My law firm turned 20 years old on January 3rd. Throughout its history, the firm’s turnover rate for attorneys has been meager and we’ve had an average retention rate of more than 95% per year. This high retention rate has assisted in attracting the best candidates, and clients enjoy having the stability of working with the same attorneys, not to mention profitability. There are several reasons behind this retention.

While proper renumeration is a major factor, It’s imperative to note that this is different than other revenue sharing programs where the entire company shares in the profits of the firm. In such a system, Harry can make as much money as Sally, despite Sally working much harder and doing superior work. Our method focuses on the individual and makes every individual their own company; how much their profit depends on how hard and smart they work as well as how effective they are at making sure the clients are happy.  

Let’s take a restaurant, for example. Each server is assigned several tables. With the amount of information we have today, we can measure how long parties sit for a meal, as well as the biggest moneymaker — how much alcohol they order. Each server should know at the end of every shift how many tables they served, the amount of profit — net and gross– made, and the average time a party sat during a meal. If the server receives an additional piece of the profits when they hit specific goals or numbers, the food will be coming out faster, the tables cleaned off more quickly, and be better salesmen when they push their favorite wines. Of course, this can backfire rapidly with an overeager server, but most restaurants know how to run an excellent establishment.

This model works well for attorneys, accountants who bill for time, and anyone on a commission-based business. I can also see it working at restaurants, spas, hairdressers, and moving companies.    

The Merit-Based Compensation Program — Revenue Sharing

The program is straightforward. Every attorney at the firm receives one-third of the billed time for a given client. The other two-thirds go to expenses (one-third) and profits (one-third). Attorneys receive additional compensation for bringing in business, receiving up to fifty-three percent of their billable time if they brought in the client and worked on the case. That means that the attorney would receive 33 percent of the monies for working on the case and an additional 10 or 20 percent of any funds earned for bringing in a client. Our revenue sharing program is not based on bringing in business. 

When an attorney at any level brings in business, he or she receives a percentage of what he or she brings in on top of the below compensation program. It should be stressed that attorneys are not required to bring in business, and we do not have a minimum billable hourly requirement. Attorneys have the luxury of striving to make as much money as they can or have a more relaxed career by billing fewer hours.

Individualized Revenue Sharing Is Not for Everyone

No attorney has ever gone more than a week or two without having assignments — so long as the other attorneys thought their work product was at the firm’s high standards. Some attorneys are more sought out for work than others. Eventually, these stars stop accepting assignments from other attorneys and control their caseloads — because if our firm attorneys notice their talents, so do the clients.

When an attorney has not been producing quality work, however, they will have trouble finding assignments to work on as attorneys do not seek them out as collaborators. In these scenarios, which has only occurred two or three times in my career, we try to move the attorney in a different department or type of real estate law or litigation within the firm.  

When Professionals Do Not Meet Their Numbers

In twenty years, I believe we have only reduced an attorney’s salary once or twice, and we do not do so strictly on the math—when we see an attorney not making their numbers, we immediately work with that attorney to understand the difficulty. Usually, there is a personal issue or a substance abuse problem. We do not give up on our attorneys, and we are willing to work with them because we believe that they will eventually make their numbers. Reducing a salary is a significant morale buster, and you must assume your attorney will be tuning up their resume.

Creating a System Where the Attorneys Trust the Protocol

Our attorneys have trust in the system. First, we have an outside accountant do quarterly reports on their numbers four times a year after each calendar quarter ends. Second, the attorneys can review their reports and numbers and have full access to the accountant for any questions. The number one issue that arises and mostly for younger attorneys is when I determine that the time spent on the matter exceeds the average amount of time for the typical assignment. I always bring the attorney in to discuss the issue before cutting time, but I have the final say as not only do we need to produce the finest product, but we need to do it cost-effectively.  

