter for your day-to-day experience

Beverly Flaxington, author of Understanding Other People: The Five Secrets of Human Behaviors, outlines the six major schemas people use to function in the world.

1. Utilitarians: These attorneys are driven by value and ROI. The utilitarian wants to find the most efficient and direct path to their desired goal. They’re driven by one thing and one thing only. Results.
2. Individualists: These attorneys are driven by ego. This sounds bad but it doesn’t have to be. These people are driven by prestige. They want to be recognized. To win awards, to see their names on walls. These attorneys may come across as arrogant but they’re incredibly hard workers who are driven to produce amazing things.
3. Theoreticals: These attorneys love to learn. Their job is one big classroom, an opportunity to learn a significant amount about the legal world around them. They’re curious, fascinated by their work and often scholarly in their approach.
4. Socials: These attorneys want to do good for others. These are the public defenders, the legal aid attorneys and those whose work takes a humanitarian approach. How will this impact/affect my clients? How will this impact those around me? My support staff?
5. Traditionalists: There’s a right way and a wrong way of doing things. These attorneys believe that a specific set of rules exist in their industry for a reason. These rules should be followed to the letter. Everyone (including them) must abide by these rules without question.
6. Aesthetics: These attorneys are searching for beauty. Beauty, aesthetics and perception are important drivers of behavior. These are the attorneys who are focused on image, appearance and They know perception matters, so the optics of a particular situation are incredibly important to them.

Schemas are thought patterns.

A mental framework people use to interpret and organize the information they receive in the world. Think of them as perceptual sunglasses. You put on blue-tinted sunglasses and the world looks blue, etc.

These schemas are easy to dismiss.

But, they control the way you, as an attorney, view and interpret the world.

• Utilitarian attorneys are far more likely to focus on specific metrics like profitability, realization and
• Social attorneys would focus their attention on finding good people to work with, on turnover rates for their support team (e.g. receptionist, paralegal).
• Theoretical attorneys would focus on all of it, taking in a massive amount of information that would overwhelm every other attorney.
• Individualist attorneys would gravitate towards (and obsess over) the metrics that make them look good (e.g. awards won, media mentions and their overall win rate).
• Traditionalist attorneys would carefully identify and choose a set of metrics they feel are important to them, then hang on for dear life. Change would be more difficult for them as any change is a violation of their traditional (unchanging values).
• Aesthetic attorneys would prefer to focus on metrics that improve public/client perception (e.g. appeal, win rates, prestige, attractive office, connections, etc.), but would begrudgingly focus on core metrics (like profit).

See what I mean?

These schemas control your focus. There is, however, a significant upside. Your awareness of these schemas gives you a choice. You’re able to objectively look at your preferences and make a choice about the metrics that objectively matter most to you.

You’ll want to identify your primary, secondary and tertiary metrics.

• Primary metrics are about survival, these are the metrics you check regularly
• Secondary metrics are about growth, the ones you monitor on a semi-regular basis
• Tertiary metrics are concerned with expansion, those you monitor less often

This needs to be defined by you.

Your goals and temperament will dictate whether you monitor these metrics or not. You’ll want to monitor the important metrics daily without fail.

Why did I take so long to get to these metrics?

Because you’re going to need a system to divide up the list of metrics below. Most people who look at the list below are overwhelmed. They don’t know they can pick and choose or how to start.

The framework above tells you.

Go through these metrics, using your goals and temperament as a guide. Identify the metrics that are survival, growth and expansion-oriented.

