Modernize Your Employee Bonus Structure

Jun 14, 2023 | Business, Labor Law, News

In the traditional legal profession, origination fees are a way to motivate attorneys to bring in new clients and generate business for firms. To empower our attorneys, Smith + Malek successfully introduced alternative methods that promote collaboration and provide avenues for growth of employees at all levels. 

As the legal industry evolves and client expectations change, it is time to question the effectiveness and relevance of origination fees (which is when an attorney is awarded a percentage of the fees generated from the client’s legal matters as compensation for their role in originating the relationship).


Origination Fees: Challenges and Drawbacks


Internal Competition: Origination fees tend to promote a more individualistic approach to client development, where attorneys prioritize personal gains over collaboration.  The fear of losing potential origination credit may discourage attorneys from seeking the collective expertise within the firm, limiting the client’s access to a broader pool of resources. This approach harms employees, because a lack of teamwork and siloed mentality often leads to attorney burnout, and also results in substandard client service.


Inequitable Distribution: Origination fees often disproportionately benefit senior partners, leaving junior associates and other team members with limited opportunities for recognition and advancement. This may result in younger attorneys feeling discouraged or unmotivated to grow with the firm.


Client-Centric Shift: Clients today increasingly recognize a team-based approach and seamless collaboration among attorneys as a method that benefits them. The emphasis is on delivering value as a collective rather than attributing credit solely to the originator. Origination fees may not align with this client-centric mindset and could even undermine client satisfaction and retention.


Embracing Alternative Approaches:


Team-Based Incentives: Law firms can implement incentive structures that emphasize teamwork and collaboration. Rather than focusing solely on origination, rewards could be tied to collective achievements, such as successful case outcomes, client satisfaction ratings, or cross-selling efforts. When determining bonuses at Smith + Malek, one of our evaluation criteria is attorneys’ willingness to collaborate, share information, and empower others.


Mentorship and Professional Development Opportunities: Recognizing and supporting attorneys’ professional growth and skill development can be a powerful motivator. Providing access to training, mentors, and opportunities to expand their knowledge base not only enhances individual attorney capabilities but also contributes to the overall growth and success of the firm. We not only place experienced mentors within each of our practice teams, but pair up seasonal interns with a Smith + Malek attorney to help them learn, as well.


Profit-Sharing Model: Consider implementing performance-based bonuses that reflect the attorney’s contribution to the firm’s success, which is more fair and more transparent than origination fees. Smith + Malek has opted for a profit-sharing model available to all attorneys. In this model, attorneys are encouraged to collaborate with one another to deliver efficient, yet high-quality work. 


Origination fees have been a long-standing tradition in law firms, but their effectiveness in motivating attorneys and aligning with the modern legal landscape is increasingly being questioned. As the legal industry evolves, embracing alternative methods to inspire and incentivize attorneys is important for success – both in terms of retaining your best employees and making tomorrow better for your clients and community.  By shifting the focus from individual origination to promoting collaboration and providing avenues for growth for employees at all levels, you create a more equitable work environment that rewards its staff for producing the best work possible for clients.