Raises and Bonuses

The good news for employers is no one ever asks me for an increase. Their raise is the amount or close to the amount of the money they made above their salary in their yearly report. However, a constant discussion is whether to increase an attorney’s hourly rate. Sometimes we need to tell the attorney to raise their rates, while other attorneys want to raise their hourly rates faster than the market can handle. When an attorney bills more than one-third of their salary and the money has been collected, the excess funds become the attorney’s bonus — payable either quarterly or more typically at the end of the year.

Collections

This revenue sharing system makes every attorney technically a partner. As such, they have an incentive to make sure the hours they billed are paid for by the clients. They are given monthly reports to see which clients have not paid their bills, and we expect the attorneys to work on the collections process. This participation could include making calls themselves or working with the accounting department to remain apprised on their progress. As a rule, we do not keep clients who do not pay their bills and are quick to withdraw from a matter or case if a bill is unpaid.   

Because we set up a system where an attorney’s salary and income center on billing and collections, we have to work with them to make sure the bills are paid and stop working on cases where the bills are not being satisfied. Besides, we sue clients who have not paid their bills for several months. This allows us to show the attorneys their hard work will not go to waste. All of the above has allowed us to have an excellent collection rate. 

We Work for Our Employees — as Do the Benefits

“We work for our employees,” is my creed. The employees work crazy hours, working like today is the most important workday of their life—every day. I have never seen any social media site on any employee’s computer. When morale is high in an office, employees usually maintain their positivity. I do everything I can to give back to my employees and try to make them happy without getting in the way of productivity. 

Walking into our office, everyone has their own office, and paralegal stations are as large as many other company’s employee’s offices. We provide food any time, all of the time, and it is always healthy. We pay for 80 percent of gym memberships to any gym preferred. Employees who arrive by nine and leave after eight receive dinner and a car home. We call our health insurance plan the Rolls Royce of plans; we self-insure dental insurance and eye-care insurance. We have holiday parties, happy hours, and the employee’s control when they want to go out as a group on the company’s dime. 

But it may be the benefits never discussed in writing before that truly separate us. Employees have had severe illnesses, including cancer and heart attacks, and we stand by them with our pocketbooks and support. Unfortunately, I had to rent a bus to the funeral of one of our employee’s husbands who was shot in the head at a mall in New Jersey. We put out an award for the capture of the murderer. We had also paid for physiatrists and even car services when an employee was scared to take public transportation. We do not have mandatory retirement as we believe with age comes more wisdom.

In confession, being cost-conscious when it comes to helping employees has never been our forte; we do need to do a better job of monitoring our expenses for some of these activities. And it may be impossible to weigh the benefits of a happy employee against what you pay or judge which benefit they appreciate.

I do not expect most businesses to copy the above. But I do believe that by providing my firm’s operational plan, companies can achieve lower turnover and maximum profitability in the future. 

One of NYC’s top lawyers explains how he transcended barriers to build an exceptional firm.

John Peter Zenger shaped my decision on that common childhood question: “What do you want to be when you grow up? ” 

Being a lawyer was the profession for my childhood self — until it was not. In my seventh grade English class, I was immediately captured by the idea that one person could use words to help others when I read a book on how Andrew Hamilton convinced a jury in 1735 to acquit Zenger, a publisher of seditious libel. My dreams shattered when I was told that law school was costly and reserved only for rich people who could afford tuition. By the time I entered high school, I had unwillingly given up my interest in law for my second passion, journalism. 

Only years later, during college, did I learn that you could use loans to pay for law school. I was working at a Catskills country club at the time, and it was there that I met a lawyer for the first time. None of the parents in the towns I had grown up in had been lawyers. I immediately investigated and, despite the obstacles I had perceived during my childhood, decided to become a lawyer. 

Fast-forward twelve years, and I started my own law firm. Starting your own business requires both self-confidence and the willingness to take a leap of faith, and a believe that your skills will lead you to success. Below, I’ve listed a few of the most important lessons from my earliest years in business. 

Secure an Uncommon Name 

Never before in the history of business has naming your company become so important. Because you will be selling a product, you want to use a memorable, easily-found name that has not already been taken. Customers must be able to find you on the Internet, as well; test your chosen name by Googling it. 