The list of metrics solo attorneys need to monitor

Survival metrics
Client satisfaction rating (	Current run rate
Breakeven cost (min. needed to cover all expenses)	Current expenses (monthly)
Balance in your operating account(s)	Current anticipated expenses (expenses from run rate)
Balance in your trust accounts (unbilled only)	Number of new clients per mo.
Amount of accounts receivables	Number of new cases/matters opened in last full month
Amount of outstanding accounts receivables	The value of these new cases/matters
Age of accounts receivables	Number of closed cases/matters
Firm debt (credit cards, line of credit, loans, etc.)	The value of these closed cases/matters
Number of marketing actions taken in last 30 days	Number of new appointments/consults set
List of marketing actions taken	Number of prospects (consults who showed up)
Number of consults generated from each	Number of prospects who became clients
Recommendation index (a 1 – 5 “likely to refer” scale)	Marketing expense as a % of revenue
Productivity metrics
Cycle time (number of days a matter is open)	Performance to budget (how close fee is to budget +/-)
Results to predicted outcome (accurate prediction of outcomes)	Work completion deadlines met
Re-engagement percentage (# of clients who retain firm for new matters)	Re-use index (a 1 -5 scale measuring a client’s willingness to reuse the attorney/firm)
Creativity index (clients rate attorney’s ability to solve legal challenges)	Quality of outcomes
Quality of advice	Quality of written product
Wins vs. losses	Transparency index (how transparent is work to client)
Firm utilization	Utilization per timekeeper (Includes support teams)
Profitability metrics
Firm profitability overall	Profitability by practice area
Profitability by client	Profitability by case/matter
Profitability by timekeeper (including support staff)	Profit per employee
Income per employee	Effective billable rate (firm + employees)
Realization rates overall	Billing realization rates
Collection realization rates	Lifecycle of realization (time between service performed and payment received)
Discounts and write-downs before billing	Discounts and write-downs after billing
Revenue collected per client/matter	# Clients sent to collections
Revenue collected per mo.	Amount billed per mo.
Customer lifetime value

At first glance, this is overwhelming.

I’ve just listed 58 metrics you’re supposed to track to ensure your firm is on the right track.

That’s right.

And this isn’t even everything. There’s a massive list of metrics you can use to track performance as your firm grows. You don’t have to track everything.

Survival matters most.

The metrics in that category matter most for obvious reasons. But there’s a significant upside to all of this. The vast majority of these metrics can be automated. You can and should use practice management tools to monitor this information for you.

Still overwhelmed?

You can outsource a majority of this work to reliable and trustworthy parties. Here’s a step-by-step process you can use to make that happen. Use software + people to manage this effortlessly.

You’ll want to make sure you:

1. Set up alerts: These alerts are automatic, alerting you to any potentially dangerous or problematic issues before they hit the point of no return.
2. Schedule software: If you’re relying on practice management software, you’ll want to schedule reports so they’re run automatically, on a schedule, all the time. Get everything out of your head and into a trusted software system.
3. Schedule people: Build a team of trusted, freelance/outsourced providers who can help you with the above list of metrics. If you’re doing amazing work (and I assume that you are), you won’t have the time you need to track all of this consistently. Surround yourself with software and people who can.
4. Focus on accuracy: You’ll want to provide your people and software with the information and resources they need to perform. This means you’ll need to track your time accurately, record data in your software tools judiciously and focus on doing this consistently. Skip this step and your metrics won’t be accurate.

Here’s why you need this.

Many of these metrics have important sub-metrics you’ll want to drill down into. These sub-metrics give you context about the metric itself.

Here’s an easy example.

Take a look at these three metrics.

1. Number of new appointments/consults set
2. Number of prospects (consults who showed up)
3. Number of prospects who became clients

If you’re generating a very high number of #2 but a very low number of #3, you’ll need to look at sub-metrics for clarity. You’ll want to look at (a.) the sources sending these prospects to you (b.) the messages that drew these prospects in and (c.) the problems and expectations they came to you with.

This requires thinking.

It’s hard work and it takes a sophisticated and experienced marketer’s help to uncover the details. A top tier marketer from a site like Toptal would be able to help you identify the story underneath these metrics.

They’d discover that:

• Your ad source (Facebook Ads) drives highly qualified traffic to your site
• Your marketing messages are resonating with your audience but…
• Prospects are leaving because they’ve found a different firm/attorney with a tremendous amount of positive reviews

Even if it’s bad news, it’s good news to know.

These metrics have just given you the actionable data you need to make some significant changes.

See what I mean?

Which law firm metrics matter most?

You now know the answer.

The right mix of metrics depends on your goals, temperament and priorities. If you’re focused on value and a significant return on investment, you’ll focus on a specific set of goals. If your temperament is different, so are your priorities.

Choose the priorities that matter most for your firm.

“Growth” means different things to different attorneys. Some solo attorneys want to build a large firm. Others prefer to build a lifestyle business, one that provides them with the freedom, opportunities and comfortable lifestyle they want.

