I have always been a strong advocate for developing your talent. As a coach I’ve seen first-hand the incredible return on investing in your people can bring, not only in revenues, but also in higher employee engagement and loyalty. The next thing to think about is how to compensate your people and stimulate even more growth for your firm.
Working with a small firm owner, together we created a firm-wide compensation package. It includes individual billing targets (yes this firm uses the billable hour). But when the lawyer or law clerk gets close to the target, the first bonus kicks in. Upon reaching the target, a second bonus is added. And finally, when they exceed the billing targets, one last bonus. That is a real incentive to meet and exceed the targets.
But now it gets interesting. The real money is in the business development each law clerk and associate engages in. Now the average file at this firm generates about 50-60k. So we set up the bonus structure as follows. From 0-50k each person brings in collected billings, they get a 5% bonus. From 50-100k, they get a 10% bonus. And 100k + they get a 15% bonus. This Managing Partner wanted to really incentivize, so if they bring in over 150k in revenue, they get 15% on the entire amount. That is going to generate growth.
We did discuss one potential outcome. That is if the law clerk, who was already bringing in business before this compensation model was put in place just focused on business development and dropped her billing targets but generated 1m in revenue, what then? Be careful what you wish for. You change her role. She becomes a rainmaker and you compensate her generously and go out and find another law clerk to fill her place. Pretty cool if that happens.