March 25, 2024 • 30 mins
The decision to pursue other opportunities is multilayered with no one consideration being more important than the other. Yet compensation often is a driver. But most professionals including lateral partners at law firms don't do a deep enough dive on a target firm's compensation structure. Each firm approaches compensation differently. Which means it is incumbent on the candidate to know what is important to them and to ask the right questions. So to, firms need to be as forthcoming as possible about the compensation structure. Steve knows the ins and outs of compensation systems based on his decades of experience. Have a listen and if you have more questions, please contact Steve at snelson@tmg-dc.com. Mention Steve's Rules when you call and get a prize. We mean it.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Unknown (00:00):
Murray, welcome to Steve's rules, periodic podcast
(00:10):
featuring Steve Nelson,executive principal at McCormick
group in the law and governmentaffairs practice. My name is
Murray Coffey, and I am theprincipal of M Coffey, a law
firm marketing and businessdevelopment Boutique. For more
information, please visit mywebsite at M coffey.net Steve
has been an executive recruiterfor nearly three decades, and
without naming names, he isready to spill the tea on best
(00:32):
practices, and maybe a few notso best practices by firms and
candidates that he has seenduring his career, recruiting
some of the most driven andsuccessful professionals into
highly profitable and growingfirms. Steve is a former lawyer
and journalist and is a fellowof the college of law practice
management and a proud son ofWilkes Barre, Pennsylvania. Full
(00:52):
transparency here, Steve hashelped my career immensely
through the years and has becomesomething of a career shaman to
me and I know many others. Hey,Steve, hey Murray. We are, we
are in episode two of seasontwo, and we're going to be
(01:13):
talking today about a topic thatis near and dear to everybody's
heart, which is compensation andso Steve has a lot of
interesting and I think, eruditeobservations about compensation
and why candidates need toreally think it through more
(01:34):
than maybe they are oftentimes.
But before we do that, Steve, asyou know, we talked about
before, the McCormack group isknown for the intel that you all
are doing on a rolling basis inin the various sectors where
you're providing services. And Iknow you just released a DC
(01:55):
report. I think you've gotanother one coming out, and
maybe we've talked a little bitabout some of the other stuff
that that's going on in themarket that's not necessarily
related to lateral partnerrecruiting. So Right? One of
heads up,sure, I mean this, you know, we
really now got two months ofdata, and it's there's certainly
been some feel out there thatthe market, lateral markets
(02:21):
picking up. And I think that'sprobably true nationally. What
we've found in DC, and it is tooearly to tell DC, is not really
at last year's levels so far,but in Texas, where, of course,
we do our report as well, Texasis up significantly, probably on
the order of 20% increase in thenumber of laterals, making moves
(02:47):
and including groups so and thegroup activity even in DC is
also strong. So I think we'relooking at a good year. DC is a
little too early to tell, butbut I think the market's coming
back. One of the things that Ithink is probably explains the
difference between DC and Texasis corporate is back. I mean,
(03:08):
corporate is back as a strongpractice area after really
struggling for a couple ofyears. So in Texas, much more
corporate work than there's inDC. So therefore, you're going
to see more activity as as thepartners now feel like they're
in a position of strength tomove, and that's actually going
to key into the compensation alittle bit as well. One other
(03:29):
point I want to make, which alsogoes to the strength of the
market right now, is we'reseeing a significant increase in
the amount of work we're doingon the administrative side, and
particularly in the area ofpractice management and
knowledge management, got a lotof assignments going on right
now, and one of the things thatwe recently reported on was that
(03:53):
the number of am law firms thatactually have practice
management, personnel, you know,professionals, warrant lawyers,
who are helping run the practiceroute. We're now over half of
the am law. 206 seven years ago,it was like, you know, maybe two
(04:14):
thirds. I mean, maybe a thirdso, so there's a lot of
significance there. And we'reand we're seeing a lot of firms
looking for the really goodpeople to handle practice
management jobs. Ifsomebody's thinking, usually,
when there's a lot of recruitinggoing on in a particular area,
it's a good time for somebodywho wants to transition from
(04:36):
maybe what they're doing nowinto this new area, as you think
about that, as you think aboutpeople who may want to
transition from anotheradministrative role in a law
firm, and I think it probablyhas to be somebody coming from a
law firm, just given the kind ofthe nuances that especially
practice management requires,what kinds of what kinds of
things should people be thinkingabout in terms of whether.
(04:57):
Whether they're in a goodposition to make that what are
the firms looking for withpractice management, then we'll
move on. But I do think maybewe'll maybe we'll just dedicate
a podcast to this at some point,because this is it's actually
growing it big. Greg, yeah,definitely. I think that
(05:18):
primarily financial management.
If you're in a law firm andyou're working in the FPA, I
think it's if you get the rightexperience and you really get
inside the practice areas andunderstand the financial parts
of the practice areas. It's apretty good transition point.
Now, some of the jobs inpractice management, tend to
(05:43):
focus a little bit more on thestaffing of matters, uses of
associates and paralegals and soforth. So there somebody maybe
who has been working inprofessional development may be
that may be a good transitionpoint to go into practice
management. And I'll just sayone other thing, because we're
working on one right now, anassignment in the Knowledge
(06:04):
Management Area. We think thatfor attorneys, people who are
practicing law, associates,maybe counsel, and let's say
they're just maybe they don'twant to be a partner. They don't
want the partnership track, theydon't want the hours, they don't
want the business developmentpressures. One option right now
(06:25):
is to become a knowledgemanagement attorney at a big
firm, and that will get you intothe heart of everything that's
going on in the marketplaceright now related to technology
and artificial intelligence. Sothis could be a huge role for
firms in the future as as this,the you know, the legal practice
(06:46):
is changing, and therefore thatcould be a powerful position in
the coming years. Soopportunities there as well for
practicing attorneys who just,you know, maybe don't want to do
that routine. Yeah, yeah.
