Latest / Wealthy Woman Lawyer Podcast, Helping you create a profitable, sustainable law firm you love / Episode 272 RESPECT: Attorney Compensation Plans with Brenda Barnes and Camille Stell

Transcript

Episode 272 RESPECT: Attorney Compensation Plans with Brenda Barnes and Camille Stell · Wealthy Woman Lawyer Podcast, Helping you create a profitable, sustainable law firm you love

• 0:01
  Intro: Welcome to the Wealthy Woman Lawyer podcast. What if you could hang out with successful women lawyers? Ask them about growing their firms, managing resources like time, team, and systems, mastering money issues, and more. Then take an insight or 2 to help you build a wealth generating law firm. Each week, your host, Devina Frederick, takes an in-depth look at how to think like a CEO, attract clients who you love to serve and will pay you on time, and create a profitable, sustainable firm you love.
• 0:31
  Devina is founder and CEO of Wealthy Woman Lawyer, and her goal is to give you the information you need to scale your law firm business from 6 to 7 figures in gross annual revenue. So you can fully fund and still have time to enjoy the lifestyle of your dreams. Now, here's Devina.
• 0:50
  Davina: Hi, everyone. And welcome back to the wealthy woman lawyer podcast. I'm your host, Devina Frederick. And my guests today are the authors of respect, an insight to attorney compensation plans. I'm super excited to have them here today because this is such a popular topic among law firm owners, how to develop great compensation plans for their lawyers.
• 1:13
  So first up, let me welcome Brenda Barnes, who is a graduate of the University of Texas at Austin in accounting. She also has an MBA from Texas State University, and she is a legal and accounting professional with more than 35 years experience working with solo to midsize law firms across the United States. She founded Brenda founded B2 Legal Management, known as B2, in the fall of 2,008. And currently, she serves as the firm's business development director. Prior to launching B2, Brenda served in a capacity of firm administrator to the law firms in Austin, Texas area.
• 1:51
  During that time, she was active in the association of legal administrators and served in many leadership roles. She's also the past president of the Austin chap chapter. As a guest speaker and panelist, Brenda is a sought after speaker on topics relevant to the effectiveness and efficiency of law term law firm practices, anything from budgeting and cash flow forecasting to law firm compensation, financial internal controls, and succession planning. She's been recognized by her peers and law firm managing partners, as well as the business community for comp being accomplished in her field. Her coauthor is Camille Stell.
• 2:30
  Camille is the founder, president, and CEO of Lawyers Mutual Consulting and Services. She's a nationally recognized speaker, writer, and thought leader on building modern law firms, succession planning, and life after law. She's also the coauthor of designing a succession plan for your law practice, a step by step guide for preparing your firm for maximum value, which was published in 2021. She counsels law firms on next level solutions, and she coaches individual lawyers on real time problems. After graduating from Meredith College and its paralegal program, Camille worked at a top law firm in North Carolina and managed client services for the state's largest legal malpractice insurance provider.
• 3:13
  She has chaired the law practice management section of the North Carolina Bar Association and the legal marketing association, Raleigh City Group. She has served on the North Carolina State Bar Committee to study regulatory reform, the Duke Law Tech Lab advisory group, and the North Carolina Pro Bono Resource Center advisory board. Camille is a fellow in the College of Law Practice Management. She is was honored by the Triangle Business Journal in 2016 Women in Business Award and by North Carolina Lawyers Weekly in 2011 inaugural class of leaders in law. So, so, happy to have these 2 women here today to talk about law firm compensation.
• 3:57
  Help me in welcoming, Brenda and Camille to the Wealthy Woman Lawyer podcast. So Brenda and Camille, welcome. I'm so glad you're here.
• 4:07
  Camilie: Thanks for having us.
• 4:09
  Brenda: I'm excited to talk to you.
• 4:10
  Davina: You're good. I'm glad you guys are here. I wanna know first that I have a a question. We're the book we're talking about is respect and insight to attorney compensation plans. And I wanna know specifically, while we're talking about attorney compensation plans, why did you guys decide to use the word respect in the title?
• 4:30
  What does that mean? What is that about?
• 4:33
  Camilie: Oh, yes. So just having worked with attorneys for 35 plus years, I have seen fighting, conflict, you know, good good attorneys leaving their firms overcompensation. And, I just think it is all about the different level of respect that your partners have for you and how much they pay you. And so we wanted to grab everybody's attention. It's about respect, and just start in on how to create and customize and modernize a compensation plan.
• 5:11
  Davina: It's so interesting because I think it may be that law firm owners don't think about that as respect unless they're thinking about themselves. They may but certainly, the the attorneys who are working for you, may feel disrespected if you're not compensating them according to what they think they're worth and that could lead them astray. Is that kind of a concept? Camille, what are your thoughts on that?
• 5:40
  Brenda: I agree. I I think that there's so much spoken about compensation. We're just as a society even, we're not comfortable talking about salaries and money. And so, it seems like the only way we can really say to our employer, when we may feel something isn't going exactly way we think it should, we might default to pay and say, oh, if I got paid a little bit more. Right?