If you find a unique name and choose to move forward, you will need to legally incorporate your company in the state in which you do business. Have your website domain name tested and secured, as well. All social media platforms should be connected to ensure your name will be distinguishable and unique from your competitors.

Impress, but Save on Rent 

There are two primary reasons that companies go out of business: rent and salaries.  

When opening a new company, you want to try to avoid renting the most magnificent office available. My company, Adam Leitman Bailey, P.C., started with one small office and a secretarial station. At the time, I bartered doing work for the landlord in exchange for the rent-free use of a shared receptionist and a conference room.  

Looks do matter, and they make an impression that affects customer decisions. I have one client who used to run workshops out of her apartment. Although she had a beautiful apartment, reviewers would frequently mention that the business was run out of the apartment in their complaints, and more than one customer cited the location during a refund demand. The apartment is no longer used for classes.

Nowadays, businesses that are wooing customers at their offices can now use advertised shared spaces or find an existing business with extra space to launch their business at a minimal cost.

Hire the Best Employees and Know When to Hire More

Every customer service company lives or dies based on the employees it hires. Most of these companies also increase revenue and become more profitable as the company continues to recruit high performers. Early on, I would spend many hours interviewing and searching for ways to better recruit candidates. I also developed a five-page questionnaire, still used today, to increase my hiring aptitude.

Besides rent, salary constitutes most companies’ highest costs. It was an investment I was unwilling to make at first — almost to the cost of my firm’s wellbeing. It took a near devastating loss and a judge’s kindness for me to make the right decision. One morning, I had 18 court cases to handle, most of them short appearances. I ran to three courthouses and at least ten courtrooms before 1 pm, trying to give every case the best possible effort. But still, I was running out of time; I looked at the clock and realized I had 10 minutes to make it to Judge Maria Milin’s courtroom. I beat the clock, but I had already defaulted. I must have looked depressed because Judge Milin called me to the bench where she kindly offered me advice.  

“Adam, I have been watching you,” she said. “I am not going to default you. I am adjourning the case to another day. You have more cases than one attorney can handle. I think it is time for you to hire an associate.” It took a near loss of a case and Judge Milin’s remarkable kindness to convince me to spend the money and hire another litigator.  

Hiring is one of the most challenging decisions for any new company. I have represented thousands of companies and found that everyone, no matter how big or small, has always reflected the essence and morale of the founders. I still believe my very best employees are the ones that have been with me the longest because I have spent the most time with them, and they are molded in the company’s image. Thankfully, many of them have passed on their training to the next generation. 

Having a manual with a thesis statement and long-term employees to pass on learning has kept morale high and allowed my business to provide a high caliber of customer service. 

If You Aren’t Making Mistakes, You Aren’t Trying Hard Enough

Americans root for underdogs; if you are starting your own business, welcome to the club. However, no matter how much love you receive from friends and family, everyone will eventually choose the best, most cost-effective option.  

I lost friends early in my career when they did not choose me as their real estate attorney. I could not forgive them. Looking back, I accept that I was wrong and regret my actions. In one particular case that I can remember, I was 29 years old and on a shortlist with a friend’s parent’s attorney, who had been recommended by several people and had a proven record. My competitor was the clear pick, but there is no telling a dreamer that he or she is not the best option. 

The truth is, I made many mistakes, and as I tell my employees all the time — if you are not making mistakes, you are not trying hard enough. 

I hustled. I never left the house without business cards. I created a newsletter that I sent to everyone I knew by snail mail. I recruited top attorneys to lecture with me. I started writing for whoever would print my material — all in my free time. I would work from when I woke up to when I went to sleep. I have worked on major holidays, including Thanksgiving, Christmas, and New Year’s Day; working six days a week became a standard work schedule.

If my lifelong pursuit of a legal career has taught me anything, it would be that the only actual barriers to success that we face are the ones that we allow others to impose upon us. If you want to build a business or achieve a long-shot dream, you need to work hard and accept your mistakes. If you fail to do so, you will never achieve the success you envision.