That's, that's a great point.
And, you know, it might also bea track for for people coming
(07:07):
out of law school who decidethat they're not going to,
that's not, that's thepracticing side, is not where
they want to be. I have a lot ofthoughts about that, especially
about the interplay with withAI, and maybe we'll talk about
that at it at another time,because I know we want to get
into into our discussion here,and we try to get in and out of
these, these discussions in halfan hour or less. So. So finally,
(07:30):
jump in. So, Steve, we're goingto talk about partner comp
issues and the, I think,questions that popped in my head
and we talked about this beforethe podcast is podcast, is your
you go, you go pretty deep herein your topics, deeper than
than, I think a lot of evenpartners who are making that
(07:53):
transition go. So tell me why,that's why, why you're going
there. I mean, people hear aboutconfidence. They always think
about that top big number,right? What is the big number?
You go a lot deeper than that,right? Yeah, I think it's, it's,
it's, it's often, it's often agating issue. In terms of of a
lateral partner, you can havesome really good, qualified,
(08:14):
accomplished lawyers who arepartners in law firms, and the
because every firm valuesdifferent things, their
compensation can be viewed attheir current firm one way, and
if they go to look at anotherfirm, it could be viewed a lot
(08:36):
different. And I think that'swhat we're going to get into
because sometimes, I mean, thishappens close to half the time.
I'll talk to a partner, and thepoint is going to the decision
will come up, or I will make,I'll make a comment. It says, I
think you're probably, you know,you're better off where you are
now, because I don't think afirm is going to compensate you
(08:57):
at the level or near the levelthat you're compensated now. So
it's really important in thatinitial discussion, initial
decision making about what, whatfuture career change or am I
going to make, is compensationis going to be at the center of
that?
Yeah, absolutely. And I, youknow, there's, I think, you
(09:21):
know, increasingly lateralpartners are being looked at as
as business generators, like newbusiness generators, bringing in
existing relationships andbringing and going out and
getting new new ones. And sowhen you have a partner, for
example, there's a lot of thesepartners, and they're extremely
valuable in inside the firms,but partners who are have a real
(09:44):
history of assisting otherpartners. You know, maybe it's,
maybe it's, you know, referralsof business or with doing first
chair work for institutionalclients. You know, there's some
of these large firms haveclients where the relationships
go back, especially if you starttalking about the big Texas
firms. Some of those, some ofthose, you know, some of those
relationships go back to thefiling of the articles of
(10:05):
incorporation for, you know,well known, well known oil and
gas companies. So, so what? Whatis it? What should a partner?
This is a terrible word, butservice partner. We're talking
about service partner. Whatshould a service partner be
thinking about, if they'rewanting to make that move,
what's the common what are thetop reasons?
(10:26):
Yeah, you know, so, and I agreewith you. It's, it's, I don't
like, it's a bit pejorativeservice. I, you know, I really
call it a technician, somebodywho's really good at their job,
really understands law can make,you know, make decisions with
regard to a strategy or a pieceof litigation that's Could,
(10:50):
could be the difference betweenwinning and losing. So there
with in almost every situation,just because of the nuances of
the lateral market, people,lawyers, who are pure
technicians, are going to findit hard to get to make a move to
another firm at all, becausethat's not what the firms tend
(11:14):
to look for. I mean, there areexceptions of that, but for the
most part, we don't, we don'tget that. What we get sometimes,
and this is where I think a lotof the really granular issues
relating to compensation come upis the person who is has done
business development also, butalso acts as a service, partner
(11:40):
or as a technician, somebody whohas who whose originations at
their current firm are acombination of what they've
generated and what is beingwhat's what they're being asked
to do by the leadership of thefirm or their partners. They're
trying to be good citizens rightwithin the firm that they're at,
(12:03):
and they're taking on theimportant work that's critical
to the firm, that work, youknow, is probably not going with
them. So that's going to factorin. They're compensated in most
firms. They're going to becompensated on the value that
they're providing their firm.
They're not being compensated onthe value of the work they're
going to bring to a move, andthat's the rub, right? I don't
(12:24):
know how many times I run intothis, a lot of times where
partner comes, comes to me andsays, Listen, I really like a
move, but, but here's my here'smy situation. I'm doing $2
million of business a year. Imean, that's my originations at
my current firm, but if I wereto move I'm going to only take
(12:44):
half of that with me. Again,you're being compensated on the
2 million you're not getting,but another firm will often it's
some firms are getting moresophisticated about this, but
often you're, they're going tolook at you as a million dollar
part. And so therefore you'vegot this mismatch of
(13:07):
compensation. It's just, it'skind of right out of the box.
It, you know, I could tell youthat, that that, having worked
in, in sales, and worked withlawyers who are, we're really
good at bringing new businessin. The firms have to invest a
lot more money into landing anew client than in expanding an
(13:29):
existing client relationship.
And is it, you know, is there anargument that can be made that,
you know, I'm a, you know, I'm atechnical partner, but what I've
been able to do is take a we hadthis client that we did half a
million dollars of work for, andas the years progressed, we did
we doubled it and doubled it anddoubled it, which isn't hard to
(13:50):
do, actually, and it's becauseof what I can do when I get in
with a client. And so my valuefor you is going to be, I'm
bringing this technicalexpertise and I'm going to
expand your existingrelationship. Is there a
argument to be made? Are firmssaying, Yeah, we need that.
(14:12):
There is, there is an argumentto be made, and it's probably a
very good argument. I think thatmost firms, in most situations,
are going to be concerned that,yes, I understand that you're a
really good, you know, businessbuilder, but it's going to take
you, if I we go to our friend,you know, it's going to take you
(14:32):
while they integrate you, aswe've talked about on some of
the other podcasts couple ofyears, and we can't afford to
pay you at the level that you'reat now for two years before you
really hit your stroke. Now theexception, I think, comes in in
succession, situations wherethere is a partner who is
(14:54):
retiring or thinking aboutretiring, and they want to bring
somebody in who can take over.