• 6:10
  But what we're I think as Brenda and I both have experienced in digging into law firms and digging into conversation, it is regularly just about the money. There is usually something underlying and it's either a lack of trust, a lack of transparency, a lack of respect, feeling like they're being heard. So I really saw that play out in conversations, And I have to say the book title was Brenda's Genius. And as we really kept digging into it, it just really was exactly the right title.
• 6:52
  Davina: Oh, wonderful. Wonderful. I I know it's certainly gonna grab a lot of people's attention. So let me ask you, what inspired you to write this book and motivated you to focus on attorney compensation? I know both of you have a a long history in sort of working with, law firm management type things.
• 7:10
  So, Brenda, why don't we start with you? What do you think, inspired you to write this book?
• 7:15
  Camilie: So just the experience of it so many plans are broken, and not rewarding the behaviors, and and and, I guess, aligning, the compensation system with the culture of the of the law firm. And, you know, we're going from, you know, generational law firms now, especially the smaller to midsize firms where we're where the first generation is retiring, and the new generation coming in is wanting to establish some maybe some different criteria and motives. And it just became, quite evident that there wasn't enough information out there about how you could customize and modernize your compensation plans, and that's kinda where we started. We're on our second edition now because we ended up with such a wealth of information on some of the of the gigs that we're on. But yeah.
• 8:04
  So, that was pretty much the motivation for me.
• 8:09
  Davina: Camille, what do you think your motivation was? What what inspired you to write about this topic? Because a lot of people would say this topic is kind of boring.
• 8:19
  Brenda: Most of my work is with solo and small firms. And, I think that many of those business models are not sustainable. I see a lot of law practices where they're really, supported and propped up by very long time senior lawyers. And, they as that generation needs to be making succession plans, I felt like they weren't doing that, and I felt like part of the reason they weren't doing that is their compensation plan doesn't allow them, you know, any encouragement or benefit from doing that. And I just was concerned that small law firm business models were just broken.
• 9:05
  And and, as community members, we need small law firms. You know, it's great that big law is out there to serve the purpose it serves, but most people are helped by a lawyer they know in their community who's running a solo or small firm practice.
• 9:26
  Davina: Right. Right. And I think growth is one of the biggest challenges that, solo law firm owners have this idea of hiring other lawyers. And then if you've built this law firm on your own for decades, and maybe you've hired other associates. But the idea of like sharing in this law firm, that is your law firm, you're the decision maker and all of that.
• 9:50
  If you really want legacy, if you really want something you can sell, you have to start thinking of how I create a career path for my employees, for my attorneys, for my staff. Because if I don't create a career path, then they're gonna look for that career path outside. And and that compensation is a huge part of that. Right?
• 10:12
  Brenda: You know, I think that's where, lawyers will say to me, oh, you know, I just lost a great lawyer to affirm down the street simply because they're paying them, you know, $25100 a year more. And that's not why. You know, that's not what the lawyer would say if they had a really, you know Honest. Honest conversation. That's not what the firm down the street would say.
• 10:43
  And so, yes, I I think that the, the recruiting and retaining lawyers, can only be enhanced with a good compensation plan.
• 10:57
  Davina: Right. Right. So give me an idea of what your I've given your, you know, we've covered your bios in the introduction and, you guys have just some tremendous knowledge and experience that you've, you know, built on in writing this book. But just tell me how you your personal experiences and professional backgrounds really influenced your research and writing of this book. Let's start with Brenda.
• 11:26
  Why don't we start with you and then we'll come back to Jamille.
• 11:29
  Camilie: Well, I mean, because I started working with lawyers when I was 25 years old, I am, you know, now in my sixties, I have had, a lot of experience and a lot of emotion that goes, goes hand in hand with the management of law firms, and I'm very very small to to medium sized firms. And I've seen compensation systems, especially the treatment of contingency cases, really hinder and and and break up firms. And so, you know, I've been with the firm for 10 years in Austin, and, we ended up, you know, split emerging up into a a really international firm now. But, you know, that 10 years of my life went into that. Right?
• 12:12
  And so when when I saw it break apart over money, I started wanting to peel back what it is that could be, instilled in some of the compensation systems that would not only reward following the dollar, which I'm a numbers person. I'll admit. I'd, you know, love the the I think the numbers tell the story, but they don't tell the whole story. Right? So, so when, you know, I, you know, what Camille said earlier about succession planning, I really started out focusing my consultancy practice on succession planning and learned really quickly that the reason many of the plans didn't work was because of their compensation system.
• 12:51
  And so I started diving into how could you follow that money and transition clients from 1 generation to the next, and and get the people to retire and on and so forth. And so I just became a passion of mine. I dove into those two things in particular. You know, I'm always worried about, you know, are you profitable and how to build your profitability. But, you know, one of the things that you said earlier, and I'll just let Camille speak to this, is, you know, when when you're you're solo and small firm and you're building your firm, you really need to to establish what it is that you want to do in the long term.
• 13:28
  So are you are you building it to sell? And if you build it to sell, then, you know, you need to to watch what firm name you pick. You have to look at who you recruit. There are a lot of compensation systems that are being designed around getting lawyers to help you build that particular firm if you're if you're building to sell. If you're building just to leave a legacy, then you've got a whole another avenue probably that you're gonna be going down, which is, you know, recruiting, associates and laterals that are end up gonna be able to take over your client base and that sort of thing.
