It is the classic mistake made by law firms. The principals are the rainmakers and the associates do the grunt work (e.g., depositions, trials, etc.) There’s just one problem: this doesn’t work.
If only a few lawyers are bringing in the business, the law firm is dependent on only a few lawyers to survive. Every lawyer, paralegal and team member must be devoted to bringing new clients to the firm. And it’s your job as the principal to create systems that incentivize associates to bring new clients to the firm.
Tell a new associate that she can make $50k or $400k—it’s up to them. Bonuses are based upon revenue generated by the cases brought to the firm by the associate. If the associate brings big cases to the firm, there’s no limit to what she can make.
Here’s our policy:
FEES ON CASES
1. All attorneys agree to devote themselves to the practice of law exclusively for the firm of John H. Fisher, P.C. (hereinafter referred to as “the firm”) and shall devote their full time, attention, efforts and skill to the affairs of the firm and will use their best efforts to promote the interests of the firm.
2. No attorney shall directly or indirectly engage in any other business or occupation without the written consent of the principals of the firm.
3. All attorneys shall be required to submit any new legal representation offered to them to a principal of the firm for acceptance or rejection by the firm.
4. No attorney is authorized to accept any new legal representation offered to that attorney without first obtaining the written consent of a principal of the firm.
5. An attorney will be considered to be the original source of a file only if the attorney establishes to the satisfaction of a principal of the firm that it was the attorney’s contact with the potential client that was the exclusive cause of the file coming to the firm.
6. In the event John H. Fisher, P.C. accepts a file, and it is agreed that the attorney was the original source of the file, the attorney will receive a bonus. The amount of the bonus shall be computed by multiplying the total amount of the attorneys’ fee received by John H. Fisher, P.C. on that file by an amount that is equal to the percentage of the net sum recovered by the client that is received by John H. Fisher, P.C. as their total attorneys’ fee in the matter.
For example, if the total amount of John H. Fisher, P.C.’s attorneys’ fee is $90,000 and that fee represents one third of the net sum recovered by the client ($270,000), then the amount of the bonus shall be one-third of the $90,000 attorneys’ fees recovered by John H. Fisher, P.C., or $30,000. If, however, the total amount of John H. Fisher, P.C.’s fee is $137,500 and that fee represents 27.5% of the net sum recovered by the client ($500,000), then the bonus shall be 27.5% of the $137,500 attorneys’ fee recovered by John H. Fisher, P.C., or $73,812.50.
7. If the attorney was not the original source of the file, the attorney will receive no bonus on that file.
8. In the event John H. Fisher, P.C. declines to accept a file, but elects to refer the file to another law firm, and it is agreed that the attorney who was the original source of the file, to the extent permitted by the Lawyer’s Code of Professional Responsibility, or any successor code of ethics in effect from time to time in the State of New York, by applicable rules and regulations governing lawyers’ professional conduct and by applicable law, the attorney will receive a bonus equal to two-thirds of the net attorneys’ fees received by John H. Fisher, P.C. on that file. If the attorney was not the original source of the file, the attorney will receive no bonus on that file.
9. John H. Fisher, P.C., as additional salary, shall pay any bonuses due to an attorney, pursuant to this policy, within 60 days of John H. Fisher, P.C.’s receiving final payment of its fee on the applicable file.
10. If the employment of an attorney with John H. Fisher, P.C. terminates, any payments due to the attorney shall be paid to the attorney, or to the estate of the attorney, within 60 days of John H. Fisher, P.C. receiving final payment of its fee on the applicable file.
11. For the purpose of enforcing an attorney’s right to any payment due pursuant to the provisions of this memorandum, the only admissible evidence shall be an “Acknowledgement of Original Source Letter”, in the form annexed hereto, signed by both a principal of the firm and the attorney within 10 days of the case first being offered to the firm. It shall be the responsibility of the attorney to immediately, upon the same being signed, deliver an original copy of such “Acknowledgement of Original Source Letter” to the firm’s bookkeeper for filing and to have a copy placed in the specific file to which it pertains.
12. Nothing contained in this memorandum is intended or shall be construed to create any partnership or joint venture between or among the firm of John H. Fisher, P.C. and any attorney or attorneys.
13. This memorandum and the rights of the parties hereunder shall be governed and construed in accordance with the laws of the State of New York.
14. For purposes of this agreement, the “principal” of the firm is John H. Fisher.
15. For the purposes of this agreement, an “attorney” shall mean any attorney employed by the firm and who is not a “principal” of the firm.
16. In the event that any one or more of the provisions of this memorandum shall be determined by a court or other judicial or administrative body to be illegal or unenforceable, such illegality or unenforceable provisions shall not affect the validity or enforceability of the remaining and enforceable provisions hereof, and any such illegal or unenforceable provisions shall be deemed amended so as to make such provisions legal and enforceable in the determination of such court or other body and shall, as so amended, be enforceable among the parties.
John H. Fisher
Acknowledgement of Original Source Letter
The undersigned hereby agree that the attorney whose name appears below was the original source of the file referred to above and is entitled to receive a bonus or other payment, subject to all of the terms and conditions of the firm’s memorandum, entitled “FEES ON CASES”, which are hereby incorporated by reference, and that the principal signing below hereby accepts that case on behalf of the firm.
John H. Fisher