Building the Team Concept to Manage and Transition Clients

Experience suggests that clients ultimately hire law firms and not lawyers. Most clients presume each lawyer is as competent as the next. If clients place primary reliance on the firm, the lawyer benefits as the firm itself maintains relationships and generates new ones. When the marketing function promotes the law firm, even if a lawyer with special skills is the "product" sold, it will most often be the law firm as an institution that will be seen as the service provider in the attorney-client relationship.

Many partners, unfortunately, seem to lack an understanding of this institutional concept, and focus solely on their own personal book of business. The broader implications of how individual fees, collections and compensation interact within the firm tend to be depreciated. Yet nothing is more important to a law firm partnership than removing the issue of who actually serves the client from the individual context alone, and placing it at the heart of the firm's institutional life.

Defining the Metrics

Partner compensation from hours billed will be governed in any firm by those metrics that define how the firm views itself and how work is done for clients. Such metrics could emphasize origination (percent of new business that the partner brings in), total hours worked, or hours assigned to other lawyers in the firm (a traditional hallmark of rainmakers). Some of these metrics will do more than others to increase, not only the partner's compensation, but the firm's revenue stream – which is, or should be, the ultimate goal. Any firm that encourages lawyers to maximize their individual compensation may have fast near-term growth. But a willingness to approach compensation as an institution makes for firm longevity.

When rainmakers focus only on their own business origination and client service, the idea is lost that clients belong to the firm, not to a partner. Lawyers may want legal services to be seen as unique because of the attorney-client relationship or because of the special skill required to deal with the challenge or because the client has some constraint that only a few lawyers can accept. Yet, when clients increasingly want to see the dynamic shift toward a model of commodity services provided by a legal team, the momentum can be hard to resist. The best way to do that is through a service approach that emphasizes the firm's entire range of capabilities and value-added resources. A single lawyer may be seen as a commodity, but it is much harder to view lawyers that way collectively.

Creating the Team

Serving clients through teams rather than just a single rainmaker allows the firm to identify and provide needed practice specialties that reflect a full range of client concerns. A billing attorney coordinates the service provision according to a strategic plan, and can give clients a complete and virtually seamless service package. The client receives "one-stop shopping" from a group of lawyers who are chosen to address specific needs, both in terms of practice specialties as well as billing rates. And because the team is the portal through which the firm's counsel is provided, clients are spared the worry that their lawyer might leave or otherwise be unavailable.

Client billing is simplified, and bonuses can go to those teams that get results. Steps like these institutionalize client billing, profitability and compensation. The firm doesn't face sudden disaster when rainmaker partners leave or retire – and clients are better served.

De-Emphasizing the Stars

Base compensation must be tied to the effectiveness of involving other firm lawyers as part of the team delivering legal services to clients. This allows for blended high and low rates on client work, which maximizes revenue and profitability. Compensation is paid based on what is generated for the organization– not for any one individual – because the organization'srevenue is maximized, and so too are profits, the lifeblood of organizational survival.

One can use a sports metaphor, comparing athletic teams that have one or two self-centered, freelancing stars to those teams with no stars, but great cooperative skills. While it is possible for the former to have a good season (often followed by a collapse), it is the latter model that is the more satisfying and longer lasting. The team model provides the greater satisfaction because the collective nature of the achievement allows everyone to stay at the top longer.

The best law firm compensation approach gets away from a star system and rewards those individuals who help the crowd perform better. This creates a more profitable firm, from which all firm members benefit. In today's competitive legal marketplace, it's the dynamic in which billing, profits and compensation all hang together.

Transitioning Key Clients

Building teams to manage client relationships builds the best foundation for one of the most difficult issues in any partnership: what happens when older partners must face retirement or de-equitization from the firm. As rainmakers age they tend to slow down, but that doesn't mean they always accept the inevitable fact that lawyers are mortal. A study several years ago by consulting firm Altman Weil, Inc. showed that the closer to retirement a lawyer gets, the more likely he or she is to oppose a mandatory retirement age. This seems particularly true for lawyers who have been leaders and rainmakers.

Firms are increasingly striving to find creative ways to address this issue. One of the largest Wall Street firms reportedly is offering a lucrative package to older partners who are willing to leave the firm: payment over several years of 50 percent of the average their previous five years' partnership draw. But this raises the question of what happens to the clients of such partners – how will they be retained and served when the billing partner is no longer there?

This concern makes essential the training of younger lawyers to service clients as members of teams. If compensation and billing credit are individualized, the business development credo often leads partners to refuse to share information on clients or prospects with the next-generation lawyer who might "steal" business before the first attorney is ready to step away from active practice. The client service team concept, with the rainmaker still involved as team coordinator, eliminates this difficulty.

An important tactic for transitioning clients to younger lawyers, who can make use of such an opportunity is the widespread use of client relationship management (CRM) databases. CRM databases, if properly used, can facilitate client transitions among senior partners and more junior members of a client service team. The CRM system shares information already available to certain members of a client service team (particularly the responsible billing partner) with all other members. A CRM database centralizes a firm's collective knowledge, wisdom and experience about clients and prospects, and makes it available to all authorized users. Rainmakers' CRM contact records can be used to develop cross-selling opportunities among younger lawyers according to an overall firm strategic plan, with opportunities targeted to individual lawyer plans. Relationship information that might have been hidden away in the retiring rainmaker's files becomes the foundation for a smooth transition. This process facilitates the existing professional relationship and is done for the sole purpose of providing better service to meet the client's needs and wishes.

Addressing Small Partnerships

The issues reviewed to this point are mainly in the context of larger firms. The issue of client transitioning is just as important in small firm partnerships. Older lawyers in these contexts should plan for transitioning their practice well before the necessity is forced by age or ill health. Failure to plan for how clients will be taken care of as a lawyer approaches the age of retirement can be construed as reckless disregard for client welfare – a true ethical violation. Planning options can include simply closing or selling the practice, but other options are just as viable: for example, grooming a successor by hiring an associate to learn the practice, or merging with or hiring a lateral with the option to sell the practice to him or her. The succession plan can be structured to transition over a period of years as client responsibilities gradually transition to the new lawyer.

Especially in a small partnership, aging lawyers or lawyers committed to closing their practices may emotionally leave their clients long before they close their doors. This can result in less effective representation well before the lawyer retires, and it is a danger to guard against. Grooming and building a relationship of trust with a younger partner or associate can guard against such a problem. It's the same dynamic that applies to client teams in a larger firm, and in any partnership will build peace of mind for both the members of the firm and its clients.