• 14:03
  So all of this, you know, is to say that succession and compensation are very intertwined with one another, and and you need to think about the firm that you're building and the culture that you're building because your compensation system will define it.
• 14:19
  Davina: Right. Right. Camille, what about you? Your personal experience and professional background. How did that influence the direction of this book?
• 14:28
  Brenda: Well, it's interesting that Brenda and I connected because while she's the numbers person, I'm the soft skills person. That's Tom. And, I was actually I've worked a lot of roles in law firms, things like paralegal work, business development, professional development, recruiting, and, you know, I really look to lawyers, to encourage them, to help them develop them selves in their careers. But I just again, as I was getting those calls to help law firms, rarely did they say my compensation plan is broken.
• 15:12
  Camilie: Yeah.
• 15:12
  Brenda: But as we delved into problems, I could see that it was. I didn't really know how to fix it. So I I had to go find somebody who could really help me, both understand better, the the numbers and how to make them work. And so when Brenda and I connected, right away, we could see that what we both brought was really valuable. And that's what encouraged us to write the book because we also realized there's probably not a ton of people who have all of our skill sets in one person.
• 15:48
  Davina: Right.
• 15:48
  Brenda: And if we combined our resources, you know, it it made for a much stronger product that we could help people out with as well as book that could bring a a great resource to people. And I think you're right. I think a lot of people do think, how interesting is compensation? But I think if they drill down into many of the problems that they might be experiencing in their firm, they might find that there's an underlying problem that could be resolved by paying a little more attention to things like managing partner compensation, you know, associate compensation in total benefit packet, and certainly with more clarity around a path to partnership.
• 16:36
  Davina: Right. Right. It and I'm so glad you guys wrote this book. I'm very excited when I found out about it because I, as a coach of law firm owners, I I have a lot of discussions with my clients about compensation, and and what do we offer? And especially now it's so competitive for these solo and small firms that are growing, and they're wanting to hire lawyers.
• 17:00
  And we went through a period where big firms were poaching from midsize firms, mid size firms were poaching from small firms, and small firms are turning around and going, who do I poach from? Right? So, what? 1.9 percent unemployment rate in the legal profession. So it's really tough out there for small firms and hiring lawyers.
• 17:21
  And I think this is such a key element. And in my casting around and looking, there are very few resources out there. And some of the resources I found are really for bigger, law firms. And also they're written in a way that even as a lawyer, I don't wanna read them because they're so Yeah. You know, full of legalese.
• 17:40
  And I think this is a really approachable book. I really have enjoyed reading it. I want to talk about, some of the different models that you share in the book. And at first, I wanna talk about, like, the traditional models. And and I know we can go way down deep into a rabbit hole here, but I'd like to give just some idea of maybe some of the traditional compensation models that we've seen in the past that people may be familiar with and maybe not knowing what the name is for them.
• 18:11
  And then we'll shift into talking about what's changed and why. That's important. So, which one of you can speak the most to sort of traditional compensation models? I certainly can jump in. Yeah.
• 18:26
  So, you know, traditionally,
• 18:28
  Camilie: right, we we had the lockstep program where people were brought in at a certain salary. If you graduated in this particular law class, everybody was paid this amount of money, and then you, you know, gradually moved up the up the pay scale until it was time for them to decide whether you were gonna be an equity partner or not or make an equity obviously or in the partnership track. And, you know, other, you know, types of formula driven, compensation packages were introduced, but it really wasn't as mechanical as it is now. So that's you know? And that's thanks to a lot of the practice management softwares have finally become sophisticated enough to be able to track multiple originators and track relationship managers and that sort of thing.
• 19:12
  So we're starting to see a little bit of an evolution of the opportunity to kinda measure some of that stuff a little bit better. But, you know, traditionally, it it's always been salary plus bonus, salary plus bonus, and then competitive benefits. I think law firms have always been extremely rich in benefits. And, and, you know, that's that may or may not be important to the generations that are coming into the law firms now. You know?
• 19:37
  And and, well, yeah, one of the things and then Camille can jump in here. But one of the things that that I think is happening much more is is designing plans that give your, new associates options. Options of of what path do they wanna be on. Are they gonna be on, I wanna make as much money as I possibly can, you know, path, or there are others that are do not wanna be on that path. And but they're great lawyers, and they you know?
• 20:04
  And, you know, it's it's funny because when, you know, we talk about women lawyers, I've I wrote the chapter on diversity and inclusion and all of that come all of that and the statistics and just all of my research with about, you know, that you know, less than 20% of women are partners in law firms and just that whole path. And one of the comments in and and the tall poppy, syndrome, which is, was put on by the ABA. It was a great conference of women lawyers that put that together. But one of the women said, you know, I had a baby, not a lobotomy. I'm still a functioning member of this firm, and I need to have a path in my compensation, you know, in such a way that I'm, you know, meaningful in contributing to the law firm.
