Tag: billable hours

Best Practices for Associate Compensation

Welcome back to our in-depth exploration of compensation within law firms. In our previous post , we emphasized the significance of establishing a robust compensation system to attract and retain top talent and keep them motivated. In this post, we’ll discuss the crucial components needed to make an effective compensation plan for associates within the firm.

Compensating associates is a multifaceted task that law firms tackle annually to attract and maintain a talented workforce. Unfortunately, numerous small to mid-sized firms lack a robust structure that anticipates market trends and internal changes, and they also often need a simplified process for determining raises and bonuses.

Key Considerations for Developing Compensation Plans for Associates:

Associate compensation programs should incorporate the following elements:

  • Market Competitiveness: How does the firm’s associate compensation compare with market standards and rival firms?
  • Progression: Does the firm have a consistent and progressive structure for raises and bonuses that aligns with its associates’ experience and performance progress?
  • Incentive Alignment: Does the firm incentivize behaviors aligned with its vision and priorities?
  • Transparency: Does the firm clearly communicate with associates about their earning potential over time and at specific experience and performance levels?
  • Feedback: Are associates given enough performance feedback to understand the relationship between their salaries, raises, bonuses, and performance?

Capacity and Performance Expectations

Establishing a compensation structure begins with assessing attorneys’ current and future economic and qualitative potential. Firms should project the expected performance and contributions over the first eight to ten years of an attorney’s career in the firm.

  • Production Capacity – How much work will the attorney handle, and what is the value of that work? Production metrics may include billable hours or caseload, expected billings and collections, and, by extension, rates and realization.
  • Qualitative Performance – Which skills does the attorney need to succeed in the position/ to create value? Consider legal skills, case management, business development contributions, compliance/ interpersonal skills, recruiting support, etc.
  • Profitability – How much economic value should the attorney create beyond their cost? (Expected profit or profit margin)

The qualitative increases in value and objective contributions to revenue and profit indicated in the table below provide an example of the most common factors. Contributions should be considered in the context of increasing long-term value and offering short-term profits.

 

INCREASES IN VALUEInvestment_Icon

Profitability_icon-1CONTRIBUTIONS TO PROFIT
  Quality of professional work Personal Productivity
   Work ethic

(consistency of quality and quantity)

 Profitability of others

(supervision and training)
  Client relations and service Originations
  Personal development and accountability Recruiting profitable lawyers
   Business development contributions

(networking, publishing, speaking, etc.)

 Business hygiene

(timekeeping, billing, collections)
  Cultural support
  Firm building

(recruiting, training, process development, etc.)
  Adding to the reputation of the firm

The table below indicates an example of expectations by experience level.

PERFORMANCE EXPECTATIONS

KEY

  Consistent 

  Approaching consistent 

  Optional

 Not expected at the experience level 

 

ECONOMIC FACTORS

EXPERIENCE (YR)

Productivity

Realization

Training Supervision

 Profit Threshold

Billing Management

 Origination

1

2

3

4

5

6

7

8

9

10

 

A firm may combine all economic scores and consider the aggregate result as a qualitative factor. As long as the selected system is consistently applied, room exists for customization.

 

QUALITATIVE FACTORS – WEALTH CREATION

EXPERIENCE (YR)

Work Ethic

Work Quality

Bar, Professional Civic

Content Publishing Speaking 

Business Development Competence

Recruiting Contributions

Client Relations and Service

Pro Bono

1

2

3

4

5

6

7

8

9

10

 

Designing a rewarding compensation strategy is essential for maximizing the value from your law firm’s legal team. This involves careful deliberation over economic and qualitative criteria. Balancing these factors and customizing your approach enables your firm to attract and retain top lawyers while nurturing a consistent organizational culture.

  1. Start by clearly defining the skill set that brings long-term value to your firm and reward attorneys accordingly to ensure retention of the most compatible talent.
  2. Employ strategies to recognize and financially reward lawyers who consistently excel in high-value areas such as work ethic, quality, and client service, thus motivating them to sustain their high performance.
  3. For firms with top lawyers nearing retirement, devise a compensation plan that encourages emerging talents to take on leadership roles, guaranteeing a smooth transition and enduring success.
  4. Recognize and remunerate specialized expertise appropriately, for instance, by providing incentives to skilled litigators in a trial-focused litigation firm.
  5. Acknowledge and reward qualitative achievements, like the publication of influential content, encouraging lawyers to align with the firm’s broader objectives.