Clients, and in that situation,it's a very good argument should
be made that you know, you'renot paying this person on what
they're bringing over. You'regoing to pay this person on what
you expect that person to tobill in the first year or two,
or and beyond that. And so Ithink firms are starting to get
(15:16):
it. But the problem that firmsrun into on that is when they
take this lateral to thepartnership at large, and they
have to write the memo to thepartner partnership that says,
This is why we're hiring. Andthen the partners say, well,
you're paying in X, and he'sonly bringing over y, and I'm
(15:38):
bringing over y plus x, andyou're paying me, you know,
you're paying me less than him,so you're going to have a
blowback from your partnership,even in a succession situation,
unless, unless that firm'sculture is such that they they
all get it, and they allunderstand it, and they're all
(16:00):
in it. They understand that thisis a situation that we as a firm
need to handle.
Yeah, that'sthat. It's, yeah, well, we can
go off on a tangent on this onefor a while, because they're,
you know, the firms need to bethinking about, sort of having
broader views of how they'rebringing people in, but, you
(16:21):
know, but that might be apodcast for another day. You
know, performance bonuses. Howdo you structure them? You know,
you know, there's, there's,there's, there's teamwork in
there, there's, there's good,you know, firm citizenship. I
you know, maybe this falls underthe firm citizenship category,
(16:43):
but you know, the the amount ofeffort that they're putting into
different business developmentcriteria, how do you, how do
you, how do you, how do youfigure that
out? Because, yeah, that's,yeah, great question. Is a
(17:08):
question that firms strugglewith all the time. Um, the
really, that's the approach thata lot of firms take to those
laterals that you know, thenumbers don't quite work, at
least with regard to what's youknow sure to come over. And of
course, firms don't want to,they don't want to take whatever
(17:30):
projections that the lateralgives you at face value, because
we know that you know thelaterals not you know, not
intentionally, but they oftenoverestimate what they're going
to bring, because they don'tunderstand the nuances of what
happens with the client andtaking the right matter. But so
(17:50):
the firms will go to, okay,we're going to give you a base
of this, which is probably lessthan what that partner is
currently making, right? Butthere'll be some performance
bonuses that can get you thereand above. Most firms are still
focused on originations as thenumber one category and then,
(18:15):
but some firms sort of come upwith a combination of
originations and the amount ofwork built. So if you're that
type of lawyer where, let's saythe succession play, where
you're going, you're going to dosome valuable work for existing
(18:36):
clients, sometimes that getsfactored in, but more often than
not, the biggest factor is goingto be your originations and
there. And as we know, what thatrewards is hoarding work for
yourself and making sure thatyou get the origination credit
and that you're not doing workothers. You go into the firm and
(18:59):
somebody asks you, you know,you're eight months into your
firm, and somebody has Listen, Igot this important client, and
you're the guy that handle this.
Can you help me out on it? Andyou know, some partners are
going to say, I really can't,because I'm not going to get
rewarded forright? Yeah, it's, you know,
there are some firms that willtell you, so I don't always know
(19:21):
if this is, this is astransparent as they want they
think it is that theydon't track originations,
right, right? And, and, so what?
How does that? How do youstructure a performance bonus
with not tracking originations?
Or are they actually trackingorigination, just not saying,
(19:43):
Well, I thinkin some cases, they're there
certainly they're certainlyunderstanding the origination
factor. Split that way. Butthere are firms that that are
that don't track it directly,and in that case, it goes. Goes
to the work managed category. Soif you're the prime lawyer who's
handling contact with theclient, handling the bills,
(20:09):
really responsible for thematter in those firms, that's
going to be the number that lookat. And that number, you know,
often tracks originations. It'snot exactly the same, but at
least that means that, you know,you don't get caught up in a
situation where there's a legacyclient and somebody brought it
in 25 years ago and is stillgetting origination credit. But
(20:29):
you know, but you as the personwho is handling the engagement
and responsible for the successof the engagement, you'll get
reward. And so I think that is amore preferable situation.
Yeah, yeah, it's whatI want to add one, one other
point on this whole compound, oncompensation, because we're
(20:52):
seeing an increase, kind of slowincrease, in the number of firms
that are in closed compensationsystems. Yeah, Jones Day is the,
you know, sort of the poster boyof that black box, right? The
black box, right. Greenbergtravels another one. And the
those firms, if, if the thepartnership has bought into it,
(21:18):
and the partnership trusts,trust is really important. Trust
the the compensation leaders asto how they're doing it, they
can have that can be a hugeadvantage in the lateral market,
because those those people canmake those decisions, strategic
(21:38):
decisions, to bring somebody in,in a situation where you know
you've got important clientsthat you have to retain, and
because of that you will value,you will compensate that person
properly, and you don't have torun it by every partner in the
firm. So that is the number one,in my mind, the number one
(21:59):
advantage of a closedcompensation system is that it
is better for laterals, I think,and in the when it's run, when
it's done properly, closecompensation system is, is can
be beneficial for everybody, notjust the laterals. But, I mean,
I think there are questionsalways about how that's being
done,yeah, and that's a, it is. It's
(22:21):
a it's a trust factor. And withso many firms growing at the
pace that they're growing andgrowing through lateral
acquisition, where the where thethe culture of trust that may
have been built up over years,with the with the legacy
partners, isn't necessarilygoing to exist with the with the
partners that are coming in on alateral basis. And it is a, it
(22:43):
is a firm culture issue. I mean,it speaks to the culture of the
firm about how the compensationis handled. And I, you know, I
go back and forth on closed, youknow, the benefits of closed
comp, I think as, I think, astime goes on, you're right, the
people who are, who are doingrecruiting and need to be more
(23:07):
strategic, need to have enoughfreedom to to work with
compensation in such a way thatthat it, it helps, it helps, you
know, maintain market share,because that's really what we're
talking about. We're talkingabout when we're talking about
lateral partner recruiting, iswe're talking about buying
market share, right? Andsometimes the market share is,
what's more important ismaintaining the market share you
(23:28):
have.