• 20:51
  So, I think plans, you know, have evolved and they're continuing to evolve, but they they now can be customized because we have more flexibility in our practice management software than we've ever had. And, you know, and it depends on what you're you're wanting to reward. Right? So
• 21:07
  Davina: Right. Right. So I've well, I worked for a law firm for a while, before I became a lawyer, and I was one of the admin, marketing manager for a lot a large law firm, the Zeiss Law Firm. And they they really had this period of time where they were trying to get all the partners to be rainmakers. And then they sort of figured out that not all the partners are gonna be good rainmakers.
• 21:31
  And so when I was reading about your finder, minder, and grinder, you know, model, I was like, yeah. Okay. I'm familiar with this model. Why don't you Camille, why don't you tell us what that is?
• 21:43
  Brenda: So I think it's, you know, we would love to see, or or law firms would love to see all people who sit in that partner seat, doing all the same sort of things. Right? Ringing in lots of clients, billing lots of hours, delegating lots of work, but we all know that that's not really how it happens. And so the oh, I think the finder minder grinder concept has been around. Right?
• 22:16
  The finder is the one who goes and gets the work. The minder is the one who manages the relationship, and the grinder is typically the associate who's really you know, their job is to get those, you know, 2 1000 hours build in the course of a year. But it's it's interesting to see how actually, particularly in a small firm, those roles really overlap some. And the beauty of using that program is that with a little bit of financial analysis, you can tweak those numbers until you make that system work for you. So for instance, you know, Brenda will run a a a financial model for 1 firm where, you know, the origination credit, or the the finder credit, you know, might come in at 30%.
• 23:11
  For another firm, she'll run it so that it comes at 15. For another firm, she'll run it, you know, 3 different ways. So everybody can see what their options are. But those are sort of the 3 roles of the people in the firm and the jobs they do and trying to to fit somebody into a role that they're not going to be good in is not gonna work. So instead, try to put everybody to their best and highest use.
• 23:44
  And even if it's a partner who is a grinder, right, that's much better than an underperforming partner, and it's much better than putting some sort of, rainmaking responsibilities on them that they're not gonna be able to fulfill. Use their ability to crank out hours to the firm's advantage and then, reward that lawyer, you know, adequately for that.
• 24:13
  Davina: Right. Right. So what's, I think most people are sort of familiar with this idea of billable hours and you're gonna, you're gonna, everybody has a billable hour requirement. And then there may be some compensation based on collected billings or maybe some compensation based on origination, depending on, you know, what you're, who you're gonna assign those to. Talk to me about some of the changes that we have had in our society and, with new generations and in our culture.
• 24:50
  What are some of the things that have impacted, certainly COVID 19 is one of the things that impacted because we have a lot more remote work going on. What are some of the other things culturally that sort of impacted the law firm in a real, really sharp, fast way that caused us to have take these big, you know, traditional models and have to suddenly pivot with them. What are some of the things you guys talk about?
• 25:19
  Brenda: One of the things, you know, that I see is, the difference in how generations purchase. So if my mom had needed a legal service of some kind, she would have asked her friends, she would have asked folks at church, she would have gotten personal recommendations, She would have gone to the office. She would have allowed them to tell her what to do. Right? She would have handed them a problem and would have waited for them to fix it.
• 25:49
  You know, my 30 year old niece is never gonna do that. Right? She's a do it yourselfer information, is always lived on the Internet as far as she's concerned. She's gonna go out and try to find whatever solution she can. And when she reaches a barrier, something she can't do, she might want a lawyer to step in and help, but she's gonna want them to work and do and communicate with her in a totally different way.
• 26:21
  I I believe you could walk into many law firms today and they look much like they did when all of us started our careers, you know, several years ago. Right? And so I think that's one thing is generational differences in consumers. I think the other thing that I see a lot is people don't know they have a legal problem. They just have a problem.
• 26:45
  They wake up and the neighbor has built a fence on their property or, their, you know, their dog bit someone. They're not thinking, oh, that's a problem that a lawyer can solve. And and lawyers haven't made themselves very accessible to just everyday folks. So a lot of people don't know a lawyer. They don't know how to find a lawyer, how to engage a lawyer.
• 27:13
  And so I believe that law firms really have to start speaking the language of the people around them and the people they're serving, and that is online. It's, more modern websites. It's more modern ways to bill clients. Clients will want transparency in pricing as well as they want legal expertise. And I think we all know if you ask a lawyer how much something's gonna cost, they'll tell you it depends.
• 27:45
  And certainly it does. But it's just like when I had a roof put on my house and I asked the roofer how much it's gonna cost, he says, it depends, but here's a range based in my experience on what your roof looks like. And so I know if I'm looking at $5,000 or $50,000. And I think that's a barrier that that lawyers have not seen an easy way around, And I believe it is much easier than they think it is.
• 28:20
  Davina: Talk to me about, maybe, Brenda, you can answer this question. Talk to me about the the new generation of lawyers, like like Camille's niece, she were a lawyer. Right. How, how is that affecting these compensation packages? Because generations think differently.
• 28:41
  They, like you said, they're, they're born. They don't know life without the Internet. They don't know life without social media. You know, what kinds of they don't know. A lot of people came into the work world, during the pandemic.
