Collect Your Fees or Collect Your Belongings

by Timothy B. Corcoran on June 24, 2015

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The ongoing Dewey & LeBoeuf trial provides endless fodder for observing dysfunctional organizational behavior. Today’s commentary (h/t AtL) was prompted by the quotes attributed to former Dewey (and now DLA) partner John Altorelli in response to nagging from a collections clerk. Altorelli had apparently missed his monthly collections target of $1.6 million and didn’t appreciate being hounded.

“I am the reason you have a job. You obviously have no clue about what is appropriate. I am going to talk to Steve DiCarmine and insist that you be fired if you ever send me an email or call me again. If he does not, I will seek other opportunities at a firm that gets it.”

What exactly is a firm that “gets it?” One that allows partners unfettered access to firm resources without demanding anything in return, such as fees? One that allows a partner to speak and act like a schoolyard bully to a staff person doing her job? One that allows a shareholder to meddle in day to day operational affairs, such as the acceptable age for receivables, how our collections clerks should handle their responsibilities, and who gets fired? And exactly what is he threatening? “Don’t make me collect my fees, or I’ll quit… and forever absolve myself of all responsibilities to collect these fees.” We get it. You don’t like to collect your fees. Who does? Well, in fact, many do.

Photo: ©iStockphoto/Taphouse_StudiosI’ve shared this thought with numerous law firm partners: If you are routinely discounting fees or failing to collect your billed fees, one of two things is happening. Either your clients do not believe you’re worth the fees you charge, or YOU do not believe you’re worth the fees you charge. Actually, it’s probably a bit of both.

Every so often, I think it’s helpful to offer a bit of tough love to partners who think their accomplishments give them free pass to act however they want, even when their actions are harmful to the business. Allow me to dust off my former CEO hat and offer my contribution.

 

  • If you act like an asshole, you should be fired. Point me to one firm, anywhere, ever, where a perpetual asshole was shown the door and the law firm collapsed. It doesn’t happen. We’re all replaceable. Being a schoolyard bully to a lowly staff person is easy. Collecting your fees is evidently hard. So if you want to prove you’re all that, then collect your fees.

 

  • The top dog rainmaker isn’t the reason everyone else has a job. In fact, it works both ways. The top dog rainmaker looks good because there are many people marketing the firm, managing key client relationships, managing firm operations and infrastructure, and doing the legal work necessary to satisfy the client that you brought in. Also, the firm exists because of the efforts of many others who built the brand and paved the way for you to get a job here. Your success wasn’t inevitable; it was a result of an extraordinary team effort. If you don’t like, or can’t understand, the team approach, collect your belongings and leave. If you think you did it all on your own, then go form your own one-man firm and prove you can compete with us.

 

  • Many partners are not 100% utilized. Many partners do not bill 100% of the time they capture. Many partners offer discounts that erode profitability. Many partners rewarded for billing time do not fully exploit leverage to improve firm profitability because doing so will reduce their hours. Many partners cost too much for what they generate. So after all these deductions to the firm’s profitability, when you have the nerve to refuse to collect whatever discounted fees the client has agreed to pay, you are willfully engaged in a conspiracy to screw your colleagues out of rightfully earned compensation. You benefited from a plush office, the firm’s powerful brand strength, and all of these lawyers and staff being paid to work on your matters before you collected a dime. Collecting your fees isn’t a favor you’re doing for the rest of us, it’s your rightful obligation. If you can’t stomach asking clients to pay for your work, then you have abidcated your fiduciary duty and you have no right to be an equity shareholder.

 

  • We’ve adopted the partnership model as a business form for its tax, liability, and profit-sharing benefits. But let’s be clear: operating as a partnership doesn’t convey day to day management responsibilities to every shareholder. If you want to engage in firm management, step up and volunteer or run for office. Otherwise, leave firm management to others. If you don’t like the firm’s collections policies, or business development team, or IT services, or secretary ratio, or compensation plan, or the color of the logo, then communicate these concerns to those in charge and then go practice law. Or start your own firm where you can make all the decisions, drawing on your substantial expertise running a business… though if your insights into collections is any guide, your career as a titan of business will be short.

Law firm senior leadership and practice group chairs, if you’re not having this conversation with your partners who fail to collect their fees in a timely manner, then you should question whether you’re cut out for your role. A law firm is a business. If we allow every partner to choose which policies they will follow, we’re not running a business, we’re operating a holding company of independent contractors sharing a logo. Your failure to establish sound policies and to hold everyone accountable means we are losing money and compromising the quality of the legal services we deliver to our clients. Is it any wonder why clients are dissatisfied and seek alternative approaches to addressing their legal needs?

 

Timothy B. Corcoran is the immediate past President of the Legal Marketing Association and an elected Fellow of the College of Law Practice Management. He delivers keynote presentations, conducts workshops, and advises leaders of law firms, in-house legal departments, and legal service providers on how to profit in a time of great change.  To inquire about his services, contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com.

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{ 1 comment… read it below or add one }

Amy Hrehovcik June 25, 2015 at 2:18 am

You raise a relevant point, and articulate it well — as usual, Mr. Corcoran. However, I’m left wondering where the proverbial carrot is relative to your very big stick.

What benefits does a human capital-valuing, collaborative culture yield? How does transparency of profit margins or client satisfaction — valued above top line revenue, billed realization, or other silly / misleading metric — impact behavior? What happens when non-billable time, invested by PG leadership into training and empowering others, is compensated accordingly?

Note: I’m aware the word “value” has become increasing played out. When I think of a better euphemism, I’ll be sure to incorporate. In the meantime, #SorryNotSorry.

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