Posted Jan 02, 2004 07:44 am CST
Instant gratification is something you don’t hear much about in the practice of law. But St. Louis attorney Tom Noonan bases his 13-lawyer law firm’s bonus structure on the “favor card,” an internal currency system that recognizes both lawyers and staff for outstanding efforts as soon as their next paycheck.
“We don’t have the traditional competitive environment you see at most firms where billings are everything. I’ve worked in it, and I think it’s unhealthy,” says Noonan. “I want the mail clerk and the IT person treated and valued the same as our attorneys, and you can’t always do that with a cumbersome written system of goals and reports. We’ve tried to go with what is right for us.”
That’s why, when creating a way to compensate its people, the insurance defense litigation, bankruptcy and foreclosure transaction firm that bears Noonan’s name shunned such current trends as individual business plans and other formal goal-setting systems. Instead, Noonan created the favor card. These are nothing more than Post-It notes bearing, in Noonan’s scribbled hand, the word “IOU” and the number of favors the recipient has earned. Fancy they are not, but each favor is worth $50.
Noonan gives them to attorneys who win judgments or any staff member who delivers above-the-call-of-duty client service, or brings in new business or new staff recruits. These bonuses aren’t based on Noonan’s observations alone; attorneys and staff can nominate each other for the awards. “It’s to everyone’s advantage to make sure performance is rewarded,” he says. Employees don’t know exactly when they’ll discover the prized Post-It on their desks.
“If you do something good for the firm, … I’ll hand you a favor card and that’s money that appears in your paycheck next week,” he explains. “It’s a bonus system crafted to reward each employee’s gifts and abilities. Our bonuses are typically not less than $250 a month or more than $5,000.”
What kind of action earns the $5,000 jackpot? A court judgment for the firm typically wins top honors, Noonan says. But anyone who refers new employees can also win big with a bonus ranging from $750 to $2,000. “Bonuses are nothing unusual at law firms, but our system has made it clear that every employee, not just attorneys, contributes to our success.” In the process, he says, the firm has very little turnover.
Noonan got help developing his business plan from St. Louis legal consultant John W. Olmstead, who says that today’s firms definitely need to establish formal guidelines for compensation and evaluation, but the route they take getting there should fit whatever culture they want to build. That goes for firms of all sizes. “If you don’t want to be a true law firm, if you want to be little more than space-sharers, ‘eat what you kill’ is fine,” says Olmstead. “But for lawyers who want to grow their business, you have to build into a team-based practice.”
Noonan’s efforts at team building are made easier by the fact that he’s the primary owner of the firm. He and two nonowner partners work to set baseline compensation and review procedures, but for the most part he likes to keep the system loose and open. He believes that’s why his firm has grown from Noonan and a desk back in 1986 to 65 employees and offices in St. Louis and Centralia, Ill.
Olmstead says Noonan’s somewhat unorthodox system doesn’t just make employees happy, it also makes smart business sense. “Today, you can’t look only at short-term dollars,” he says. “You have to begin evaluating attorneys and staff in more subjective but measurable ways.” Going beyond billable hours to reward employees and recognize talent allows firm managers to develop more hard data, helping to hone better recruiting strategies and lawyer compensation levels.
And, he says, “You’ll do a better job of determining the real value employees have within your firm.”