Portable Business Lawyers: 10 Factors to Consider Before Making a Lateral Move
Here are 10 factors to consider before a portable business attorney makes a lateral move to a law firm. This should serve as a guide for your decision-making process, as there are many moving parts in such motion and I cannot cover the whole ground.
1. Law firm environment: Never underestimate the importance of the business environment. If you are dissatisfied with the business environment, you will not be left with the compensation you receive for long. Some of the main reasons for unhappiness include an unapproachable group or a practice leader; an out-of-touch practice leader; lack of cohesion within the group; the lack of participation of a lawyer in the management of the company; the failure of the firm to support the development of an attorney’s business and a difference of opinion regarding billing fees for various clients. For example, in the field of intellectual property, some companies have little interest in supporting a patent prosecution practice. Patent prosecutors may find that the litigation group will not divert assets into their practice while increasing their billing fees to a point where they cannot compete. Before making a move, write down the reasons you are unhappy with your current company sideways, and be sure to address these issues with the potential new company.
2. Association: Lawyers and firms are more wary of anointing revenue or equity partner status to side attorneys than in the past. Without the proper level of business, many companies will not provide a partner degree. In these situations, it will take a year or longer for some companies to first test you as a legal advisor (a pilot program if you want) before even trying to hire you as a revenue partner. This may be a good option for those lawyers with a smaller book as legal adviser to see if the fit is right for both parties before investing in a partnership.
For those with a larger book who become partners immediately, there are a wide variety of ways that companies designate and compensate “partners.” The terms “Equity” and “Income” have a wide variety of definitions and formulas now, so be sure to do your due diligence by closely reviewing offer letters or partnership agreements to determine your financial obligations and compensation. Part of your due diligence should also include reviewing the company’s relevant statutes and recent finances before making the leap.
3. Portable business: It’s no wonder your laptop business is the key to almost every side partner move. I realize that the more business you have, the more chances you have of landing a leading company with a partner title. However, be conservative in the amount of business that you hope to generate and that you hope to develop. I like to use a range that is expected of each customer. If you only list as many laptops as possible, you can act like an Albatross during your time at that company. Whether you are paid with an “eat what you kill” formula or a salary plus a bonus, it is best to choose a company that fits what you are and what you have. Otherwise, it is simply a matter of time before it works. You really don’t need that pressure on your head every day.
The number of portable businesses will vary based on industry type, customer base, connections, and visibility in the legal market. In general, for transactional attorneys, most good-sized firms would like partners to bring in at least $ 1.0 – $ 1.5 million in portable businesses, while the more prestigious firms seek $ 3.5 million or more. Even with these amounts, some firms will want attorneys to come in as advisers first.
There is a market for lawyers with $ 500 thousand to $ 1.0 million for boutique firms and with some regional firms. It is more difficult to gauge the exact range needed for trial attorneys, but firms will need to see much more than they do with transactional attorneys and will need to clearly see a good, consistent business record.
Billing rate: An obvious question for clients is how much your services will cost them. If you are moving from a small business to a large business, the billable rate can be a hurdle, especially for smaller clients or new businesses you are developing. Find out if the potential new company is flexible in vetting with existing clients. You will also want to determine if the fees will be too high for the type of industry you are in. For example, M&A clients are likely willing to pay premiums compared to insurance defense or workers’ compensation clients.
Most companies will ask you to complete a Lateral Couple Questionnaire (“LPQ”). Usually this is a very extensive form that will present pages of questions about your experience, practice, clients, past, present and future income and bills, any ethical issues, references, etc. If you are using a recruiter, I suggest you read it. Be careful to have firm contact with current referrals that you don’t want contacted until after an offer is extended or better yet accepted.
4. Compensation: There are a variety of ways that firms compensate attorneys with portable devices. For the type of attorney positions in smaller firms, you may see a “Eat what you can kill” compensation plan with origination fees and bonuses depending on who enters the business and performs the services (see # 5 below). You have to be honest with yourself and take a very conservative approach to what you can really do with your clients; are the bonuses really achievable and the company will have an overflow so you can make additional compensation.
If compensation is largely based on salary, get the particular details about the bonuses as well as the percentage of source collectibles you will receive when you do company work or the company does your client’s work. It is best to get this in writing if possible. Most typical of a larger firm is paying a salary to the attorney with the business and a bonus for reaching certain billing milestones. At the very high end, base salaries may be 1/3 of the laptop business (might even be better if you are a practice leader or in charge of the office) but much more typical is a ratio of 1/4 to 1 / 5 with a nice bonus for making numbers.
5. Origination percentages: Find out the percentage you will receive if the firm works on client matters and when you work on firm matters. I have conducted an informal survey and the methods of origin vary widely. Some companies will get a bonus at the end of the year, while others will provide specific percentages. Lately I have seen 50/50 to 60 (attorney) / 40 (firm) splits with smaller firms.
6. Business development / cross selling: You may want to move to a new firm to attract larger clients with legal needs outside of your “specialty” or to expand your client base within your field. To achieve this goal, you will need a firm that is willing to commit to putting the appropriate human capital and financial resources to develop your business. Meet with the other attorneys in the practice area and the group leader to affirm that there is a similar motivation to cross-sell to your current and future clients.
7. Conflicts: Don’t assume that you can lead all of your clients to one potential firm; be sure to resolve any disputes. Companies vary as to whether they will build a wall if there are conflicts or whether they will scrap the deal, so it is important that the conflicts are executed before you give up on your current company. Sometimes conflicts can take up to 3 weeks to run.
8. Administrative assistance: It is advisable to find out if you will have adequate administrative assistance and access to associates, paralegals, etc. Most likely, if you move to a larger company, you will have the option of bringing in some of your staff depending on their salaries and available work.
9. Reputation of the company: Determine how important the reputation of a company or group is to you. If you have clients in a particular region, perhaps the only thing that matters is the reputation of the company in that region; If you have clients on the coasts, you can consider a company that is known on both coasts.
10. Size: One factor to consider is whether you want to belong to a large company / group. Is being the big shot or having lots of peers / mentors important to you?
Take the time to write down all the reasons you are unhappy in your current company AND all the reasons you like in your current company. Write them down! Keep this checklist when talking to potential companies and be realistic if you are making a smart career move. Keeping the above topics in mind before you move will help ensure that your new business is a perfect fit for your career.