Imagine the following scenario:
Jordan is a third year Associate with a mid-sized firm in Calgary who has a billable hour target that is somewhat reasonable compared to the targets in Big Law. He typically achieves that target and receives a bonus of $18,000. He is also paid 10% of the billed and collected business that he brings in.
Despite the “reasonableness” of the target, Jordan is under constant stress, for the simple reason that even a “reasonable” billable target in the legal profession is difficult to achieve when one is trying to keep up to date with the law, administer a practice efficiently, promote business, and have a life outside of work.
One of the things that Jordan tends not to get to is business development.
I asked Jordan what happens to lawyers at his firm who fall two hundred hours short of their target. He told me that as best as he can tell, they get some notes from accounting telling them that they are bad people, and they do not get their bonus, but there are no other consequences. In fact, Jordan tells me that many of the Associates fall short.
So here is what I told Jordan:
- Forget about driving yourself crazy trying to reach your target. You will lose $18,000 a year, or about $9,000 after taxes.
- Use those extra 200 hours to market like crazy.
- With some luck in three years your client base will increase by at least $300,000.
- Over the long run, the 10% payment for client origination will more than make up for the money that you lost on the bonus.
- You will be more likely to be offered a partnership if you have a substantial client base than if you had put in the extra 200 hours a year billing files and had no clients.
- If you are not offered a partnership or decide that you do not want to be a partner, you will have options and job security because you have a client base.
- Working under stress to reach your billable hours target if it means sacrificing building a client base is a sucker’s game.
I have met an awful lot of suckers in the legal profession.
This article was originally published by Law360 Canada, part of LexisNexis Canada Inc.