The Problems With "Permanent" Origination Credit
by Joel A. Rose
In many law firms, originating partners receive "permanent" credit
for all work performed for the duration of relationships with the clients
they brought into the firm. In others, the trend is for originating partners
to receive credit for a limited time (usually three to seven years) after
which that credit is suspended, although the partner may still be the
client's primary conduit within the firm.
If the concept of "permanent" origination credit is still a part of
your firm's partner compensation system, now may be the time to make changes
and address potential problems. These usually relate to:
The perception that partners who receive permanent origination credit
lose their incentive to work as non-originators. These partners no longer
have to generate new business from prospects nor must they produce as much
personal billable work since they automatically receive a share of the
profits from the personal production of the other attorneys. This problem is
intensified in firms where non-originating partners inherit origination
credit from departing rainmakers.
- Lack of incentives for cross-selling the firm's services or expanding
client work originated by another partner. Partners claim, perhaps rightly,
that it is not worth taking the time to sell to another partner's client when
such efforts go unrewarded.
The alternative? Set time limits on origination credits and have
partners share origination credit with other members of the firm who develop
business by cross-selling the firm's services to clients whose accounts were
originated by another partner. In addition, offer "maintenance credit" as
long as the originating partner completes the following tasks to reinforce
the relationship between the client and the firm:
Bring the client in the door and make certain the work is referred to
the appropriate practice area and attorney.
- Guarantee that the client's work will be performed in a timely, high
quality and cost-effective manner.
- Maintain active contact with the client, keeping in mind
opportunities to aid in the development of that client.
- Build a personal and professional relationship with the client, and
handle any potential or actual problems that arise over the course of the
relationship, i.e., processing legal work and collections).
- See that whoever is responsible for the work within the firm ensures
that client schedules are agreed upon and internal schedules are met.
- Oversee timely and appropriate billing and the collection of fees and
Your firm's executive or compensation committee should also review
the contributions of partners who receive maintenance credit to determine if
this credit should be retained in the same manner or re-allocated to others
as changes occur in the client relationship and work performance.
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