A key aspect of any law firm succession plan is keeping the firm’s best clients when the rainmakers are gone. As more Boomers retire or start their winding down efforts, concerns about client retention and proper compensation are at the forefront of succession plan conversations.
Incentivize Successful Client Transitions
It should come as no surprise that transitioning clients works best when retiring lawyers are properly incented. In other words, if a senior lawyer in your firm is retiring, you must carefully calibrate their pay for client transition efforts when those efforts lead to retention of a firm client.
Determine the Right Origination Credit
Perhaps the biggest challenge you will face during the client transition phase is determining origination credit. This determination involves two factors:
- How much credit: You will need to choose a compensation formula that fits your firm. Origination compensation at law firms usually ranges between 10 and 25 percent.
- Who to credit: You must decide who gets the origination credit: the junior lawyer now doing much of the work or the soon-to-be-retired senior lawyer who has smoothed the way to keep the client at the firm.
Compensate the Retiring Lawyer
While there are a few ways you can incent client transitions, consider this possibility. For an agreed-upon timeframe, pay the retiring attorney a portion of origination, even when their involvement is very little or even nothing at all. In this way, the senior lawyer benefits while a junior lawyer is landing a client (with little effort) that could possibly remain a major revenue generator for the foreseeable future.
Get Creative for Best Results
Your law firm must get creative with compensation issues if you expect your succession plans to work. Revising compensation formulas during client transitions is critical to ensure succession plan success.