Yeah, the the other, the otherimportant point, um, and this
is, this is mostly from theperspective of the lateral and
their decision making processis, again, you know this idea of
portable business talking aboutanother term that I think is
(23:50):
derogatory in nature, sometimes,that, For example, litigators.
Litigators are often, yeah,they've got clients that they're
hoping won't come back,particularly in a white collar
situation, right? And and solitigators are often, it's
(24:12):
episodic, you know, you'll bringin business. You know, one year,
next year might be a littledifferent. And, but when you're
looking at your upcoming year,yeah, and you're looking at it
from a portable standpoint, youknow, it's going to probably be
pretty low because, you know,it's whatever you got on your
plate then. And that's what Ilike loud, what I want laterals
(24:35):
to do. I asked them to do is goback over the last five years,
and figure out how much of thework that you produced, that you
originated, was known to you atthe beginning of the year, and
how much was just developedbecause you got a referral your
(24:56):
old, you know, law schoolroommate is the same. General
Counsel of a big company calledyou in on something, whatever it
is, I think you'll find that alot of your work is coming in
that way. Well, that doesn't theportable analysis doesn't work,
and so it must. Firms need tolook at historical trends. They
(25:18):
don't do a really good job ofdoing that, and they don't do it
on the LPQ eat. The LPQ is, issorely lacking in that sort of
analysis. So, and laterals, tobe fair, they don't, you know,
they, they're not thinking aboutit either. So they're not, they
have trouble going back and so,well, did that come in? You know
(25:39):
that they really, you know, havetrouble with it. So part of it
is as you're as you're a as alawyer at a firm, and you're
doing fine, and you're not eventhinking about leaving. Pay
attention to these, to thesedynamics. Pay attention to the
the statistical patterns. Payattention to what you're
(25:59):
bringing in and what's beingbrought in, because you're the
key person to handle this. Sothat's the call that I have, is
that lawyers have to be a littlemore sophisticated about what
value they're providing to theirfirms. Yeah, and I think that's
a great if there's one takeawayfor for partnership thinking,
(26:24):
you know, thinking long termabout their their their careers,
and maybe where they where theyend up, and
looking carefully at it, howyour business comes in. So you
can have that discussion withwith a with a recruiter, with
whoever it might be saying, lookthe trends here. Here are the
(26:44):
trends. And in my especially thelitigators, here's the trends in
my portfolio. And it seems like,it seems like I get two to three
big pieces of litigation, andthat's all you really need in
the course of a year, two tothree pieces of big litigation.
But I don't know in thebeginning of q1 that you know
when that's when it's going tocome in, but I know it's going
(27:06):
to come in, because, if that'sthe rhythm that right, I mean,
right. And so, you know, that'sasking the firms to take a bit
of a bit of a leap of faith withlitigators. But you know,
litigators also tend to havehigher risk tolerance than most
lawyers. So wasn't Steve, we'recoming up on about 25 minutes
(27:30):
here in our discussion. Soanything you want to make sure
that we cover before we close?
And you know any, any way, anyyou know, if people have
questions, how do they get awhole lead? Because there's not
a lot of recruiters out therewho are going to talk at this
stuff as much understanding ofthe Comp world,
(27:50):
right? Um, I pride myself inanswering anybody who who writes
to me by email calls me. Ireally try to answer everybody
who you know comes in eithergets referred in or comes in,
you know, through something likethis. So definitely send me an
(28:13):
email. S Nelson at TMG, hyphendc.com, and I, you know, and
I'll give you, you know, myanalysis of your situation.
Yeah, that doesn't mean you haveany commitment to me at all.
It's just a matter of, you know,you know, it's funny. I'll give
you a story. I've talked to aguy who's actually, is not, not
(28:36):
A, not A, well, he is anattorney, but he's been doing an
administrative job for thefederal government, actually,
and, and he asked me some adviceabout, you know, a couple of
things he's been thinking about.
And talked to him for a while,and, you know, and really helped
him, actually, hopefully he'sgoing to get an offer from a
(28:57):
really good firm. And, you know,I'm, I'm happy, I'm really happy
that able to help him out, andI'm not making a penny.
And to our listeners out there,Steve is not, is not. Bs in
here, you will, you will get acall back from Steve. I can
guarantee that. And if youmention the Steve's rules
(29:20):
podcast. You'll also get a fruitbasket.
Maybe chocolate. I think it'sprobably chocolate is but, yeah,
that's what I go for. Don't sendme fruit. Let's go for
chocolate, chocolate and coffeeevery time
there you go. Man, after my ownheart. Alright, Steve. Well, why
(29:42):
don't we wrap this up anothergreat, great, rich Steve's rules
podcast, and we'll have, we'llhave Steve's contact information
in the in the show notes and andif you do write the Steve. You
immediately add you to the tothe to his his list of folks, to
(30:05):
get the intel that they're thatthey're producing, which is
invaluable, especially those ofyou who are on the who are the
side of the business where we'retrying to source you're trying
to source the folks andunderstand the trends that are
going on. So Steve, thank you.
Thank you. Always a pleasure,absolutely, absolutely, All
right, bye, everybody. You.
