By Philip J. Kavesh, J.D., LL.M. (Taxation), CFP®, ChFC, California State Bar Certified Specialist in Estate Planning, Trust & Probate Law
In this newsletter article, I talked about how to use bonuses to incentivize your associate attorneys. In this article, I will address how to also incentivize your support staff.
The principles are basically the same, but there are a few important items that are tweaked for support staff. First and foremost, non-attorney staff members cannot receive some percentage or share of firm revenue or profit. Virtually every State Bar’s Professional Ethics Rules (or state’s Business and Professions Codes) prohibit this. So, the manner in which staff bonuses are established and calculated must be done in a different manner.
Unlike the attorney bonuses, which are based upon individually generated monthly revenue, the staff bonuses are based on the firm meeting certain revenue goals. This is done this way is because, other than perhaps a senior paralegal position, it is difficult to track how any one staff member contributes to the firm’s revenue. This way, the contributions each staff person makes to the success of the firm is rewarded once the entire firm has reached its goal. In establishing the firm goal, you need to go through the same process (described in detail in my previous article) of determining your monthly expenses, adding a reserve for non-recurring or unanticipated expenses, and an amount for your salary/profit. When you add up all of the individual attorney monthly revenue goals, it should equal this firm goal and the same firm goal should be the minimum bar for staff bonuses.
For example, let’s say your firm in total hits its initial monthly revenue goal of $100,000. The staff gets a minimal bonus. With each additional $10,000 of revenue over the minimum goal, the bonus goes up in ever-greater amounts. The exact amount of each staff member’s bonus is not defined in a way that it can be pre-calculated by the staff members, like it is with the attorneys. It’s not expressed as a percentage of revenue or profits for the regulatory reasons already stated. This is also not a preset formula because we may want to allocate bonuses based on job duties and how these tasks correlate to the financial success of the firm. The staff is told that as the firm reaches its goals, a bonus “pool” will be set aside in a discretionary amount and from that bonus pool, each staff member will be paid a discretionary bonus. You have the latitude to reward staff in proportion to their seniority, compensation level, effort, results and other criteria you feel appropriate.
Certain key staff may qualify for individual bonuses, either separately or on top of the firm “pool” bonus. For example, my office manager (who is also a paralegal) gets a purely discretionary amount for months where both the firm revenue goal is reached and the firm’s expenses are kept within budget. My estate administration staff gets a discretionary bonus based on cases that complete and are paid for during the month.
Since I have established the types of bonus arrangements for staff members, my firm has enjoyed near miraculous results—with the firm, as a whole, hitting its revenue goal month after month, virtually every month out of the year. It’s amazing to see how everyone in the firm will pull together as a team when they are all focused on the same goal. The staff will make extra efforts, especially in the last ten days of the month, to make sure that they are supporting the attorneys (and kicking them!) in every way possible to make their bonus goal!
ABOUT THE AUTHOR
Attorney Philip J. Kavesh is the principal of one of the largest estate planning firms in California – – Kavesh, Minor and Otis – – now in its 38th year of business. He is also the President of The Ultimate Estate Planner, Inc., which provides a variety of training, marketing and practice-building products and services for estate planning professionals.
If you would like more information or have a question for him, he can be reached at phil@ultimateestateplanner.com or by phone at 1-866-754-6477.