Insights On Compensation For Small To Mid-Sized Law Firms

RESPECT - An Insight To Attorney Compensation Plans

Get the only guide you need for designing and implementing compensation systems to grow and scale your law firm, written by the law firm compensation experts.

2nd Edition, with 100+ new pages and case studies!

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The Law Firm Compensation Experts

About Us

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Brenda Barnes, MBA, CPA

Brenda Barnes is a graduate of the University of Texas at Austin in Accounting and has an MBA from Texas State University. She is a legal and accounting professional with over 35 years of experience working with solo to mid-sized law firms across the United States. Brenda has an innate understanding of best practices in law firm accounting and financial management.

 

Brenda is the founder of B2 Legal Management, LLC, known as B2 which provides outsourced accounting and billing services to law firms. She sold the business in 2021 and focuses her time on her consultancy practice providing clients with custom compensation plans, succession planning and financial management. (brenda-barnes.com)

 

Prior to launching B2, Brenda served in the capacity of Firm Administrator in the Austin, Texas area. During this time, she was active in the Association of Legal Administrators (ALA) and served in many leadership roles. She is a past president of the Austin Chapter. As a guest speaker and panelist, Brenda is a sought-after speaker on topics relevant to the effectiveness and efficiency of law firm practices, from budgeting and cash flow forecasting, to law firm compensation, financial internal controls, and succession planning. She has been recognized by her peers and law firm managing partners, as well as the business community, for her accomplishments in the field.

Camille - Lawyers Mutual Consulting

Camille Stell

Camille is the founder and President of Lawyers Mutual Consulting & Services. She is a nationally recognized speaker, writer, and thought leader on building modern law firms, compensation planning, succession planning, and life after law.

She is also the co-author of Designing a Succession Plan for your Law Practice: A Step-by-Step Guide for Preparing Your Firm for Maximum Value, 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 top law firms in North Carolina and managed client services and risk management for the State's largest legal malpractice insurance provider.

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, the North Carolina Pro Bono Resource Center Advisory Board, and the Legal Aid of North Carolina Innovation Lab Advisory Board.

Camille is a Fellow in the College of Law Practice Management. She was honored by the Triangle Business Journal with its "Women in Business" award, and by North Carolina Lawyers Weekly in its inaugural class of "Leaders in the Law."

About The Book

What We Cover

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Implementation

Learn how to implement compensation systems to make sure you can attract and fairly compensate the best talent.

Compensation Systems

Whether you're looking for details on partner comp or associate comp, our book has you covered.

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Insights

Get insights on compensation trends, tax implications, nuances in compensation, and common controversies to make sure you've got all your bases covered.

Table Of Contents

Introduction   1

How To Use This Book   3

Chapter 1: A Compensation Overview   11

• Current compensation models

• Law school debt issues

• Compensation formulas

• Aligning a modern compensation plan with up-to-date market data

Chapter 2: Partner Compensation Systems   31

• Partner compensation defined

• Common partner compensation models

• Strategic points for designing compensation systems

• Communication methods

• Compensation formulas

Chapter 3: Business Origination   67

• Types of origination

• Determining who gets credit

• Credit granted for a limited time or in perpetuity

• Origination credit and equity

• Origination policies and avoiding conflict 

Chapter 4: Managing Partner Compensation   82

• The managing partner role

• Characteristics of a strong managing partner 

Chapter 5: Associate Compensation   92

• Case studies in associate compensation

• Using your compensation plan to reach firm goals

• The burden of law school debt

• Emotional factors of compensation

• Performance measures for lawyers beyond the billable hour

• Bonus plan

Chapter 6: Compensation and Tax Implications   129

• Entity types

• Reconciling book net income and taxable income

Chapter 7: Compensation Carve-Outs   142

• Paying new partners

• Paying non-equity partners

• Paying practice and industry team leaders

• Retirement 

Chapter 8: Compensation System Biases   156

• Patterns of racial bias in law firms

• Steps firms can take to battle inherent biases

Chapter 9: Trends in Compensation   186

• Workplace trends

• Legal deserts

• Succession planning

• Benefits beyond salary

• Reviewing and updating a compensation plan

Chapter 10: Law Firm Valuations and Equity Buy-Ins  216

• Importance of Law Firm Valuations 

• Standard methods utilized by valuation consultants.

Chapter 11: Compensation Case Studies  234

Chapter 12: Interviews with 3 Law Firms 255

• King Law

• McIlveen Family Law Firm

• Cranfill Sumner, LLP

Conclusion   293

Appendix   297

About the Authors and Editor  306

• Brenda Barnes, CPA, MBA

• Camille Stell 

• Connie Copeland 

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What They're Saying

Book Reviews

Partner compensation is often referred to as the ‘third rail’ in law firms – making necessary change difficult to tackle.  Brenda and Camille have approached this topic in a methodical way. 

This book is a great read whether you are just getting started in your law firm leadership journey, or if you have been here a while and are ready to think differently about a tough topic.

Debbie Foster, Managing Partner, Affinity Consulting Group

We are a relatively small firm. Our firm has a "sea change" coming at the end of this year. I bought your book for one of our shareholders to competently address the issues which come up. She has read the whole thing and directed me to order two more copies.

We expect to use this as a manual for addressing our compensation changes. Just thought you should know that this book has and will make what we face much easier. Can't wait for your next book to come out.

A Grateful Reader

Camille Stell and Brenda Barnes recognized that most American lawyers work in smaller and mid-size firms, where core values have greater importance and personal relationships mean so much more. Camille and Brenda have responded with this clear, straightforward guide to partner compensation for those law firms in which culture really matters, collegiality and client service are genuine priorities, and respect among professionals is meant to be strengthened every day.

Partner compensation in smaller and midsize firms is about more than just money - read this invaluable book to find out why and how.

Jordan Furlong, Legal Sector Analyst, Law21

Brenda Barnes and Camille Stell have written a book that the legal profession badly needs. They speak from a depth of both knowledge and experience about what lawyers and law firms need if they want to achieve the firm culture they say they desire; namely, compensate in a way that supports mission, values and long term vision and strategy.

All lawyers interested in understanding law firm compensation systems, discovering why past systems may not be the path to satisfaction today, and digging into possible alternative systems for the firm of the future, will find this publication an excellent resource.

Thomas C. Grella, former managing partner of McGuire, Wood & Bissette, PA in Asheville, NC, and author of Lessons in Leadership: Essential Skills for Lawyers.
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