Murray, welcome to Steve's rules, periodic podcast
(00:10):
featuring Steve Nelson,executive principal at McCormick
group in the law and governmentaffairs practice. My name is
Murray Coffey, and I am theprincipal of M Coffey, a law
firm marketing and businessdevelopment Boutique. For more
information, please visit mywebsite at M coffey.net Steve
has been an executive recruiterfor nearly three decades, and
without naming names, he isready to spill the tea on best
(00:32):
practices, and maybe a few notso best practices by firms and
candidates that he has seenduring his career, recruiting
some of the most driven andsuccessful professionals into
highly profitable and growingfirms. Steve is a former lawyer
and journalist and is a fellowof the college of law practice
management and a proud son ofWilkes Barre, Pennsylvania. Full
(00:52):
transparency here, Steve hashelped my career immensely
through the years and has becomesomething of a career shaman to
me and I know many others. Hey,Steve, hey Murray. We are, we
are in episode two of seasontwo, and we're going to be
(01:13):
talking today about a topic thatis near and dear to everybody's
heart, which is compensation andso Steve has a lot of
interesting and I think, eruditeobservations about compensation
and why candidates need toreally think it through more
(01:34):
than maybe they are oftentimes.
But before we do that, Steve, asyou know, we talked about
before, the McCormack group isknown for the intel that you all
are doing on a rolling basis inin the various sectors where
you're providing services. And Iknow you just released a DC
(01:55):
report. I think you've gotanother one coming out, and
maybe we've talked a little bitabout some of the other stuff
that that's going on in themarket that's not necessarily
related to lateral partnerrecruiting. So Right? One of
heads up,sure, I mean this, you know, we
really now got two months ofdata, and it's there's certainly
been some feel out there thatthe market, lateral markets
(02:21):
picking up. And I think that'sprobably true nationally. What
we've found in DC, and it is tooearly to tell DC, is not really
at last year's levels so far,but in Texas, where, of course,
we do our report as well, Texasis up significantly, probably on
the order of 20% increase in thenumber of laterals, making moves
(02:47):
and including groups so and thegroup activity even in DC is
also strong. So I think we'relooking at a good year. DC is a
little too early to tell, butbut I think the market's coming
back. One of the things that Ithink is probably explains the
difference between DC and Texasis corporate is back. I mean,
(03:08):
corporate is back as a strongpractice area after really
struggling for a couple ofyears. So in Texas, much more
corporate work than there's inDC. So therefore, you're going
to see more activity as as thepartners now feel like they're
in a position of strength tomove, and that's actually going
to key into the compensation alittle bit as well. One other
(03:29):
point I want to make, which alsogoes to the strength of the
market right now, is we'reseeing a significant increase in
the amount of work we're doingon the administrative side, and
particularly in the area ofpractice management and
knowledge management, got a lotof assignments going on right
now, and one of the things thatwe recently reported on was that
(03:53):
the number of am law firms thatactually have practice
management, personnel, you know,professionals, warrant lawyers,
who are helping run the practiceroute. We're now over half of
the am law. 206 seven years ago,it was like, you know, maybe two
(04:14):
thirds. I mean, maybe a thirdso, so there's a lot of
significance there. And we'reand we're seeing a lot of firms
looking for the really goodpeople to handle practice
management jobs. Ifsomebody's thinking, usually,
when there's a lot of recruitinggoing on in a particular area,
it's a good time for somebodywho wants to transition from
(04:36):
maybe what they're doing nowinto this new area, as you think
about that, as you think aboutpeople who may want to
transition from anotheradministrative role in a law
firm, and I think it probablyhas to be somebody coming from a
law firm, just given the kind ofthe nuances that especially
practice management requires,what kinds of what kinds of
things should people be thinkingabout in terms of whether.
(04:57):
Whether they're in a goodposition to make that what are
the firms looking for withpractice management, then we'll
move on. But I do think maybewe'll maybe we'll just dedicate
a podcast to this at some point,because this is it's actually
growing it big. Greg, yeah,definitely. I think that
(05:18):
primarily financial management.
If you're in a law firm andyou're working in the FPA, I
think it's if you get the rightexperience and you really get
inside the practice areas andunderstand the financial parts
of the practice areas. It's apretty good transition point.
Now, some of the jobs inpractice management, tend to
(05:43):
focus a little bit more on thestaffing of matters, uses of
associates and paralegals and soforth. So there somebody maybe
who has been working inprofessional development may be
that may be a good transitionpoint to go into practice
management. And I'll just sayone other thing, because we're
working on one right now, anassignment in the Knowledge
(06:04):
Management Area. We think thatfor attorneys, people who are
practicing law, associates,maybe counsel, and let's say
they're just maybe they don'twant to be a partner. They don't
want the partnership track, theydon't want the hours, they don't
want the business developmentpressures. One option right now
(06:25):
is to become a knowledgemanagement attorney at a big
firm, and that will get you intothe heart of everything that's
going on in the marketplaceright now related to technology
and artificial intelligence. Sothis could be a huge role for
firms in the future as as this,the you know, the legal practice
(06:46):
is changing, and therefore thatcould be a powerful position in
the coming years. Soopportunities there as well for
practicing attorneys who just,you know, maybe don't want to do
that routine. Yeah, yeah.
That's, that's a great point.
And, you know, it might also bea track for for people coming
(07:07):
out of law school who decidethat they're not going to,
that's not, that's thepracticing side, is not where
they want to be. I have a lot ofthoughts about that, especially
about the interplay with withAI, and maybe we'll talk about
that at it at another time,because I know we want to get
into into our discussion here,and we try to get in and out of
these, these discussions in halfan hour or less. So. So finally,
(07:30):
jump in. So, Steve, we're goingto talk about partner comp
issues and the, I think,questions that popped in my head
and we talked about this beforethe podcast is podcast, is your
you go, you go pretty deep herein your topics, deeper than
than, I think a lot of evenpartners who are making that
(07:53):
transition go. So tell me why,that's why, why you're going
there. I mean, people hear aboutconfidence. They always think
about that top big number,right? What is the big number?
