Law Practice
Experts: Share-the-Spoils Model Better Than ‘Eat What You Kill’
Posted Nov 5, 2007 1:11 PM CST
By Martha Neil
Although an eat-what-you-kill approach to law practice has gained popularity in recent years, a share-the-spoils model is the better pathway to follow for future law firm success, experts say.
Otherwise, according to Doug Moore of accountant Grant Thornton, the law firm "promotes stars and rainmakers, those who bring in the bulk of business, who are tight with clients at the expense of the health of the overall business," summarizes the Financial Post. "For example, he asks, what happens if the key rainmaker is wooed away and leaves the business?"
The Canadian business publication points to the success of Toronto-based Woolgar VanWiechen Ketcheson Ducoffe, which has grown from 2 to 12 attorneys (including seven partners) over the past 15 years, as an example of how well this approach can work—when combined with other key marketing strategies.
Partner Mark Woolgar says his corporate firm follows the "dinosaur" method of even-Steven sharing of profits among partners, but established as well an adjunct human resources consulting business that effectively brought nonlawyer professionals onto the law firm's team. Woolgar VanWiechen also has a flat-fee billing system, rather than charging hourly rates, he notes.
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Comments
streabogg
Nov 9, 2007 8:09 AM CST
Can someone please explain these 2 models? I’ve heard the terms thrown around for years, but have had difficulty applying these 2 metaphors to the business of dividing profits.
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ESq.
Nov 9, 2007 8:21 AM CST
Eat-What-You Kill means that if you bring in the business, you get all the fees/profits generated by that client (e.g., you “catch” the client, you eat it, if you don’t get clients, you starve and don’t make any money). Share-the_Spoils means that at the end of the year all the profits of the firm are divided evenly, regardless of who brought in the business or whose client generated the most revenue or work.
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streabogg
Nov 9, 2007 9:51 AM CST
OK thanks for that explanation. So, presumably profits are what are left over after costs. So the poor worker insects that tend to & fatten up the prey prior to the slaughter at least get the benefit of their hours worked on the matter, right? then the Master Predator devours the remainder of the carcass. I think I get it.
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been there
Nov 9, 2007 10:30 AM CST
Any person who has practiced in an eat what you kill firm also knows that the approach makes it much harder to do big deals. There is no incentive to cooperate with anyone else or even to introduce your clients to others… But the question remains, why do most firms adopt eat what you kill approaches?
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Been there too
Nov 9, 2007 10:49 AM CST
I think the term “eat what you kill” is typically used perjoratively by proponents of something else. Having been through variations of both systems, any program that does not link pay and performance invariably ends up with someone doing little to contribute while making an amount similar to those who have made sacrifices necessary to generate more revenue. I’ve also found performance based compensation useful in getting partners to forego clients that are no or slow pay.
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also been there
Nov 9, 2007 11:02 AM CST
Most firms adopt Eat What You Kill revenue sharing because it ensures that if you “ain’t working, you ain’t eatin”. Of course, this hurts the lawyers that do a better job working on a matter brought to the firm by someone else than they do bringing new matters in. I was a partner at an Eat What You Kill firm for 10 years or so, and I found that I was not getting many in-firm referrals and was primarily working only for the clients I brought to the firm. I realized that I could keep much more of what I killed if I went off and started my own solo firm, because the owerhead of my old 60+ lawyer firm was pretty high. Now, my net income is much higher, but I work more on administrative and other matters. It is definitely a trade off.
The problem with “sharing the spoils” will always be that some lawyers have a tendency to just collect a check once they have worked hard for a few years. That leads to jealousy, as Partner A doesn’t want to work his butt off to allow Partner B to play solitaire on his office computer.
The best model is a combination of the two, but reaching a compromise on how non-revenue producers are compensated is always difficult.
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streabogg
Nov 9, 2007 3:12 PM CST
I do not think that “client producers” are the only “revenue producers”. Don’t people who work on a matter produce revenue for the firm? Doesn’t a client come to a firm with the expectation that his/her work will actually get done? The rainmaker can’t do that while golfing or attending cocktail parties. I think the system needs to reward both.
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David J. Bilinsky
Nov 9, 2007 5:50 PM CST
There is no question that it is hard to build any kind of firm culture and loyalty around an ‘eat-what-you-kill’ compensation structure.
The old adage that ‘you get what you reward’ applies: if your compensation system does not reward delegation, mentoring, cross-marketing, precedent creation, time spent on firm administration and the like, then one shouldn’t be surprised that these activities are given lip-service at best in the firm.
‘Eat-what-you-kill’ firms reward activities that drive individual bottom-line results. There are lawyers that are suited to these types of firms.
But ‘strip-mining’ rarely results in a firm that is focused on strategic goals, with long-term plans and a positive, sharing culture.
I think it ultimately rests on leadership; if the firm administration self-selects eat-what-you-kill lawyers, then that will be the makeup of the firm; conversely if the firm attracts partners and associates based on wider consideration and the leadership of the firm makes it clear (and is supported by the compensation system) that activities that define a firm vs a collection of self-interested individuals, are rewarded - then the firm should evolve into a more of a well-rounded business enterprise.
David Bilinsky
info@thoughtfullaw.com
lawyer and business consultant
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Jeff
Nov 10, 2007 3:30 PM CST
I don’t know if I agree with this article when it assumes that there’s something wrong with a law firm “promot[ing] stars and rainmakers.” It’s called capitalism, baby! Who are these so-called experts - Karl Marx, Esquire?
I guess these experts are more concerned with the health of the law firm, rather than the health of the individual practitioners - well, that viewpoint (or its opposite) determines the entire conclusion.
Jeff, Gen. X
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frankinsc
Nov 12, 2007 8:49 AM CST
A combination of the 2 rewards the attorney who generates the work and the attorney who does the work. By way of examle, an attorney who generates the work gets 20% credit for all fees collected on the matter. while the attorney who does the work gets credit for 80% of his fees collected on the matter. This encourgages the reainmake to generate more work because he gets 20% and also encourgages the rainmaker to delegate more work.
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