It is also necessary to acknowledge the value of specialized expertise and reward it accordingly. For example, if trial experience is highly valued in your litigation firm, compensating successful litigators who excel in this area is an excellent strategy. Finally, recognizing qualitative accomplishments, such as publishing high-quality content, can motivate your lawyers to contribute to the firm’s mission.

A compensation strategy that considers both qualitative and economic performance is vital for motivating and retaining the best-fit individuals for your law firm. By extending recognition beyond mere base salary increments to contributions that exceed expectations, you uphold the fairness and prosperity of your organization.

Join us as we continue to explore compensation best practices for law firms. Stay tuned for upcoming articles that will provide in-depth insights and actionable guidance on creating compensation systems that not only draw in and retain top legal talent but also bolster the firm’s long-lasting prosperity and cultural ethos.

©2024 PerformLaw
For more news on Compensation Strategies for Law Firms, visit the NLR Law Office Management section.

Don’t be Content with Subpar Content: Five Content Marketing Best Practices

In the past, we have outlined eMarketing best practices, integrating your eMarketing system with other marketing technology, and even discussed using artificial intelligence in your email marketing strategy. However, if you’ve got all the elements in place and your email marketing metrics are still disappointing, what else can you improve? Well, let’s address the 10,000-pound elephant in the room – your content.

For many law firms, content is typically written by lawyers. This can be a challenge because lawyers by trade, are legal writers – favoring a particular writing style that often is not favorable for eMarketing purposes. This leaves the marketing department to attempt to shape the content to make it as effective as possible.

So what is a marketer to do when faced with a partner who is convinced that posting 5,000 words (1,000 of which are footnotes) on the latest regulation change is the best way to communicate with clients and prospective clients? Here are five suggestions and talking points to help build consensus and buy-in for improving your firm’s publications and content marketing.

1. Best of the Bunch

Take a look at some of your firm’s recent publications by practice area. Are there one or two groups that consistently provide concise, well-written content that is not drowning in legalese? Next, it can be a good idea to look at their metrics. If their mailing list is in good shape, they should also have some of the best open and click-through rates at the firm.

These are the folks to hold up as examples of how to correctly write marketing content. Anyone who has been a marketer in a professional service firm knows that capitalizing on the competitive nature of professionals can be a powerful tool for changing behavior. If you can find one or two practices with superior metrics and can tie it to their content, then you have something to hold up as an example to the rest of the firm.

2. Train ’em Young

Today, associates have grown up with unparalleled access to the internet, email, Twitter (now X) and LinkedIn, so they get it. Firms should capitalize on the technology-savvy and sponge-like nature of the younger members and utilize them by creating content that resonates with their clients. They will likely already understand the importance of concise messaging as the key to effective communication.

3. Break Down Their Mailing Metrics

Lawyers tend to write for other lawyers. As marketers, we need them to write for people from all walks of life. Remember, many CEOs probably don’t have a JD. A quick analysis of their mailing lists may help persuade them that they are not just sending to other lawyers. It is important for lawyers who write to understand that well-written and relevant pieces are often the ones that are most likely to be circulated throughout companies.

Human resources and marketing, for example, are the two departments that are often the ‘beneficiaries’ of law firm alerts. Writing in heavy legalese can be counterproductive for these groups. For attorneys who are still hesitant to alter their writing style, remind them that lawyers also read newspapers, magazines, and even novels. Some of the most important and complex issues of our time, involving matters such as foreign policy, terrorism, taxes, the economy, and healthcare, are communicated every day in these publications—without the use of footnotes.

4. First Is Not Always Best

While it is important your clients know your firm is on top of recent developments, simply sending out a regurgitation of the new regulation doesn’t necessarily convey that your firm understands the impact of the law on the client’s business. Yes, you want your email on the topic to be among the first received, but there’s more to it. You need to demonstrate an understanding of the implications of the law by addressing questions like, “What does this mean for me? Do I need to be concerned? What can I do to prepare or minimize the risk for the company?”

Both speed and depth are important when it comes to content marketing. Get the alert out quickly and explain why it is important to your readers. Later, your lawyers can write a longer, in-depth piece for an outside publication which can also be forwarded to their mailing list.

5. Size Matters

65% of digital media consumption occurs on mobile devices. No one, including your own lawyers, would be inclined to read a 3,000-word piece on their iPhones, no matter how much time they have. The fact is, today’s professionals use their phones to consume quick-hit content – get in, get the jist, and get out, onto the next. This means we need to meet them where they are and produce similarly easy-to-digest content.