You go a lot deeper than that,right? Yeah, I think it's, it's,
it's, it's often, it's often agating issue. In terms of of a
lateral partner, you can havesome really good, qualified,
(08:14):
accomplished lawyers who arepartners in law firms, and the
because every firm valuesdifferent things, their
compensation can be viewed attheir current firm one way, and
if they go to look at anotherfirm, it could be viewed a lot
(08:36):
different. And I think that'swhat we're going to get into
because sometimes, I mean, thishappens close to half the time.
I'll talk to a partner, and thepoint is going to the decision
will come up, or I will make,I'll make a comment. It says, I
think you're probably, you know,you're better off where you are
now, because I don't think afirm is going to compensate you
(08:57):
at the level or near the levelthat you're compensated now. So
it's really important in thatinitial discussion, initial
decision making about what, whatfuture career change or am I
going to make, is compensationis going to be at the center of
that?
Yeah, absolutely. And I, youknow, there's, I think, you
(09:21):
know, increasingly lateralpartners are being looked at as
as business generators, like newbusiness generators, bringing in
existing relationships andbringing and going out and
getting new new ones. And sowhen you have a partner, for
example, there's a lot of thesepartners, and they're extremely
valuable in inside the firms,but partners who are have a real
(09:44):
history of assisting otherpartners. You know, maybe it's,
maybe it's, you know, referralsof business or with doing first
chair work for institutionalclients. You know, there's some
of these large firms haveclients where the relationships
go back, especially if you starttalking about the big Texas
firms. Some of those, some ofthose, you know, some of those
relationships go back to thefiling of the articles of
(10:05):
incorporation for, you know,well known, well known oil and
gas companies. So, so what? Whatis it? What should a partner?
This is a terrible word, butservice partner. We're talking
about service partner. Whatshould a service partner be
thinking about, if they'rewanting to make that move,
what's the common what are thetop reasons?
(10:26):
Yeah, you know, so, and I agreewith you. It's, it's, I don't
like, it's a bit pejorativeservice. I, you know, I really
call it a technician, somebodywho's really good at their job,
really understands law can make,you know, make decisions with
regard to a strategy or a pieceof litigation that's Could,
(10:50):
could be the difference betweenwinning and losing. So there
with in almost every situation,just because of the nuances of
the lateral market, people,lawyers, who are pure
technicians, are going to findit hard to get to make a move to
another firm at all, becausethat's not what the firms tend
(11:14):
to look for. I mean, there areexceptions of that, but for the
most part, we don't, we don'tget that. What we get sometimes,
and this is where I think a lotof the really granular issues
relating to compensation come upis the person who is has done
business development also, butalso acts as a service, partner
(11:40):
or as a technician, somebody whohas who whose originations at
their current firm are acombination of what they've
generated and what is beingwhat's what they're being asked
to do by the leadership of thefirm or their partners. They're
trying to be good citizens rightwithin the firm that they're at,
(12:03):
and they're taking on theimportant work that's critical
to the firm, that work, youknow, is probably not going with
them. So that's going to factorin. They're compensated in most
firms. They're going to becompensated on the value that
they're providing their firm.
They're not being compensated onthe value of the work they're
going to bring to a move, andthat's the rub, right? I don't
(12:24):
know how many times I run intothis, a lot of times where
partner comes, comes to me andsays, Listen, I really like a
move, but, but here's my here'smy situation. I'm doing $2
million of business a year. Imean, that's my originations at
my current firm, but if I wereto move I'm going to only take
(12:44):
half of that with me. Again,you're being compensated on the
2 million you're not getting,but another firm will often it's
some firms are getting moresophisticated about this, but
often you're, they're going tolook at you as a million dollar
part. And so therefore you'vegot this mismatch of
(13:07):
compensation. It's just, it'skind of right out of the box.
It, you know, I could tell youthat, that that, having worked
in, in sales, and worked withlawyers who are, we're really
good at bringing new businessin. The firms have to invest a
lot more money into landing anew client than in expanding an
(13:29):
existing client relationship.
And is it, you know, is there anargument that can be made that,
you know, I'm a, you know, I'm atechnical partner, but what I've
been able to do is take a we hadthis client that we did half a
million dollars of work for, andas the years progressed, we did
we doubled it and doubled it anddoubled it, which isn't hard to
(13:50):
do, actually, and it's becauseof what I can do when I get in
with a client. And so my valuefor you is going to be, I'm
bringing this technicalexpertise and I'm going to
expand your existingrelationship. Is there a
argument to be made? Are firmssaying, Yeah, we need that.
(14:12):
There is, there is an argumentto be made, and it's probably a
very good argument. I think thatmost firms, in most situations,
are going to be concerned that,yes, I understand that you're a
really good, you know, businessbuilder, but it's going to take
you, if I we go to our friend,you know, it's going to take you
(14:32):
while they integrate you, aswe've talked about on some of
the other podcasts couple ofyears, and we can't afford to
pay you at the level that you'reat now for two years before you
really hit your stroke. Now theexception, I think, comes in in
succession, situations wherethere is a partner who is
(14:54):
retiring or thinking aboutretiring, and they want to bring
somebody in who can take over.
Clients, and in that situation,it's a very good argument should
be made that you know, you'renot paying this person on what
they're bringing over. You'regoing to pay this person on what
you expect that person to tobill in the first year or two,
or and beyond that. And so Ithink firms are starting to get
(15:16):
it. But the problem that firmsrun into on that is when they
take this lateral to thepartnership at large, and they
have to write the memo to thepartner partnership that says,
This is why we're hiring. Andthen the partners say, well,
you're paying in X, and he'sonly bringing over y, and I'm
(15:38):
bringing over y plus x, andyou're paying me, you know,
you're paying me less than him,so you're going to have a
blowback from your partnership,even in a succession situation,
unless, unless that firm'sculture is such that they they
all get it, and they allunderstand it, and they're all
(16:00):
in it. They understand that thisis a situation that we as a firm
need to handle.