It’s up to you.

Prioritize your metrics. Choose your primary, secondary and tertiary metrics.

Choose carefully.

With the right metrics, you’ll have the roadmap you need to produce the positive “growth” you’re looking for, no confusion or doubts necessary.

It’s a common problem.

You’ve sent invoices to your clients, but you haven’t received payment. You’re a professional, so you pick up the phone and call your client.

You’re hit with the news.

Your client states they haven’t received your invoice. You look into the problem and you discover that the invoice was automatically rejected due to the missing budget for a matter on the invoice.

Are you compiling and guiding your invoices?

You know invoicing is complicated.

The billing workflow in many law firms is a multi-step process.

1. Timekeepers track/reconstruct their time (if reconstructed, firms lose as much as 70 percent of their income if they wait one week to record their time)
2. Accounting creates pre-bills for managers/partners to review. These invoices then are submitted to clients
3. Accounting runs into errors with their eBilling systems and has to document them. Managers/partners have no idea that clients haven’t received their bills. Collection with accounts receivables is delayed
4. Accounting reaches out to timekeepers to resolve the issue
5. Collection teams attempt to collect on an invoice the client (a.) has never received (b.) is completely unaware of. Collection activity stops temporarily as teams work to resolve the issue.
6. If they’re lucky, managers/partners in the firm are aware of the problem at this stage, they’re unhappy. Clients may feel they’re treated unreasonably or that the firm has acted unprofessionally.

Several issues stand out here:

• Firms have lost 70 percent of their income due to attorneys reconstructing their time after just one week (many wait a month pushing losses further)
• Accounting runs into billing issues but the appropriate parties aren’t notified. Without appropriate reconciliation procedures, firm leadership may not identify the problem quickly
• Accounts receivables are delayed, disrupting cash flow. Multiply this scenario by 25 to 100 invoices and cash flow is severely disrupted
• The client/firm relationship is harmed. This leads to a breakdown in the relationship, adding yet another barrier to client retention.

Are you seeing this?

This is a common problem for many law firms. There’s a disconnect that exists at each stage of the workflow.

Compile Invoices accurately, shepherd carefully

The success of your billing workflow depends on both. There are simple strategies you can use to eliminate unnecessary disruption.

Compile invoices accurately

1. Verify and monitor contemporaneous (as-it-happens) billing in your firm. Timekeepers should track their time automatically, as-it-happens. Your practice management software should provide you with the reporting you need to audit timekeepers in your firm. Provide your accounting team with the access they need to verify compliance.
2. Provide managers/partners with timekeeping reports at specific intervals (e.g. daily, weekly, monthly, etc.).
3. Verify billing guidelines are met and that invoices are prepared per client guidelines. Work to minimize/eliminate eBilling errors and mistakes. Use a task management system to notify involved parties (e.g. managers, partners and timekeepers).

Shepherd carefully

1. Create a map of client billing expectations. Identify, ahead of time, what’s allowed, what requires client approval, and what’s forbidden. Identify the stop words and hidden rules that immediately flag your pre-bill for review. Then revise them.
2. Treat timesheets like precious cargo. Think of your time as products in a store. Each and every shred of time generates revenue. Each line item is a unit of revenue. Every improvement timekeepers and accounting teams make to timesheets/invoices increases firm realization rates and revenue.
3. Deliver unexpected news to clients before they receive their invoice. Have timekeepers and accounting review pre-bills before clients are invoiced. Verify that invoices are accurate, confirm to billing guidelines and are received by clients.
4. Use a task management system to maintain swift communication with accounting teams and timekeepers.

Is this really necessary?

Aren’t timekeepers supposed to stay focused on billable work? It seems like timekeepers are being punished with more non-billable work. They’re already overloaded is this necessary?

Absolutely.

These issues crop up at specific times in the attorney/client relationship.

1. With new clients
2. Changes to existing client relationships

In the beginning, you’ll need to pay close attention to the requirements and guidelines your clients have laid out. It requires careful attention until everyone on a client’s matter is acclimated to the way things need to be done.

Paying close attention in the beginning reduces the amount of work you’ll have to do in the end.

It’s a win for everyone.

Your invoices should be compiled accurately and shepherded carefully

It’s never a set and forget ordeal.

