The assessment of a law firm
Importance and complexity of the services offered by the partner
Typically, large departments or clients generate more traffic for the firm. Other factors, such as the stability of the partner’s client list, the number of years that the average client’s relationship with the firm lasts, and the composition of their clientele also have an impact on their compensation. partner. More “points” would be awarded to associates with the largest and most diverse client base.
Associate promotional activities
When the partner promotes the firm as part of its business, it contributes to establishing and maintaining the firm’s visibility and goodwill. His participation in business and community events as well as professional conferences helps to increase the visibility of the firm. Associates who participate in this type of promotional and business development activities for the firm will generally receive more points.
Partner’s customer type
The nature and type of activities the associate carries on may affect his ability to generate “excess profits” for the firm. Customers in a thriving industry or industry will generate more traffic than existing or declining businesses. As a result, a partner with clients in growing sectors will be assigned more points than those with clients in slowing sectors.
Average size of the partner’s accounts
For a professional services firm, large accounts are generally worth more than smaller accounts, mainly because they significantly contribute to covering overhead costs and can help attract new clients. Associates with the largest clients will often be allocated a larger share of the firm’s profits.
Growth of the respective accounts of the partners
The historical growth of a partner’s clientele or its sales per client is also a reliable indicator of its ability to generate “excess profits” for the firm. The higher the rate of customer growth, the higher the partner will earn a significant share of the profits as it contributes to better operating results and increased ridership.
Number of years of service of the partner in the firm
The number of years of service with the firm may also affect the allocation of profits. As practice increases over time, there is a natural tendency to allocate a greater share of benefits to associates with the most years of service (subject to productivity). For a law firm, continuity and stability are seen as assets on the market.
Inclusion of the name of the partner in the name of the firm
The inclusion of an associate’s name in the firm’s name enhances its visibility in the marketplace and with customers and potential customers. Indeed, clients and, more importantly, potential customers can make the connection between the partner and the firm and be willing to entrust him with their mandates. After all, is not that the goal? Thus, more points will be awarded to the partners named in the name of the firm.
Number of years of experience of the partner
Experience is a major criterion in the distribution of profits. There is indeed a correlation between, on the one hand, the experience and know-how of the partner and, on the other hand, the points attributed to him. That’s why the most experienced associates will get more points.
Types of Services Provided by the Associate (Generic Services, Specialized Services or Special Works)
In general, the profit margins of a law firm vary according to the variety of mandates supported. Specialized services such as taxation, consultations (eg, in the context of mergers and acquisitions) and litigation support are usually quite profitable. This is the reason why associates who provide mainly specialized services receive a greater share of the profits.
Commitment to the community
By participating in community activities, the partner often manages to build relationships and expand networks. When they sit on the board of directors or on charitable or professional committees, associates interact with senior executives and professionals from a variety of backgrounds, which increases their chances of being the subject of a recommendation in the future.
The recognition of a partner by peers and the business community can affect the recommendations and, therefore, the goodwill attributable to that partner and the firm. For this reason, associates who are recognized by their counterparts and by the business community in general will receive more points for the purpose of awarding benefits.
Percentage of external recommendations for the associate
The recommendations are a good indicator of the partner’s ability to generate more benefits for the firm. In general, the higher the percentage of associate’s accounts from referrals, the more points he or she receives.
Number of clients met by each partner
A client does not associate the firm with associates he has never met. The allocation of points may therefore also depend on the number of customers encountered during the year.
Interpersonal skills, communication skills and technical skills of each partner
Although the assessment of interpersonal skills and communication skills (and to a lesser extent, technical skills) is subjective, some emphasis is placed on these qualities when distributing benefits among associates. Associates who show the best interpersonal skills, the best communication skills and the best technical skills are entitled to a greater share of the profits.
Associates who have the greatest mobility flexibility to serve or attract new customers may be awarded additional points to emphasize their mobility.
Degree of dependence of the firm on the partner
Each partner can play a different role within the firm, and some even have additional responsibilities. Thus, the firm will depend on some partners more than others. More points will be awarded to the partners whose firm depends and who are considered essential to the continuation of its success.
Role of each partner in governance and strategic direction
Since the role of key associates is not limited to fulfilling certain administrative tasks, those who contribute to developing and implementing the firm’s strategic plan receive a greater share of the benefits.
Partner Specialty (if applicable)
Partners who provide services to clients in a particular niche or who hold a specialty (eg, taxation or offering certain types of consulting services) that other associates do not also add value to firm and contribute to increasing the profits and the goodwill of the latter. As a result, more points will be awarded to associates holding a recognized or sought-after specialty.
Sales of the partner
Turnover is often used to establish the traffic of a law firm (as discussed in the first part of this article). More points are awarded to associates with higher turnover.
Billable hours of the partner
While billable hours are not directly related to profitability, they provide a good sense of how much time the partner spends on generating revenue or, in other words, covering the firm’s indirect operating expenses.
Hours in the partner’s budget
The total number of hours devoted to the firm’s activities (including billable and non-billable hours) is a good indicator of the partner’s overall commitment to the firm and its growth. The number of hours spent on clients and other firm activities (eg, administrative, marketing, research and community involvement) is a factor taken into consideration when awarding points .
Most of the above-mentioned factors, which can not be exhaustive, are suitable for medium to large firms. Small firms will use other criteria and arguments to determine an associate’s compensation for a given year.