• 28:55
  So remote work is just given that it's a possibility. And, working from anywhere, work life balance, we're seeing a lot. What kinds of things do you see that are gaps we need to bridge to the generations?
• 29:11
  Camilie: Right. And, you know, and it's it's it's it's becoming, more prevalent even though I think a lot of law firms are fighting back on the flexible work arrangements or the work from home arrangements. I think that is a a very shortsighted because I do think the generation that's coming into the firm wants to see transparency. They wanna know exactly what their path to partnership is. They if you have a billable hour requirement, they wanna know what it is.
• 29:38
  I mean, I've had a client the other day, and the associate was, well, just tell me what I need to do. That's that's all I need. I just need to know what it is you expect from me to make this piece you know, that tier. The other you know, the thing is addressing, law school debt because so many, you know, of of the new associates are coming in with a tremendous amount of debt and that, you know, coupled with trying to to work very hard, especially in a solo to small firm, and they've gotta make their, you know, their payments on their debt. You know, just being conscious of how you structure maybe some of your bonus systems so that they are rewarded, for some innovative designs, and helping you create, the, advancement in technology, for example.
• 30:22
  I mean, they want to see their firm moving forward, mood staying pace, doing what needs to be done to, you know, to to address social and ethical responsibilities in the community. They want to know what's expected of them of the numbers, and and they want and I said this earlier, flexibility and choices about what path they're on rather than everybody just being fit, you know, in the same mold and say, well, everybody's gonna bill 1800 hours, and this is how we're gonna do it because they're all not on that same path. You know, they wanna see diversity and inclusion, you know, the the initiatives inside of a firm so that that the, inherent biases that are often built into compensation systems are being addressed. You know, so it's just they're they're a lot more, in my opinion, progressive in the thought and flexibility of the designs that they would like to see in the systems. And, again, you know, it gives the owners of law firms great opportunities.
• 31:29
  I mean, it really does because they can build a workforce of of of attorneys around them that's helping them meet the their strategic goals. And, and it's really I always say, have you asked them? Have you sat down and talked to them about their career path and what they want to do, you know, as they progress? Do you provide them coaching and business initiatives? Do you teach them about the business of law?
• 31:55
  Do they understand finances? So when they're making decisions about hours they're spending on that matter, that they understand that, you know, what that means to the law firm as far as the, you know, the the business side of it and that sort of thing. So I think that we are starting to and we're at least introducing and engaging with partners that they need to think about this when they're building this associate comp package is that it's more than just the money. It's it's gotta have a lot more of of those things built into them that give them opportunity and flexibility.
• 32:30
  Davina: Let's talk about diversity, equity, inclusion for a minute because I you know, the reason I have the wealthy woman lawyer podcast, and we particularly focus on, you know, women in all shapes, colors, sizes, ethnicities, is because if you open up a big law or midsize law website, and you look at the partners page, you will see you may see some people of color, some women as associates, but the partners by and large are going to be what I call the white men over 60 club. Yep. It used to be white men over 50 club. And now that I'm knocking on 60, I'm calling it white men over 60 club. And their idea of diversity started in the in the eighties nineties when they started including white women in that.
• 33:22
  So you might see more white women, but you see that women had to become men Mhmm. To be able to sort of compete in these traditional firms. So women of our generation, you had to there was no real excuse for having babies or not having babies. You had to grind it just like the men did. If you didn't, you, you weren't cutting it.
• 33:41
  And so I'm excited to see that there's new generations of people, millennials and Gen Z coming up behind us who are saying we want a different kind of world and we wanna see our faces represented and the partners of law firms. As law firm owners, how can we, ensure that we're creating policies and that we're using compensation in a way that encourages sort of diversity, equity, and inclusion of all types of people.
• 34:17
  Camilie: Yeah. So there is a tremendous amount of information on the, diversity lab, minority corporate counsel association of different things that you can do as owners of a law firm. The the first step, though, is having a commitment to the fact that you want to make ensure that there that where you can, you minimize any type of biases in any of your systems, not just in compensation. And, you know, it's it's it's true. I mean, it's like the traditional law firm, you know, partner would walk out of their office.
• 34:56
  They have their favorite associate next door. They don't make a conscious effort to ensure that other team members of the firm get to participate on that particular client matter or take them to that client meeting. So I think that having a commitment to, to being conscious of that, you know of course, don't I'm I'm just assuming that we don't tolerate just, explicit bias. These are things that you don't recognize that are happening inside your firm. And may you know, have an independent purse yeah, person look at it, and and just point out, say, well, you know, this this is a this is a type of thing that like origination credit.
• 35:37
  So origination credit is something that, unfortunately, women have to fight for all of the time because it's just, you know, and the others that will say women can be the worst on them on each other. You know? And it's like, you know, it's like, be supportive. You know? It's it's okay that, you know, it's got the tall poppy syndrome is that whole thing where it's like whoever rises to the top, we're gonna cut you back down to size because we don't want anybody, you know, going out ahead of us.
• 36:05
  But the, you know, the the best way to to address that, I mean, is to to really be conscious of the fact that you are not going to tolerate in that and test it. And the the generation of of attorneys that are coming in, they really don't even understand how that could have even happened. You know? It's it's right? They're like, what?
