Best Practice Tips

Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the managing partner for a 18-attorney insurance defense firm in Atlanta. We have 6 partners and 12 associates. Most of our associates have 10 years plus experience. They receive a salary plus discretionary bonus. We are having problems with six of the associates not reaching performance goals. (1,800 minimum billable hours per year.) While we have some attorneys billing 2,400+ hours per year - these six are not - some are billing 1,400 hours. What sort of incentive should we be thinking about to improve their performance?

A. The incentive is to get to continue their employment, maintain a full work schedule, progress to partnership, and to receive future pay raises and bonuses.

I know of some insurance defense firms that pay a billable hour bonus above a certain level. However, this approach often causes other problems such as milking hours in client files and overbilling often resulting in client dissatisfaction and potential loss of key clients. In addition, other factors are also important - quality of work, results obtained, teamwork, client relationships (minding) etc. that are often not considered and left out of the equation.

Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the owner of a 5 attorney estate planning/elder law firm in Boston. Our business volume has been stagnant for the past several years and down substantially this past year. We try to do all the marketing that we can. I do at least one seminar a month, we are in key directories, have a good website, send out paper and print newsletters, etc. In the past we have experimented with TV and radio advertising where we used professional narrators/actors. The results were dismal at best. Frankly, I feel we need to spend more on advertising but we are undercapitalized and funds are tight. I would appreciate your thoughts.

Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Q. We are a 16-attorney insurance defense firm in Nashville, Tenn. We have 3 equity partners, 4 non-equity partners and nine associates. The three equity partners (who bring in all the business) are nearing retirement and the remainder of the attorneys have completely failed to develop rainmaking skills and develop business. We hired lawyers to "bill hours" and failed to consider the long-range implications of hiring lawyers without business-getting skills. Do you have any suggestions?

By John W. Olmstead, MBA, Ph.D, CMC

Q. Our law firm is a New Orleans 14-attorney firm that focuses its practice on business representation in both litigation and transactional matters. We have four equity partners. The other ten attorneys are associates. We have been discussing implementing a non-equity partnership tier and how we should handle compensation and other perks. We would appreciate your thoughts and suggestions.

A. I believe that the non-equity partnership tier should be meaningful and distinctive - both internally and externally. Consider the following:

1. List non-equity partners as partners on the firm's website and other firm marketing collateral material. If you feel you must make a distinction list the equity members as managing partners.
2. Allow non-equity partners to attend some partner meetings and have input as non-voting partners into management decisions.
3. Allow one non-equity partner to be elected to the Executive Committee as a non-voting partner.
4. Allow non-equity partners to serve on firm committees.
5. Pay dues to a Country or other similar club for the non-equity partner.
6. Tie a portion of the non-equity partner's compensation to a bonus based upon firm performance.

While you want to create incentives - status and economic - for the non-equity partnership tier be careful that you don't diminish the desire for future equity partnership.

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