Yeah, that'sthat. It's, yeah, well, we can
go off on a tangent on this onefor a while, because they're,
you know, the firms need to bethinking about, sort of having
broader views of how they'rebringing people in, but, you
(16:21):
know, but that might be apodcast for another day. You
know, performance bonuses. Howdo you structure them? You know,
you know, there's, there's,there's, there's teamwork in
there, there's, there's good,you know, firm citizenship. I
you know, maybe this falls underthe firm citizenship category,
(16:43):
but you know, the the amount ofeffort that they're putting into
different business developmentcriteria, how do you, how do
you, how do you, how do youfigure that
out? Because, yeah, that's,yeah, great question. Is a
(17:08):
question that firms strugglewith all the time. Um, the
really, that's the approach thata lot of firms take to those
laterals that you know, thenumbers don't quite work, at
least with regard to what's youknow sure to come over. And of
course, firms don't want to,they don't want to take whatever
(17:30):
projections that the lateralgives you at face value, because
we know that you know thelaterals not you know, not
intentionally, but they oftenoverestimate what they're going
to bring, because they don'tunderstand the nuances of what
happens with the client andtaking the right matter. But so
(17:50):
the firms will go to, okay,we're going to give you a base
of this, which is probably lessthan what that partner is
currently making, right? Butthere'll be some performance
bonuses that can get you thereand above. Most firms are still
focused on originations as thenumber one category and then,
(18:15):
but some firms sort of come upwith a combination of
originations and the amount ofwork built. So if you're that
type of lawyer where, let's saythe succession play, where
you're going, you're going to dosome valuable work for existing
(18:36):
clients, sometimes that getsfactored in, but more often than
not, the biggest factor is goingto be your originations and
there. And as we know, what thatrewards is hoarding work for
yourself and making sure thatyou get the origination credit
and that you're not doing workothers. You go into the firm and
(18:59):
somebody asks you, you know,you're eight months into your
firm, and somebody has Listen, Igot this important client, and
you're the guy that handle this.
Can you help me out on it? Andyou know, some partners are
going to say, I really can't,because I'm not going to get
rewarded forright? Yeah, it's, you know,
there are some firms that willtell you, so I don't always know
(19:21):
if this is, this is astransparent as they want they
think it is that theydon't track originations,
right, right? And, and, so what?
How does that? How do youstructure a performance bonus
with not tracking originations?
Or are they actually trackingorigination, just not saying,
(19:43):
Well, I thinkin some cases, they're there
certainly they're certainlyunderstanding the origination
factor. Split that way. Butthere are firms that that are
that don't track it directly,and in that case, it goes. Goes
to the work managed category. Soif you're the prime lawyer who's
handling contact with theclient, handling the bills,
(20:09):
really responsible for thematter in those firms, that's
going to be the number that lookat. And that number, you know,
often tracks originations. It'snot exactly the same, but at
least that means that, you know,you don't get caught up in a
situation where there's a legacyclient and somebody brought it
in 25 years ago and is stillgetting origination credit. But
(20:29):
you know, but you as the personwho is handling the engagement
and responsible for the successof the engagement, you'll get
reward. And so I think that is amore preferable situation.
Yeah, yeah, it's whatI want to add one, one other
point on this whole compound, oncompensation, because we're
(20:52):
seeing an increase, kind of slowincrease, in the number of firms
that are in closed compensationsystems. Yeah, Jones Day is the,
you know, sort of the poster boyof that black box, right? The
black box, right. Greenbergtravels another one. And the
those firms, if, if the thepartnership has bought into it,
(21:18):
and the partnership trusts,trust is really important. Trust
the the compensation leaders asto how they're doing it, they
can have that can be a hugeadvantage in the lateral market,
because those those people canmake those decisions, strategic
(21:38):
decisions, to bring somebody in,in a situation where you know
you've got important clientsthat you have to retain, and
because of that you will value,you will compensate that person
properly, and you don't have torun it by every partner in the
firm. So that is the number one,in my mind, the number one
(21:59):
advantage of a closedcompensation system is that it
is better for laterals, I think,and in the when it's run, when
it's done properly, closecompensation system is, is can
be beneficial for everybody, notjust the laterals. But, I mean,
I think there are questionsalways about how that's being
done,yeah, and that's a, it is. It's
(22:21):
a it's a trust factor. And withso many firms growing at the
pace that they're growing andgrowing through lateral
acquisition, where the where thethe culture of trust that may
have been built up over years,with the with the legacy
partners, isn't necessarilygoing to exist with the with the
partners that are coming in on alateral basis. And it is a, it
(22:43):
is a firm culture issue. I mean,it speaks to the culture of the
firm about how the compensationis handled. And I, you know, I
go back and forth on closed, youknow, the benefits of closed
comp, I think as, I think, astime goes on, you're right, the
people who are, who are doingrecruiting and need to be more
(23:07):
strategic, need to have enoughfreedom to to work with
compensation in such a way thatthat it, it helps, it helps, you
know, maintain market share,because that's really what we're
talking about. We're talkingabout when we're talking about
lateral partner recruiting, iswe're talking about buying
market share, right? Andsometimes the market share is,
what's more important ismaintaining the market share you
(23:28):
have.
Yeah, the the other, the otherimportant point, um, and this
is, this is mostly from theperspective of the lateral and
their decision making processis, again, you know this idea of
portable business talking aboutanother term that I think is
(23:50):
derogatory in nature, sometimes,that, For example, litigators.