• 36:29
  I I don't even I don't know. I don't even understand why this is an issue, but clearly it is. Right? So Right. Right.
• 36:35
  Davina: Well, and as women, we're continuing to face challenges to rights that we long assume that we now didn't have to deal with anymore, but now we see a rollback in that. So it's definitely something that we can't afford to rest on our laurels and not consider that. And I think what is unique and I know, like, in my work with, women law firm owners. When you become a business owner, you're now balancing the needs of the business with the needs of the people. And so it's it's easy when you are the one sort of in the seat of, you know, I'm not getting the raises.
• 37:11
  I'm not getting the mentorship. I'm not getting the support, which is what the ABA report talked about women struggling with. Right? But when you're the boss, and now you have people who say, well, I've got 3 of my employees are out of maternity overlapping. You know, there's gonna be some resentment, some concern about that.
• 37:31
  Some, well, I can't afford to pay all these people and still get the work done if they're all out on overlapping maternity. So we're really starting as women to deal with the hard questions ourselves of running a business, and how do we deal with these issues, and how do we deal in a way that supports other women, that supports women of color. And there's some, you know, there are some of things that I think come up that, you know, people can give thought to is oftentimes, you know, our ring makers may have been brought up in an an advantage or privileged way where they may have connections that people who weren't brought up with the same advantage and privilege, you know, don't have. And so there may be something where we really have to look deep into those types of things and go, how do we help create a more equitable situation? Because maybe my person who, you know, graduated from a a top tier law school and has all these connections is going to be able to make more money.
• 38:32
  But my person who didn't, who had to put themselves through law school, maybe they don't have that. So I think there's a lot of work that can be done and probably we could have a whole conversation just on diversity, equity, and inclusion. I want to talk about I wanna go back to transparency. Because I think this is something that makes a lot of us who sort of grew up in the career world, in the nineties, eighties nineties and and 2000, early 2000, a little uncomfortable. And this is this idea of transparency.
• 39:03
  I am often speaking with people who, who just think that as the business owner, you need to just tell people like how much money you're making. Everybody needs to know how much other employees are making. And we have a new generation of people who are kind of brought up on this social media content where they're seeing that this is how we want it to be. We want everybody to be transparent because that how do we root out that things are inequitable unless everything's transparent? But as a business owner, that can be a very touchy thing, especially in a small business where you're making a certain amount of money and the people working for you are gonna look holistically at that amount of money and to go, you're making that much money and you're only paying me this.
• 39:49
  And of course, they're not gonna see all the other expenses of the business. So transparency seems to be kind of a really double edged sword that can cut us. And also maybe the thing that we have to do anyway. What kind of information did you get as you were interviewing and talking with people and sort of coming to conclusions for this book around transparency and how we work with that.
• 40:15
  Brenda: I think when a lot of lawyers hear us say that, they say it's all or nothing. And I don't as with most things, that's not the case. I I am not suggesting here's what I am suggesting. The more you tell your associates not to talk about the salaries they're making, the more they're gonna talk to each other about the salaries that they're making, and they're gonna wonder why John keeps making more money than Jane. And what I'm suggesting is not that you publish a spreadsheet with everybody's name and salary, but you talk about bands, salary bands.
• 40:59
  You talk about, you know, years of hire and classes. You talk about things that make a difference and why this 1st year stood you know, this this 1st year lawyer is making more than this one. Oh, well, actually, though, this is their first law firm. They just came off a 2 year judicial courtship. We pay, you know, $15,000 bonus for that.
• 41:27
  So that's why. You know? So letting them fully understand what the pay looks like, and what the bonus opportunities are. It it doesn't mean that you have to, again, show the number, but you tell everyone this is what you have to do to get the bonus, and this is what the bonus pull will look like. And what you bring home from that is what you've earned based on what you've done in in these criteria.
• 42:04
  Path to partnership. I get that the owners are gonna feel, odd sharing, you know, this is this is how much I bring home. But I think if you can say to them, here's how much it costs to run a law firm. Here's what we pay in rent and salary, and then everything else. And our partners based on their billables and their originations tend to bring home between $350,500,000.
• 42:43
  And then as owners of the business, we split the profits at the end of the year. Now if everybody else in the firm is making $25,000, that's gonna be hard to hear. Right? So one reason you might not wanna be more transparent is because you don't have a good story to tell. But if you've got a good story to tell, you should have no fear in in sharing more of it.
• 43:14
  Camilie: And and share the stories of being generous. Right? So so, you know, I'm a big believer in in the, the book Traction. I love Traction. I'd I'd ran my business on it.
• 43:25
  It increases your profit. Have the goals to accomplish what it is that you wanna do as a firm and get everybody to buy into it. And as you meet those goals and objectives, then share be generous. Share some of of the profit. Here's a profit distribution.
• 43:42
  We had a really great quarter. You know? We're gonna distribute some money out to everybody. And, and Camille's exactly right. The more you are specific about the the objective criteria, which are your hour, your collections, or however you're measuring all of that, but your subjective criteria as well of how, you know, the different things are.
• 44:00
  Do you mentor associates, especially if we're talking about partner comp? You know? It's like, you know, what are you moving the firm forward, or are you just sitting still? You know? So it's it's associates look, and they are aware of the nonproductive partners that are sitting in those offices.