An excellent way to help dissuade your lawyers from writing lengthy, dense alerts, is to appeal to their billable hour. Long pieces take longer to write – when a piece half the size will not only take them half the time but ultimately increase readership by twice as much.

© Copyright 2024 CLIENTSFirst Consulting
by: Christina R. Fritsch JD of CLIENTSFirst Consulting
For more news on Content Marketing for Law Firms, visit the NLR Law Office Management section.

Why the Billable Hour Is Here to Stay

While you may grind away on files day in and day out through six-minute intervals, tracking the time can prove distracting and burdensome. The billable hour remains the standard method for billing with lawyers, and this has been the standard for decades. Despite the longevity of the billable hour, plenty of lawyers believe they can find a better way to bill their clients.

The Argument Against the Billable Hour

Lawyers from a variety of fields have raised arguments against billing by the hour. One of those arguments is how you only have so many hours in the day that you can work. In addition, an hourly billing setup fails to acknowledge how different legal services will have differing value. Some have made the claim hourly billing encourages inefficiency and incompetence because the longer it takes a lawyer to finish the job, the more they get paid. This shows a conflict of interest because a lawyer might feel tempted to spend the maximum hours on a file.

Does the Billable Hour Remain the Standard?

Gradually, lawyers have started to charge through alternative methods. Some of those methods include:

  • Flat fees

  • Results-based fees

  • Contingency fees

  • Fees by stages

In today’s world, a client asks more value for his dollar, and plenty of lawyers are happy to accommodate. Still, the billable hour reigns supreme even despite talk of a massive shift. The billable hour hasn’t taken hold as of yet. However, it has been growing. In fact, a recent study found how the alternative fee arrangements were up five percent from several years ago to 22 percent since.

Revolutionizing the Law Industry

Plenty of firms have seen this and started to shift their own law practice out of the curiosity of what a billable-hour free firm might look like. Since the early 1990s, lawyers have predicted the eventual end of the billable hour, but it has never truly ended. Until a more alternate billing comes, it’s unlikely that the billable hour will ever fully go away. In fact, some law firms will always prefer it, and unless the clients demand a change, the billable hour serves both lawyers and clients in a way where an alternative arrangement might prove to be more difficult.

Education of the Client

Bill Rice, a partner at Bennett Jones, says that his national firm offers the alternate billing proposal. Many times clients will ask for the alternate billing, but in the end, they wind up choosing the hourly billing because they don’t know how to judge if the alternate arrangement will be fair. Rice says, “While we’ve moved forward with breaking the billable hour, we still haven’t reached the appropriate level of comfort with alternate billing.” Essentially, clients are unable to find a better way to judge the value or to maintain control over it.

This is where research comes in play. If you decide to want to take an alternative route, education is key. By explaining the process, average cost, and the highest potential cost, your client can decide which avenue he or she may want to take.

Where Alternative Billing Does Best

In some cases, the billable hour continues to be the best fit for the attorney and/or law firm. This includes the markups and discounts and how much time a lawyer puts into the case. Sometimes blended rates come into play due to work getting divided amongst the firm. In these circumstances, you will experience a blend of hourly rates.

Where fixed-fee billing (say that five times fast) works best, might be when an event an activity is scheduled. Some of the possible examples include:

  • Patenting

  • Immigration visa

Fixed-rate billing also allows an attorney to exit a case with less worry. Sometimes with the billable hour, there’s that worry of a possible lawsuits malpractice. When you lay everything on the table, the client knows what he’s getting himself into. As a result, you have a more satisfied group of clients because they feel they got the value out of what they paid for.

The Problem of Efficiency: The Billable Hour

You could spend up to an hour trying to fix a leaky faucet and getting nowhere in the process, even though the problem is fairly simple. The same could be said about the billable hour. You want to provide attorneys with some incentive on why they should work hard to finish the case fast. It’s true that some of the other billing methods might not necessarily be cheaper than the billable hour, but it gives clients a fixed budget to work with and peace of mind knowing it won’t go higher.

The billable hour isn’t likely to go anywhere in the future. New methods of billing will, however, probably come up as lawyers get more creative on how to bill their clients for their legal services. The world today focuses more on value-driven legal services. For that reason, it seems like a good incentive to provide lawyers with a reason to up the quality of their services while giving clients predictable budgets they can count on to stay the same.

This post was written by Jaliz Maldonado  of PracticePanther © Copyright 2017
For more legal analysis go to The National Law Review