If you’re like most law firms, your billing workflow is a complicated, multi-step process. Give your invoices the attention they deserve.

All it takes is a little bit of your attention.

Give your invoices the upfront attention they need and you’ll reap the rewards. A 50 to 70 percent increase in revenue, a decrease in non-billable work (over time) and higher realization rates.

It’s another way to stand out.

You’re a professional. If you’re focused on serving your clients and serving your firm, you’ll do what it takes to compile invoices accurately and shepherd them carefully. With some upfront attention and a bit of effort, you’ll have everything you need to achieve sky high realization rates.

Are you overpaid? It’s an assumption your clients frequently make. They see your hourly rates, the large dollar amounts on their invoices and they pause.

It’s an easy assumption to make.

In reality, it’s actually the opposite. A large majority of attorneys are overworked and underpaid. Many simply aren’t receiving the revenue they actually deserve.

Your clients don’t see the full picture

They don’t see the large amounts of time, effort and resources you pour into their matter. They’re largely indifferent to the heavy losses you endure on a regular basis.

Your effective billing rate is partially to blame.

Attorneys are working for less than they deserve because they’re in the dark. When I use the term effective billing rate you know what I mean. I still want to make sure we’re all on the same page.

Here’s the formula.

Total annual revenue ÷ Total number of hours invested = effective billing rate

See what I mean?

When you use this formula to calculate the amount of time (billable + non-billable) you spend on a client’s matter, the results are less than ideal.

Why is that?

You’re spending (losing) a significant amount of time to a variety of sources/causes. Address these causes and you increase your effective billing rate, it’s that simple.

Here are two ways to do it.

Strategy #1: Minimize and optimize incentives

Discounts, write-downs and write-offs are a common part of attorney life. Clients use a variety of excuses to maximize their incentives.

• I shouldn’t have to pay for justice! These clients feel they’re innocent of wrongdoing. In their head, that means someone else (you, adversaries, anyone but them) should be forced to pay your fees for representation.
• “I’ll return the favor and refer additional clients your way.” This sounds like a fantastic deal, it really isn’t. It could be true but that isn’t the point. The referrals you receive are likely to be more thrifty clients who are looking to minimize your fees and maximize the amount representation they receive.
• “We’re part of the same [club/group/ethnicity, etc.]” This can work if there’s a quid pro quo arrangement. Typically what ends up happening is the opposite. You’re expected to provide a significant amount of representation in exchange for little to no money. Kneel down to accept this arrangement and these “clients” will never let you stand up again.
• “I simply can’t afford you.” This manipulates social norms in a way that solely benefits the “client.” With a little bit of implicit nudging and a lot of social pressure, attorneys are maneuvered into a position to offer their services at a (heavily) discounted rate. If this objection works once it’s used repeatedly to extract incentives and value from the firm.
• “Why is my bill so high? I’m not paying that.” Clients either haven’t received the appropriate level of communication or they’re simply unwilling to pay more than they expected for legal services. These clients know firms are afraid of losing them so they use this to squeeze more value out of the attorneys handling their matter.

Minimize discounts, write-downs and write-offs by using:

• Developing a strong value proposition: Provide clients with a proposition that is: (a.) something they want (b.) something they can only get from you (c.) something they believe you can provide (d.) something they understand. This typically requires two things: (1.) doing what other firms can’t (2.) doing what other firms won’t
• Offering bonuses, incentives and rewards instead of discounts, write-downs and write-offs. Bonuses, incentives, urgency and psychological triggers motivate clients to take action. discounts, write-downs and write-offs enable and reward poor behavior (e.g. non-payment).
• Choosing clients very carefully. Attorneys accept poor behavior from bad clients. These clients are accepted by firms because there isn’t enough business to go around. These poor quality clients wouldn’t be tolerated if attorneys and firms were filled to the brim with high-quality leads from outstanding clients. Outstanding business development gives firms the ability to say ‘No’ to bad clients.

Strategy #2: Optimize or eliminate costs and expenses

Clients today are demanding more.

They don’t want to pay for research, costs and fees. They’re unwilling to pay for first-year/junior associates. They’re using AI to reduce their need for outside counsel. They negotiate for (dramatically) reduced rates.

Here’s the problem.

