How to Get Your Team to Originate Cases

It’s tough being an attorney and a business owner. You’re tasked with doing work for your clients, while also figuring out how to keep your firm profitable and, if possible, enjoy the fruits of your labor.

That’s why it’s not surprising to us when we overhear these attorneys say things like:

• “I can’t take a vacation or we won’t have enough new clients.”

• “My attorneys never seem to originate cases.”

• “I’m exhausted trying to find more and more clients to keep the business running.”

Right away, when we hear this type of talk here at Cathedral Capital (CathCap), we already know the problem:

You do not have a bonus system in place that incentivizes attorneys to originate.  

It’s an extremely common problem. Some attorneys have no incentives at all, assuming that the attorneys will be invested enough to do the work as part of their salary (spoiler: they won’t). While others incentivize so little that it is not in their financial interests to waste their time.

Of course, you don’t want to lose out on potential profits by paying out too much, either.

So, naturally, when we talk about this issue with our clients, the attorneys usually ask us the same question: what kind of bonuses do I pay for origination?”

What “Good” Compensation Looks Like for Origination

Not long ago, we were working with Micah, an attorney that ran a law firm with 7 other attorneys under him, along with a slew of paralegals and legal aids. Micah was dedicated, working tirelessly to find more and more work that could keep help him pay everyone’s salary and keep the business operational.

But the business also depended on him for survival. If he took a vacation, even for a few days, his people wouldn’t meet their billing goals, he’d run a loss, and he’d lose a substantial amount of revenue. In some ways, one short vacation would cost him – including his lost savings from paying out his payroll – tens of thousands of dollars.

Naturally, Micah wanted his attorneys to take some of the burden off of him, and they were not. But part of that was because he assumed, wrongfully, that they would want to go out and find cases for the good of the company. He did not have an incentive structure in place, and his attorneys responded by not finding any new clients on their own.

He came to CathCap, and we created one for him.

We designed a bonus system, where the attorneys would be paid for 10% of every case they brought in. That included ALL billing, even if it was work completed by paralegals, by Micah himself, or for additional cases by the same client in the future. Any attorney originating cases was eligible for this 10% bonus.

It worked. The attorneys at Micah’s firm brought in $300,000 the following year.

Now, $300,000 was obviously not enough to cover the entire firm. But what it meant was that there was enough work coming in without Micah that he could take a vacation. And he did. I think he went to Puerto Vallarta and had a great time.

Incentivize Your Team for What You Want Them To Do

 Now, this 10% bonus is not right for everyone. That is because YOUR incentives need to be based on what you want your attorneys to do.

Do you want them to work more and harder, creating more and more billable hours? Then you don’t need a high origination fee because you want them to work. Instead, you can do a low origination fee, or you can even give them a bonus for increasing their billable hours. That’s what a lot of employers do – give people a financial to work harder for longer.

If you want your attorneys to generate cases, then that’s where you put your incentives. Offer larger bonuses for originating cases so that your team spends more time on that side of the work. You can also do a tiered system, where you pay some percentage (for example, 7%) for new cases up to $100,000, and something like 12% for cases above $100,000. That type of incentive gives them even more reason to originate a lot of cases.

What is a Good Incentive Amount?

Your specific financial situation is going to determine what a good incentive is, and when you consult with CathCap, we can work with your finances and your business to determine what a good incentive might be.

But if you need an easy way to come up with a bonus percentage now, the easiest way to do it is to look at your marketing budget.

Let’s say you spend 9% of your total revenue on marketing. That means that, for every case you originate, you are losing about 9%. If you offer a bonus of 9%, then you’re paying out what you would have spent on marketing if you had just upped your marketing spend instead. That makes it a good bonus amount.

Warning: Define “Origination”

We want to note, here, that it is critical that you define what an origination is. An origination is not answering the phone when someone calls. It is not turning an old client back into a client again. It is not converting someone that saw an ad in a magazine.

It only counts as origination if it is someone that you absolutely would not and could not have turned into a client without the help of that specific individual. For example:

• Their friends and family.

• A complete stranger they met on the street.

• Someone they met at a work function that they attended in their own spare time.

It is someone that they went out to find, 100% on their own, independent of the rest of the firm, and managed to turn into a new client.

Incentivizing Employees to Generate Business

These incentives do not have to stop at originating cases, either. You can incentives non-attorneys for origination – although you should make sure that you’re following local laws, as nearly all states outside of Arizona only allow you to pay a flat fee for non-attorney origination.

You can also incentivize people for booking sales calls, or for converting lost clients, or for assisting with your internet marketing campaigns. There are few limits on what incentives you can and cannot do. The trick is to figure out which ones will help you generate the most business with the least amount of loss.

At CathCap, coming up with these types of incentives is part of what we can do when we work with attorneys to find ways to increase revenue and maximize profits. To make things easier for you, we’ve created these free resources, available here, that help you improve profitability. You can also contact us by clicking here to schedule a time to talk with one of our CFOs.