Category Archives: Law Firm Economics

Origination Credit is a Mixed Bag

With increased competition among law firms, business development is a top priority. To maximize revenues, many—if not most—law firms incentivize rainmakers via compensation models which encourage business development. They track originations as a way to reward those who bring in the most business. Historically, however, the most profitable U.S. law firms never tracked originations. They…
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Profitability, Not Size of Book, is Key to Lateral Partner Success

The size of the candidate’s book of business is not the controlling factor in determining the success of a lateral partner hire; rather, profitability is the key concern. A $5million book of business is not worth the same to every law firm’s bottom line, and the calculation depends upon several factors. The true value of…
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Will Timesheets Become Obsolete?

When lawyers first adopted an hours-based billing model in the mid-twentieth century, most lawyers billed around 1,300 hours per year at modest rates. No one foresaw logging 2,000+ hours per year at fees of $500, $1,000, or more per hour, which has become the norm at most large and mid-sized law firms. There’s a limit,…
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Is Lockstep Out of Step with the New Reality?

Most law firms, unlike other businesses, categorize associates by law school graduation year rather than level of expertise for purposes of hiring, compensation, and promotion. Until recently, the traditional lockstep model made some sense, assuming that associates who enter law practice at the same time gain like experience at similar firms. Class year designation, therefore,…
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