• 44:16
  And they are watching to see what the management of the firm is going to do to move that along. You know? And as we're talking about all these compensation plans, you know, we talk about the things that could help people, I always also try to remind, you know, the partners. It's you don't want to lose a really good rainmaking productive partners because your compensation system is so naive or so constrained that you're not rewarding them for their contribution. Because, again, it goes back to respect.
• 44:50
  Right? It's all, you know, the money and how hard they're working. And I hear it time and time and time again. It's like, I work and I work and I do all this nonprofit work and I sit on boards and I do all that, and then partner over here does nothing. I mean, they they pick up at 5 o'clock and off they go, and they just want to be measured for their contribution to the firm.
• 45:12
  And that's why compensation systems and the design of them are so important, and the associates are sitting there watching that design.
• 45:19
  Davina: Right. Right. Talk to me about what you you know, one of the challenges of small firms hiring lawyers is is lawyers are out there going, well, I can go over here and make x dollars. And right now with sort of the tight labor market among lawyers and a lot of lawyers starting their own firms out of law school and that kind of thing, It's a struggle for small law firm owners to compete. And so one of the things I talk with them about is making sure that you're talking about your whole compensation package.
• 45:55
  What makes you different? What are some of the things that small firms can do to really put together those enticing attractive compensation packages where they might not be able to meet that salary, that base salary that's competitive to a larger firm. What kind of ideas do we have for them?
• 46:17
  Brenda: In the book, we interviewed 3 law firms and, we asked them about the benefits that they were providing. And, I think that that's, there's a really interesting idea there. So for example, one of those firms, provides, tuition reimbursement. And, you know, that's that's in one check that they get every year that goes straight to their to pay off their loan debt. And that is something that, you know, particularly speaks to this generation of folks.
• 47:00
  I mean, you might could do, you know, something as big as, you know, 2 or 3 payments for them. And then so they're paying their regular payments, and then you give them that bump, that that can be really impactful to someone. Another one of the firms, that we interviewed, they have unlimited leave. And it's funny. I was in a recent meeting with her, and she was talking with another lawyer.
• 47:31
  And the other lawyer said, I I can't imagine that you do that. How in the world do you give unlimited leave? And she said, one, I got tired of trying to micromanage that. You know, someone needed, you know, 3 weeks this year for a big trip, and someone, you know, wanted to take extended time for this. And she said, I got tired of trying to manage that.
• 47:57
  She said, and I realized why do I need to manage it? These are extraordinarily smart people that I'm working with, and they know what they have to do, and they know what they need to get done. And if they can manage all of that, I'm happy for them to take the time they need. And she said, and it really doesn't average much more than I would probably give them anyway. She said most of my lawyers take 8 to 12 weeks off a year.
• 48:29
  And she said, you know, that's they come back better, healthier, stronger, more eager, and excited to work. So, you know, I think there are all sorts of things you want. It is. It is. And some of those people are probably not on partner track.
• 48:48
  Right? They're probably they have hours that they need to meet, and they're doing it in a different way. You know, maybe working that really hard period of time before the the vacation. But they're taking it off throughout the year, not, you know, the whole summer at a time.
• 49:08
  Davina: Oh, yeah.
• 49:09
  Brenda: But I think we all sort of we gotta go, wow. How could you possibly make work? And when you when you try something different like that, you don't have to say we're gonna do this forever, and we're gonna do it even if it's a huge failure and it costs me a ton of money. I've I've told you I'm doing it and we're doing it forever. Try things out.
• 49:32
  Just let your employees know. Let your associates know. This is something I'd like us to try. If it doesn't work, we'll have to try something different.
• 49:42
  Davina: I it's interesting the unlimited the unlimited PTO is a big topic. And a lot of women loan law firms are offering unlimited PTO. But what they're what I see people finding as they grow is there might need to be some policy and regulation around it. So there may need to be a policy about how the the, the length of notice, how we coordinate with other people on our team. We can't have all the paralegals out at once, or we can't have a full team out at once.
• 50:13
  And so did the I am seeing unlimited PTO working for people. I'm generally not seeing, law firms where people are taking 8 to 12 weeks a year. I mean, then that's shocking really for that much time. But, and I think statistics will show that most people, if they have unlimited PTO, actually take less vacation time because they don't have this sort of defined so it definitely is a model that we're seeing a lot. A lot of people are are experimenting with it, but I think you have to really, think make sure your policies and procedures that you're understanding.
• 50:50
  And that happens naturally, I think, as you grow. You start to grow and you say, oh, we just had a situation where, you know, we had a whole team out at once and and other people had to cover for them. So we can't let that happen. So now we need to create a policy where people are, you know, coordinating with each other. But, you know, for coordinate with each other instead of the management coming in.
• 51:10
  Camilie: Yeah. Yeah. Well, for attorneys, you know, I mean, if their their compensation plan is based on their productivity, they're going to be confined a little bit anyway. Because if they wanna make, you know, a $150,000 a year, they know exactly how much they've got to to work it, right, to to get there. So I think that will self manage the unlimited, you know, time off as well.
