How Does Marketing Relate to Attorney Compensation?
Much has been written, analyzed and dissected about the various means and formulae in which attorney compensation can be determined. And most of these articles tend to focus on identifying the best means for compensating as based on balancing client origination, attorney billing, client development, billing efficiency and overall account responsibility.
This is as it should be.
Less highlighted however is how the various compensation scenarios work to encourage or discourage the business-building efforts of the firm at large as well as that of the individual attorneys.
Net net, as a legal marketing firm, we see many cases in which the firm’s compensation structure has a direct impact on the ability of the firm and its attorneys to generate new clients.
For example, in a firm in which the billable hour is paramount and where failure to generate a threshold of such time results in reduced compensation for the attorney, there is often a reluctance to take on the responsibilities of law firm management and firm business-building. In such cases, serving on a marketing committee may be requested of an attorney, but that service is begrudgingly provided because a) it diminishes the opportunity for more billable hours and b) the service itself does little if anything to further the attorney’s overall revenue potential. Multiply this by all of the members that may serve on this committee and it’s not too difficult to see that the firm’s overall marketing/branding efforts will be poorly, if at all, implemented. In such a situation, the firm’s focus on billing will negatively affect its marketing. This in turn, sets up new conflicts, wherein, older members of the firm, who see no harm in this, bequeath a poorly branded/marketed firm to their younger colleagues.
From a marketing perspective, there are problems with going too far in the other direction as well. If “rainmaking” is the primary focus, attorneys are compelled to concentrate on activities for which they may be ill-suited. Driven to meet, “schmooze,” present, write articles, etc., has the potential to send some of the firm’s best “billers” into a state of paralysis. The result is either less billing, poor rainmaking, or in many cases – both.
How attorneys are compensated also affects their willingness to cross-promote other firm practice areas. If developing/growing a particular account is highly rewarded, then the compensation-seeking attorney may be less willing to “give up” the responsibility for a client to another member of the firm. Not good.
Even within the domains of billing, origination, client development, the potential exists to create schisms where the welfare of some attorneys – usually the more senior members – directly “undoes” the business building efforts of the others. The result is a law firm, divided in its culture and thus unable to convey a unified vision, or brand to the outside world. This, in turn, comes back to negatively affect the very attorneys who had isolated themselves from the overall firm marketing efforts in the first place.
Net net, the success of a law firm’s marketing and business development programs are inextricably tied to the relationship between the firm as a whole and the wide range of attorneys who walk its halls. And one key aspect of that relationship, though not all, is the means by which attorney performance is measured and compensated. Hence, in developing a compensation formula, firm attorneys must not just analyze how it will affect their individual bottom lines, but how it will affect the firm’s ability to grow.
Compensation should encourage the firm’s attorneys to talk up their colleagues within the firm and pass the client on to another when their expertise is more closely aligned with the matter at hand. In such cases, both attorneys should share in the compensation. This promotes overall growth, which ultimately is advantageous to everyone at the firm.
We have seen many law firms have difficulty with this concept. However, when one takes it a step further, enhancing the firm’s ability to grow through compensation formulae that may not be as immediately gratifying, may yet in the long run, provide these attorneys with the kinds of personal bottom lines they are actually seeking.
All it takes is a little foresight.
A.L.T. Legal Professionals Marketing Group, serves as the marketing advocate
for law firms and vendors to the legal community. Since 1993, the agency
has worked with these entities to help them obtain new clients, cross-sell
existing clients and command higher fees.
© A.L.T. Advertising & Promotion Inc. 2010
