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Great advice from The Lawyer Whisperer

August 2, 2016
Question

I’m a first-year associate at a small firm and have brought in several clients including two large cases. Can I ask for a bonus for these cases? Is so, what’s reasonable to expect and how should I ask?

answer
Julie Q. Brush

The ability to generate business is the key to career leverage and success for the law firm lawyer. Because in today’s law firms…big, medium and small, the “book of business” reigns supreme. The traditional path for law firm lawyers has been to learn the legal ropes as an associate with the expectation that after 9 – 10 years; associates would advance to rainmaker status. The law firms of yesteryear provided more opportunity and support for this transition: associates had more responsibility for client management and control – and as senior partners rode off into the sunset, books of business were passed down to the designated heir apparent. But in the Darwinian law firm environment of today, it’s a vastly different story. And associates are finding it increasingly more difficult to develop the client relations and business development skills in their formative years – leaving them frustrated and vulnerable come partnership time.

As a first year associate, your business development success is most certainly an anomaly – and a sign of great things to come if you continue to hone your skills. So be sure to acknowledge and congratulate yourself for this achievement at such an early stage of your career. Such accomplishment and value to the firm deserves recognition from your colleagues. But are you entitled to additional compensation for your efforts? Entitled? No. But is it reasonable to ask for a bonus? You bet…assuming the new clients you have secured for the firm have or will generate meaningful revenue for the firm.

So how much should you ask for and what’s the best way to inquire?

Given your seniority and status as a newbie in the firm, it is highly unlikely that the partners will agree to assign you any formal origination or billing credit – and will pass these designations to partners in the firm. In addition, you will not be guaranteed an automatic percentage of the revenue generated by these clients for bonus purposes (firms will cut these types of deals with incoming or existing partners and senior lawyers who bring in business – with percentages ranging from 10%-50%). There is no other industry standard to provide guidance for your type of situation so if the partners do agree to pay you a bonus, the amount will be purely subjective and within the firm’s sole discretion. Because of this, I recommend that you prepare a compelling case as to why a bonus is merited and have a clear idea as to the dollar amount or range that you believe is fair. Do not rely on firm management to set the price and determine your fate without your opportunity to be heard.

A “reasonable” dollar range will depend on the size of revenue billed and collected. I’m currently unable to provide you with concrete numbers because you have not provided information on the cases you have referenced. Generally speaking however, I’ve seen firms apply numbers in the range of 10% of revenue collected when issuing bonuses young associates – but as the revenue increases, the percentage benchmark decreases. So as you assess how much revenue these two large cases have generated or are projected to generate keep this information in mind.

With regard to the “how” part of your request, I recommend scheduling a meeting the appropriate partner to discuss the matter in person. In this conversation, your tone should be humble, but confident – and must not be demanding or entitled or you’ll compromise your ability to get what you want. You should be clear, concise and ask for what you want. Below are a few diverse examples to serve as a guide.

“Roger, thanks for taking the time to meet with me. As you know, I recently brought in Company A and Company X as clients to the firm as a result of my strong relationships with the hiring managers/General Counsel in those companies. I’m very excited to have them as part of the firm’s client roster and hope to bring in more in the future. Each of the cases has generated quite a bit of revenue for the firm, so I wanted to discuss an end of year bonus arrangement for my contribution. I’m not sure how the firm operates in these situations, so I reviewed the total billings and have come up with a proposal that I think is fair. The billings amounted to roughly $650,000 so I believe a bonus of $50k – $60k is a fair number and hope you do as well. Let me know your thoughts.”

“Stephanie, I appreciate your meeting with me today. I wanted to speak with you about the two cases I recently brought in to the firm and the firm’s policy around credit and bonuses for originated work. I realize that as a first year lawyer this situation is pretty unique so I thought it would be great to discuss additional compensation for my contribution upfront. Since both cases are just underway, I wanted to propose an additional bonus based on 10% of the final billings and collections – and see if that is something the partners would be open to. I’ve done some research and given the current market, I thought this was a fair number.”

“Chris, thank you for meeting with me. I’m really excited and proud about the two new cases I brought into the firm and wanted to discuss the possibility of an end of year bonus for my efforts. Does the firm have a compensation policy on associates who generate business? [If the firm has such a policy, you will have a guideline as to what to expect and base your discussions. If the firm does not have a policy, then proceed with your ask]. I’m not sure what the final billings will be, but I thought it would be good to discuss this now so that we are all on the same page. I’ve conducted some market research and there is no uniform standard for this type of situation – bonuses seem to be all over the map. So I’ve taken into account all the information as well as my seniority and I think that a 10%-15% bonus on total billings is fair and reasonable. Let me know if you agree.

Finally, if you believe your recent business development activity is a sign of more to come, don’t be afraid to ask for a more concrete arrangement on a going forward basis. This could include a set percentage of all work that you generate for the firm. Given that you are in a small firm, the flexibility should be there to accommodate your request. So starting a dialogue now is a wise approach.

As a first year associate who is generating business for your firm, you are off to a fantastic start in your career. And given your business development history including the two new cases you have recently landed, you deserve extra kudos and compensation for a job well done. So I encourage you to make your case and ask for what you believe to be a fair reflection of your contribution. By being proactive, you’ll increase the likelihood of securing a result that will keep you happy and motivated to continue on your path of rainmaking success.

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