You still have to pay your employees for the research. You still have to cover your expenses/fees and the licensing arrangements for the software you use. Clients continue to demand discounts.

Your margins are growing slimmer.

Reduce the amount you’re spending on research and your margins go up. Find a way to provide clients with the value they need at a reasonable price they’re willing to pay.

• Renegotiate with vendors. Request volume discounts or reduced licensing fees with your vendors and technology providers (e.g. a reduced rate in exchange for an extended contract).
• Use alternative fee arrangements to increase your rate at a price that’s affordable but repositions your client’s
• Improve attorney productivity. There are simple strategies you can use to achieve big wins in a short amount of time. Here are three easy ideas: (1.) Firms lose 50 to 70 of their revenue to time leaks. Research shows switching to contemporaneous (as-it-happens) time tracking boosts law firm cash flow and recovers previously lost revenue. (2.) Use practice management software to track and optimize attorney performance. (3.) Firm employees waste 11.2 hours per week dealing with document management issues. A document management system eliminates these challenges.
• Counter their offer. Your prospects and clients are going to push for discounts and write-downs. Counter with a better offer you’re sure they’re willing to accept. How do you do that? You use a client intake questionnaire to identify your client’s primary, secondary and tertiary problems. Then provide an innovative and cost effective solution to their secondary and tertiary problems. It’s difficult, but it’s worth it.

Eliminate your productivity challenges, optimize the performance of your legal practice and your effective billing rate goes up. Your employees are able to spend more time on billable work and are able to complete work in an efficient manner.

Effective billing rate improvement bonus strategies

• Bonus strategy #3: Improve your firm’s utilization rate: Several studies show an unpleasant truth. Attorneys are paid for less than 30 percent of their day. Optimizing your firm’s utilization rate goes a long way towards boosting firm earnings.
• Bonus strategy #4: Improve your firm realization rates: You can do this by following billing guidelines, follow billing best practices and implement excellent systems and procedures to minimize disputes.
• Bonus strategy #5: Outsource work to freelancers and AI, further reducing expenses and overhead. Here are a detailed set of instructions you can use to outsource and automate huge segments of your billable and non-billable work.

Your clients can’t see the full picture

They’re not seeing the large amounts of time, effort and resources you’ve poured into their matter. Their indifference isn’t malicious, they’re simply unaware.

You’ll need to train your clients.

Create a strong value proposition. Focus your attention on optimizing your firm. There are easy strategies you can use to create big wins for your firm. Don’t rely on your client’s faulty assumptions. Ignore naysayers who state inflated costs are part of running a firm.

You can do better.

With the right approach and a clear set of strategies to follow, you’ll have the tools and resources you need to boost your effective billing rate dramatically, no billing complaints necessary.

Will you let them help you?

Your employees want to send you an avalanche of fresh leads, new clients and more revenue. They’re eager and willing to send you more business than you can handle.

They want to see your firm grow.

They’re willing to do this and more for you. There’s just one simple condition they’d like you to meet for them. It’s reasonable, fair and appropriate.

They want the credit.

Many partners take origination credit unfairly

Kristi Dosh, a former attorney, shares a disturbing picture of origination credit gone awry.

“I brought in my first client at the end of my first year as an associate. I wasn’t actively out trying to land my first client, but I had gone out and found some pro bono work in an area the firm didn’t really practice: historic preservation.

A paralegal on my team found out about that pro bono work and introduced me to someone she knew who was attempting rehabilitation on a historic property and needed assistance with the tax credit aspect. I went to lunch with this gentleman and his business partners – alone. When I did it, I had no idea it would turn into work. Otherwise, I would have taken a partner with me. Instead, it was presented as an opportunity to network and to give a little advice to a friend of this paralegal.

Except the lunch turned into a bona fide client engagement. Exciting, right?

I can’t remember how one of the partners on my team found out about the new client, but he did. He called me to his office and told me he was having the form changed to identify him as the originating attorney.

His reason? Because it was his paralegal who introduced me.“

If you’ve found yourself on the receiving end of this you know how it feels. It is absolutely infuriating.

A partner in her firm who had never met the client, spoken with the client, or done anything remotely close to historic preservation decided to steal the credit for her work.

The result?

