By Kristina Schneider, Practice Success Coach
Over the past few years, particularly following the pandemic, we have seen a lot of changes in the employee market and computing both a fair and competitive wage. Regardless of where you are located, inflation and increased competition for competent employees have come to the forefront.
Whether you are thinking about your current employees or are thinking about hiring, you may be curious about what exactly is reasonable or fair compensation for either support staff or associate attorneys. Here are a few tips that we use to determine fair compensation.
LOOK AT SOME INDUSTRY STANDARDS
We recommend looking up the Robert Half Salary Guide, where you can enter your city (or the next largest nearby city) and then type in a job title or role (“administrative assistant”, “receptionist”, they use “lawyer” over “attorney” or “associate”). The system will return a low, middle and high range for a salary for this position which gives you a ballpark idea of the going salary in your geographic area for those roles. To calculate hourly salary, I simply take the total compensation and divide that number by 2,080 (which was calculated by 40 hours per week times 52 weeks out of the year).
COMPARE APPLES TO APPLES
One thing I typically point out to our clients is that the range provided by Robert Half is typically compensation for any and all kinds of area of law and it’s also total compensation. So, if it says $130,000 for a 2-3 year associate, know that this may not be talking about compensation for an estate planning practice and that’s total compensation, after some nice bonuses that may be paid out at year-end.
Additionally, I recently had an attorney client tell me that he was worried about not being able to pay an experienced lawyer in another area of law quite a bit of money because that was the salary he was used to. I told him that his years of experience in a completely different area of law was likely not going to be to his benefit. What I heard was this associate was burnt out and wanted to get away from that area of law and transition into estate planning. Perfect. Then, in my opinion, this associate may be given a comparable salary to a 2-3 year associate attorney and a bonus structure in place that would allow the associate to make more money when they make the firm more money!
DEVELOP BONUS STRUCTURES TO BRIDGE THE GAP
Bonuses are a fantastic way to bridge the gap between the base salary you may offer the staff member or associate attorney and the salary they may desire, request or that higher side of that pay scale. Many people have bonus structures for associate attorneys, but they have never considered bonus structures for support staff.
We have implemented bonus structures for support staff for several years now. We have trained other attorney business owners how to do this in their own practice and have found a great deal of success with this. For many attorneys, they begin to see record-breaking revenue numbers for their firm and it’s a win-win for everyone! This is because the firm makes more money and meets their financial goals and the staff are happy because they are being rewarded accordingly.
The bonus structure also helps create a “team effort” with people helping one another out on behalf of the firm as a whole and they see how important their own role can be in helping the firm achieve its goals.
An added benefit that has come out of this is that many attorneys begin to also feel some sort of accountability to getting done what they are supposed to because the staff is busting their butts to make the firm money and that requires that the attorneys do what they need to do to in order to drive in revenue into the firm.
Staff bonus structures are a fantastic way to also help bring your current team members to market without having to take such a large hit to your overhead expenses each month.
For more step-by-step instructions on how to set up bonuses for support staff, see Phil’s program entitled, “8 Steps to Setting Up Bonuses for Support Staff That Are Legal, Ethical and Motivate Them”.
ASSOCIATE COMPENSATION STRUCTURES
I have seen attorney business owners with a variety of compensation structures for their associate attorneys. I have seen some firms that pay minimum wage and then a percentage of any revenue they bring in. I have seen people pay some pretty generous base salaries with no bonus structures in place.
The tested and proven associate attorney bonus structure that we recommend is a fair base salary, based on experience in estate planning, and then a 10% bonus of all revenue generated over a set amount each month. The monthly revenue goal is customized based on the attorney’s calendar and availability to take on matters and what’s reasonable for them to make with the goal that associates are only in revenue-producing activities (i.e. meetings with clients to engage them or collect a balance payment).
For a more in-depth breakdown of associate attorney compensation and bonus structures, check out Phil Kavesh’s presentation entitled, “9 Steps for Successfully Compensating & Incentivizing Associate Attorneys”.
MONTHLY vs. QUARTERLY (OR YEAR-END) BONUSES
Another common question that we get is about when bonuses should be paid and our recommendation is to pay out bonuses monthly. This way they remain (hopefully) constant, frequently and consistently enough that they actually serve the very purpose they are intended. You are rewarding employees immediately based on performance and results from the past 30 days. This prevents you having to bank bonus money to be paid out and then paying out bonuses perhaps following a down month or a month when an employee may have certain behavioral or performance issues. Random bonuses with no real understanding as to how that bonus was earned or what was done to earn that bonus (or simply because you made it another year) is not an ideal bonus structure—but, while not ideal, is better than no bonus structure at all!
In conclusion, compensation is an important part of an overall benefit that an employee – – either an associate attorney or staff member – – receives for working at your firm. There are plenty of other benefits that you may offer employees as part of their “compensation” or “benefits” for working at your firm, including but not limited to medical insurance, retirement benefits, life insurance policy, remote work opportunities, work-life balance, opportunities for growth and mentorship, and more.
Make sure that you are looking at the overall benefits that you’re offering to your employees that many other comparable law firms are or may not be. Keep yourself competitive and find creative ways to set yourself apart, just like you (hopefully) do with your estate planning services!
ABOUT THE AUTHOR
Kristina Schneider is a Practice Success Coach here at The Ultimate Estate Planner, Inc. She graduated with a Bachelor’s Degree in Business Administration from Pepperdine University in 2004 and was hired right out of college to work for the Law Firm of Kavesh, Minor & Otis, coordinating and facilitating Philip Kavesh’s “Missing Link” Boot Camps while also providing administrative support to Mr. Kavesh as his Executive Assistant for over seven years. Through her direct hands-on experience in Mr. Kavesh’s law firm, Kristina has been able to assist numerous estate planning professionals through The Ultimate Estate Planner and, equally as important, many of their staff members, in the successful implementation of Ultimate Estate Planner’s products and systems. She is currently pursuing her MBA degree from Pepperdine University Grazadio Business School. You can reach Kristina at (424) 247-9495 or by e-mail at kristina@ultimateestateplanner.com.