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This week, I am particularly excited about several new happenings. First, I've just concluded a nine-day period of cycling that was the best consecutive riding I have been able to do since a car hit me three years ago. For me, that is truly exciting. I have actually reached the level of riding at the time of the accident. Any day on the bike is a good day, and now even better.
Also, I just received the first physical copy of my latest book, the 20th anniversary of my very first book, the Attorney and Law Firm Guide to The Business of Law®, Third Edition, published by the American Bar Association. Go to www.lawbiz.com for more details.
And, we will go live with our new website, www.LawBizregistry.com, that will cater to lawyers who want to monetize their law practice by selling or buying. Please check it out and let me have your thoughts. We expect to be live in the next few days.
lawbiz.com
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Compensation: How to Divide the "Pie"
Dividing the pie is always a touchy subject amongst those who want to eat their fair share. Similarly, compensation, or how to divide what is left over in a law firm, is a subject sure to arouse emotions.
There are three levels to consider: (1) the staff, (2) the associates and nonequity partners, and (3) the equity partners.
Staff
The actual cash compensation must be competitive with the marketplace. The availability of benefits also play a major role in employees' thought processes. In addition, noncash factors, such as reputation of the firm and opportunities for education and professional association activities, are important.
Retaining employees is important. Turnover is one of the highest-cost items in any business operation. Law firms could increase their profit by paying more attention to personnel issues.
Associates and Nonequity Partners
Law firms, even large ones, must provide value to their clients. And they must be profitable in order to open their doors the following day.
While the new, high-priced associates may not earn more than they cost the firm in the very beginning, at some point within the first three to five years, on average, these lawyers must be profitable. In other words, their total billable hours minus the expenses attributed to them should equal a net profit to the firm.
Equity Partners
Equity partners in the Am Law top 50 law firms recorded average profits per partner of $1.6 million in 2012. The contrast to the typical solo lawyer's experience could not be more dramatic.
There are, of course, various formulas for determining compensation among partners. It's not important what formula is used as long as all involved perceive the process as fair.
Conclusion
People will generally accept a great deal less than the top compensation to which they might be entitled as long as they like their colleagues, they think the work that they do is interesting, and they enjoy their clients.
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$112
for TWO more days:
until May 1
(reg. $149.95)
Attorney and Law firm Guide to The Business of Law®, 3rd ed.
To Order:
1-800-837-5880
or order online at lawbizstore.com
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Ed Poll has simplified the mystical process of operating a law practice so that anyone can be more effective with his/her clients and become more profitable. Learn more.
"Your Guide to Biz of Law Book is like a Bible for my practice." - G. Gordillo
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| FEATURED VIDEO:
(Click image to view)
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Getting Started As A Solo
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CLIENTS SAY:
"I met with Ed for my first appointment in the Immersion Program, and at that first meeting, he saved me thousands of dollars by encouraging me to change a method of billing I have used for years. Ed validated and encouraged me to change something so simple which was costing the firm money. Ed is insightful, truthful and motivating. I look forward to our future meeting!"
MVO
Los Angeles, CA
"I would highly recommend the services of Ed Poll to anyone in need of assistance with understanding their business, improving its operations, or valuing it for sale or transition to some other operational format."
DMG
Austin, TX
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