This act of treachery permanently destroyed her trust in this partner. This disaster soured her relationship with the firm, eventually costing the firm a talented employee.

You can avert disaster with a few innovative approaches

I say innovative, not because these approaches are new, but because they’re used so infrequently. It’s an unfortunate reality in the legal world.

But it’s also avoidable.

With a few simple and innovative approaches, you can dramatically reduce conflicts around origination. Here are four ways to approach origination plans.

Approach #1: Create a sunset rule for origination

Permanent origination credit is common in many firms. But this approach creates unnecessary headaches. It also creates bitterness and resentment resulting in the breakdown of teams and the build-up of silos.

Here’s an example.

Partner A brings in a new client. A receives the origination credit for the client’s matter and work is completed. Seven years pass and the client is now inactive. Partner B brings the client back and works with them on a new matter, however, A receives the origination credit for B‘s work. B is understandably upset.

Why would A receive credit for B‘s hard work?

Permanent origination credit.

A sunset rule would diminish partner A’s involvement over time, taking a client’s inactivity into account. If the firm received no new business in the seven-year interim, it would be both reasonable and fair for B to receive the origination credit for his work.

A sunset rule could start at 75 percent, decrease to 50 percent over time, decrease to 25 percent and then finally drop to 0. The originating partner could receive credit for a limited time (e.g. three, five or seven years, etc.).

Approach #2: Require active participation to receive credit

Unwarranted origination credits typically don’t serve the clients. Clients are often neglected, in some capacity, by attorneys who will/won’t receive credit for their work. Active participation helps to mitigate these concerns.

Here’s how.

The partner or associate should be required to maintain contact with the client or the attorney handling the work. They should work with all parties involved to bolster the client/attorney/firm relationship.

1. Bring new clients in, then refer them to the best-qualified attorney or department for handling
2. Remain involved, verifying that high-quality work is produced in a timely and efficient manner
3. Maintain persona and/or professional contact with the client, helping to develop new business opportunities
4. Ensure that reporting is done timely and within the appropriate schedule/guidelines previously set
5. Shepherd a client’s matter through the firm to ensure work is done to standard
6. Oversee timekeeping, billing and collection of fees and costs

If this seems like common sense, it’s not.

It seems obvious when it’s pointed out, but it’s not so obvious that it’s inherently intuitive.

Approach #3: Use matter proliferation credits

Incentivize partners.

Give your partners a strong and compelling reason to “proliferate” or grow new business on behalf of the firm. If partner B or associate B proliferates new business from an existing client originated by partner A they should receive a matter proliferation credit to incentivize them further.

What about client hoarding?

Won’t partner A hoard existing clients to avoid sharing their origination credit?

Yes, if the credit is shared.

You can incentivize both partners/associates if the matter proliferation credits are separate from origination credits. This provides both attorneys with the opportunities they need to provide significant value to the client, strengthening the client/firm relationship further.

This is also ideal because it keeps clients loyal to the firm. Clients who work with multiple partners are far less likely to leave the firm if a partner decides to leave.

Approach #4: Use decision by committee to resolve disputes

Origination can be messy.

The circumstances of a particular situation can be complex and difficult. It’s prudent to establish a (separate) governing body that will provide the firm with direction.

This could be:

• The managing partner
• A management committee
• A specialized compensation committee
• An executive committee

The point here is this.

You need a separate governing body that is disconnected from those disputing credits. You need an objective third party that follows an objective rule set that is written down and clearly established.

This eliminates bias.

But it also gives the firm the tools it needs to resolve any potential disputes that occur as a result of gaps or blind spots in your policies (this is inevitable).

Don’t leave this to other partners.

Take care of your firm’s employees as this is one of the most important employee retention tools your firm has at its disposal.

Your employees want to grow your firm

If you let them, your employees will send you an avalanche of fresh leads, new clients and more revenue. They’re eager and willing to send you more business than you can handle.

They’re willing and able to do this and more for you.

But, they’re looking for fairness. It’s the one condition they’d like you to meet in this regard. Be reasonable, be fair or be gone.

Your employees are your greatest allies.

They’ll do their very best to give you the results you need, just be sure to them credit where credit is due.

Give me the credit for your hard work.

This is the situation associates and paralegals run into. They bring new clients to the firm. Then, before they can receive credit for their hard work, the origination credit is ferreted away by a senior partner at the firm.

