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 costs.

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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