• 51:35
  I think you run into problems probably with your staff. You know? That's a that's a tricky one because you gotta be there when the clients need you. Right?
• 51:45
  Davina: Mhmm. Yeah.
• 51:47
  Brenda: So
• 51:47
  Davina: let me I'm just checking here to make sure that I get I have so many questions, and we have a limited amount of time. So I wanna make sure that I'm getting some good ones in here before we end, which we need to do in a few minutes. But, what practical, well, I think we discussed that. So what are the comp some of the common pitfalls that firms should avoid when they start either establishing or attempting to revise their compensation plans? What are some of the common pitfalls do you think they should avoid?
• 52:22
  Camilie: So one of the things that that we run into frequently because I usually there my there are processes that I actually interview the partners individually on their own, confidentially to talk about what motivates them and what they find that they what means something to them in the compensation plans. And and, of course, you know, it also allows me to determine who the players are and who's who's got some anxiety about not being compensated or respected enough for their contributions and kinda I can dig down into the emotional side of the sole compensation system. But one of the things that always strikes me is that they will, many partners will immediately go to that origination credit that they want to to put into their comp system and assume that that's going to motivate everyone in the firm to go out and and generate new business. And I I constantly have to say, that's not going to work. You certainly need to reward those that are going out and hitting it out of the park, but but that that lawyer that that never was a rainmaker, you can put 35% there, and they're still not going to see any benefit from that that piece of compensation.
• 53:33
  So, so that's one of the things that that we see quite frequently is just trying to fit it in. So, you know, we've talked about the f m finder minder grinder, FMG. That's just a starting point to then customize. One of the things that we're starting to see is phantom stock options. So in other words, small solo, small owners that wanna retain the equity and don't want to, you know, eventually, have some type of succession plan or sale, but want to hook that really talented lawyer into the firm, you'll do a valuation, then you offer them a phantom stock option so that when and if the firm is sold in the future, they have the upside of that.
• 54:15
  And it really is starting to take some I mean, I'm we're starting to see more and more of that. So, Camille, you have other
• 54:24
  Davina: I wanna I wanna ask Camille a question and then, Brenda, back to you. And that is before we end, Camille, what if you were to leave these women law firm owners with one sort of gold nugget, one thing that that you want them to have as a takeaway from our conversation, and I'm gonna encourage everybody to go to the link in the show notes and get this book because there's a lot of gold nuggets in it. But off the top of your head, what do you think is one gold nugget you wanna leave them with within this conversation? And then Brenda, we'll go to you. Same question.
• 54:58
  Okay.
• 54:58
  Brenda: Yeah. I I think that it's, it is can seem overwhelming, to say, oh, I have to create a whole new compensation plan, and I'm a small business owner, I'm pulled in 5 directions. I'll just have to do that later. And what I would encourage you to do is to just start thinking about this one step at a time. And maybe the first conversation you have is with your associates and say, you know, with check-in.
• 55:31
  How are you doing? What's going on? What's meaningful to you here? You know, not a performance evaluation, but a conversation and find out what's on their mind. And, you know, maybe say, I I'm I'm intrigued by, doing some research into compensation systems and wanna know, you know, what what what are things that would be impactful to you.
• 56:00
  But just start having some easy conversations. You'll have to follow-up on them or people will be disappointed. But don't think you have to solve the problem tomorrow, and don't think you have to solve it by yourself.
• 56:14
  Davina: That's wonderful. Wonderful advice. Thank you. Brenda, what are your thoughts on that? I don't know.
• 56:19
  Your your takeaways.
• 56:21
  Camilie: Yeah. So Camille kinda took mine, but that's that's okay. I would say, you know, just and, it's all about the communication. It really is. It's about discussing what some of the goals and objectives are for your, associate attorneys and whether they want to be on the partnership track.
• 56:39
  If so, then adding that non equity piece maybe to it and that sort of that sort of thing. But, you know, as to not be intimidated by it either because the generations that are coming into law firms now, they really just wanna know what's expected. What's my path? What's what how are you you know, if I wanna make this amount of money, how can I do it? And, and then having some meaningful, you know, social inter you know, work from home, all of the things that we tend talk about this whole hour is, you know, just all the little nuggets that you need to add into the compensation system that isn't always all about the numbers.
• 57:15
  Davina: Right. Right. I think that's great advice. And ladies, I've really enjoyed our conversation. I I told you at the start of this, I had so many questions.
• 57:22
  We might have to do a second episode of this because there's so many different nuances to attorney compensation. And it's a big topic right now among, or has you know, always has been among law firm owners. So I thank you for being here. I thank you for writing the book. I've enjoyed it.
• 57:40
  And I'm recommending it to anybody who wants to know about attorney compensation. Again, the title is respect and insight to attorney compensation plans. And we will have a link where you can purchase this book, in the show notes. And, Camille, Brenda, thanks so much for being here. I've really enjoyed it.
• 57:57
  Thank you for
• 57:58
  Brenda: having us.
• 58:01
  Intro: If you're ready to create more of what you truly desire in your business and your life, then you'll want to visit us at wealthywomanlawyer.com to learn more about how we help our clients create wealth generating law firms with ease.