It’s a bitter pill to swallow.

Origination credit schemes are, to quote Jim Cotterman, “the single most important determinative factor in partner compensation.”

Many firms don’t know how to handle origination

Should origination credits be permanent? Do you need a “sunset rule?” If so, how long?

It’s often messy and complex.

But origination is also an incredible source of lost business for many firms. Here’s a real example shared with The American Lawyer:

“Jeffrey is a paralegal with a top 50 Am Law firm in San Francisco. While vacationing in Mexico, he met the general counsel of a Fortune 500 company who was in the market for legal representation. The two hit it off, and over the course of the next several days, Jeffrey convinced the GC to consider his firm as a contender for outside counsel. The GC had already identified a few firms with which he might do business. But he was sufficiently impressed with Jeffrey and his portrayal of his firm that he agreed to consider his proposal.

Jeffrey presented the client to the office managing partner when he returned, noting that legal fees in the first year could exceed $2 million.

Jeffrey smartly asked for some type of origination credit; he proposed an end-of-year bonus or a small percentage of the company’s billings as recognition for his business-generation skills. The firm balked—and refused his request—simply because he was a paralegal.

“In the end, it all came down to turf battles and egos,” Jeffrey said.

“The partners couldn’t stomach that a non-partner—much less a paralegal—had landed such a big fish.” Ultimately, he was so incensed over what happened that he left the firm. And the GC found representation with a competitor.”

It’s a scenario that’s repeated on a daily basis. It’s an unbelievable case of firms losing both the battle and the war. It costs firms a tremendous amount of money in the form of lost clients and lost talent.

The first step for firms?

Set specific goals for your firm. These goals should be specific and measurable.

It starts with questions.

• Should origination plans be permanent or come with a sunset rule?
• What are the terms and conditions for a sunset rule?
• Who is eligible to receive origination credit? (e.g. partners, associates, paralegals, receptionists)
• What the minimum/maximum allowable percentage for origination credit?
• Will your firm offer a matter proliferation credit?
• Who receives credit if someone else upsells or cross-sells firm services?
• How will origination disputes be handled? Who has the final say?
• How will your firm handle inherited or transferred clients? What about an extended absence, disability or death?
• How should origination credits be handled for inactive clients who are activated by a new employee?
• How will origination and matter proliferation credits be tracked?

Answering these questions gives everyone in the firm clarity. That clarity is the key to creating origination policies that work.

Here are 10 policies for an effective origination plan

Origination credits should come with a set of responsibilities and requirements. These requirements reduce the bitterness and resentment that comes from a poorly managed origination scheme dramatically. Here are a few policies you can use to create an effective origination plan:

1. Award/prioritize credit to employees who add value to the client/firm relationship.
2. The attorney (or employee) receiving origination credit should be obligated to maintain (personal/professional) contact with the client or attorney handling a client’s matter.
3. Outline the terms and conditions for sharing origination credit with other attorneys or employees in the firm.
4. Allocate origination credits by matter for greater accuracy.
5. Set clear metrics outlining what will be measured and rewarded.
6. Outline destination for origination credit when the originating attorney leaves the firm.
7. Set clear requirements for exigent circumstances and extended absences.
8. Make sure origination credits work with your compensation models, never against it.
9. Create an origination plan that supports your firm culture (e.g. adhocracy, clan, hierarchy and market).
10. Use simple, objective and hard rules.

Your origination plan should drive your firm’s goals. This isn’t simply about compensation. It’s about incentivizing your team to work together.

These details are crucial.

These details show firms how to handle origination

They give your team the tools and resources they need to build stable and profitable client relationships. This isn’t the case for most firms.

It’s actually the opposite.

Origination is an incredible source of lost business. Instead of building up the firm it tears them down. Firms with poor origination plans devolve into matter bartering, bad pitch teams, siloed partners and employee departures.

This doesn’t have to be the case for your firm.

With the right policies and a clear origination plan, you can give employees the tools and resources they need to grow the firm’s book of business. Your employees have a simple request.

Give me credit for my hard work.

An effective origination plan does just that. With the right policies, you’ll have what you need to boost firm revenue, attract new clients and retain all-star talent. No bitter pills needed.