Litigators are often, yeah,they've got clients that they're
hoping won't come back,particularly in a white collar
situation, right? And and solitigators are often, it's
(24:12):
episodic, you know, you'll bringin business. You know, one year,
next year might be a littledifferent. And, but when you're
looking at your upcoming year,yeah, and you're looking at it
from a portable standpoint, youknow, it's going to probably be
pretty low because, you know,it's whatever you got on your
plate then. And that's what Ilike loud, what I want laterals
(24:35):
to do. I asked them to do is goback over the last five years,
and figure out how much of thework that you produced, that you
originated, was known to you atthe beginning of the year, and
how much was just developedbecause you got a referral your
(24:56):
old, you know, law schoolroommate is the same. General
Counsel of a big company calledyou in on something, whatever it
is, I think you'll find that alot of your work is coming in
that way. Well, that doesn't theportable analysis doesn't work,
and so it must. Firms need tolook at historical trends. They
(25:18):
don't do a really good job ofdoing that, and they don't do it
on the LPQ eat. The LPQ is, issorely lacking in that sort of
analysis. So, and laterals, tobe fair, they don't, you know,
they, they're not thinking aboutit either. So they're not, they
have trouble going back and so,well, did that come in? You know
(25:39):
that they really, you know, havetrouble with it. So part of it
is as you're as you're a as alawyer at a firm, and you're
doing fine, and you're not eventhinking about leaving. Pay
attention to these, to thesedynamics. Pay attention to the
the statistical patterns. Payattention to what you're
(25:59):
bringing in and what's beingbrought in, because you're the
key person to handle this. Sothat's the call that I have, is
that lawyers have to be a littlemore sophisticated about what
value they're providing to theirfirms. Yeah, and I think that's
a great if there's one takeawayfor for partnership thinking,
(26:24):
you know, thinking long termabout their their their careers,
and maybe where they where theyend up, and
looking carefully at it, howyour business comes in. So you
can have that discussion withwith a with a recruiter, with
whoever it might be saying, lookthe trends here. Here are the
(26:44):
trends. And in my especially thelitigators, here's the trends in
my portfolio. And it seems like,it seems like I get two to three
big pieces of litigation, andthat's all you really need in
the course of a year, two tothree pieces of big litigation.
But I don't know in thebeginning of q1 that you know
when that's when it's going tocome in, but I know it's going
(27:06):
to come in, because, if that'sthe rhythm that right, I mean,
right. And so, you know, that'sasking the firms to take a bit
of a bit of a leap of faith withlitigators. But you know,
litigators also tend to havehigher risk tolerance than most
lawyers. So wasn't Steve, we'recoming up on about 25 minutes
(27:30):
here in our discussion. Soanything you want to make sure
that we cover before we close?
And you know any, any way, anyyou know, if people have
questions, how do they get awhole lead? Because there's not
a lot of recruiters out therewho are going to talk at this
stuff as much understanding ofthe Comp world,
(27:50):
right? Um, I pride myself inanswering anybody who who writes
to me by email calls me. Ireally try to answer everybody
who you know comes in eithergets referred in or comes in,
you know, through something likethis. So definitely send me an
(28:13):
email. S Nelson at TMG, hyphendc.com, and I, you know, and
I'll give you, you know, myanalysis of your situation.
Yeah, that doesn't mean you haveany commitment to me at all.
It's just a matter of, you know,you know, it's funny. I'll give
you a story. I've talked to aguy who's actually, is not, not
(28:36):
A, not A, well, he is anattorney, but he's been doing an
administrative job for thefederal government, actually,
and, and he asked me some adviceabout, you know, a couple of
things he's been thinking about.
And talked to him for a while,and, you know, and really helped
him, actually, hopefully he'sgoing to get an offer from a
(28:57):
really good firm. And, you know,I'm, I'm happy, I'm really happy
that able to help him out, andI'm not making a penny.
And to our listeners out there,Steve is not, is not. Bs in
here, you will, you will get acall back from Steve. I can
guarantee that. And if youmention the Steve's rules
(29:20):
podcast. You'll also get a fruitbasket.
Maybe chocolate. I think it'sprobably chocolate is but, yeah,
that's what I go for. Don't sendme fruit. Let's go for
chocolate, chocolate and coffeeevery time
there you go. Man, after my ownheart. Alright, Steve. Well, why
(29:42):
don't we wrap this up anothergreat, great, rich Steve's rules
podcast, and we'll have, we'llhave Steve's contact information
in the in the show notes and andif you do write the Steve. You
immediately add you to the tothe to his his list of folks, to
(30:05):
get the intel that they're thatthey're producing, which is
invaluable, especially those ofyou who are on the who are the
side of the business where we'retrying to source you're trying
to source the folks andunderstand the trends that are
going on. So Steve, thank you.
Thank you. Always a pleasure,absolutely, absolutely, All
right, bye, everybody. You.
Popular Podcasts
Amy Robach & T.J. Holmes present: Aubrey O’Day, Covering the Diddy Trial
Introducing… Aubrey O’Day Diddy’s former protege, television personality, platinum selling music artist, Danity Kane alum Aubrey O’Day joins veteran journalists Amy Robach and TJ Holmes to provide a unique perspective on the trial that has captivated the attention of the nation. Join them throughout the trial as they discuss, debate, and dissect every detail, every aspect of the proceedings. Aubrey will offer her opinions and expertise, as only she is qualified to do given her first-hand knowledge. From her days on Making the Band, as she emerged as the breakout star, the truth of the situation would be the opposite of the glitz and glamour. Listen throughout every minute of the trial, for this exclusive coverage. Amy Robach and TJ Holmes present Aubrey O’Day, Covering the Diddy Trial, an iHeartRadio podcast.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy And Charlamagne Tha God!