Salaries

[cpj04]

I am a solo (just me and secretary) in Houston with general business practice. I am in the Galleria area. I am about ready to make an offer to a 9 year associate who does primarily real estate and business law. She doesn't have much of a book of business (she's coming from an in-house real estate development firm), but great synergies and potential. I have a strong practice now that I can't keep up with and she is definitely needed.

I am searching the internet for some direction or clue on compensation package that I should offer, and I came across this site and this forum. Any suggestions, ideas or comments on what range I should be in. I know what I was making at a 10 lawyer firm in year 9 about 4 years ago, but imagine that the price has gone up.

I will be offering full insurance, CLE budget and reimbursement of marketing/entertainment expenses. I don't have 401(k) yet, but will have one soon and will match up to 3%.

Any thoughts would be appreciated.

Since salaries range so much, you will need to take into account what sort of billable requirement you have, how much work will she be doing that is required but not billable per se (admin work, contingent work, flat rate work...), whether you are a nice person to work with (I'm serious - If you're a jerk, offer a whole lot more!), whether you think she can generate business on her own, what sort of bonuses you pay - if any, whether this is a high pressure/stressful atmosphere, and so on. Some of that she won't know until she gets there, but you do want to keep her around, presumably.

Give a few more details and you will probably get some more responses, but those are some factors to take into account. My thought is enough to draw her in (definitely more than her current job) and if she is worth it, you can always give raises, but you can't take away a salary, once given.

[cpj04]

Thanks for the response.

I anticipate a requirement of about 2000 billable hours per year. She won't need to do much administrative work (she will be an associate, someone will do her time entries and she will have a secretary) and this is a very flexible and easy-going place to work. She will have the normal stresses but neither my secretary nor I are high-stress folks. I hope that she will be able to generate business. She seems like she is capable, but she has been in-house until now, and it is imperative for a small firm that she be able to do so.

I envision a salary and then additional compensation based on the business she brings in. For example, 15% of all business she generates and collects will be part of her compensation package.

[baltassoc]

I'm not quite a 9th year (5th year), but here's what it would take me to move:

Exceed my current salary by 8-10%, with a sincere promise to reexamine my salary within six months if business / work quality merited this (but this is a potential pitfall - if the reevaluation doesn't lead to a raise, your associate is going to be irritated). If the associate doesn't seem happy where she is, the evaluation promise isn't necessary.

Provide adequate benefits. Yours are adequate, although you don't spell out the insurance benefits, in particular the associate's portion. Everyone expects to pick up some portion, but it makes a big difference to the bottom line and we are aware of that. When I changed jobs the difference in the associate portion was $300 a month in my favor, which I saw the same way as being paid $3600 more a year. Also, parking. If it's not free in your building, and she has free parking now, adjust accordingly. In my case it was again $150 a month in my favor when I moved, but if I were to return to my old firm, they would have to pony up an extra $5k a year over the 10% salary increase above to get me back (not that I would go back).

The percentage of billing is a great idea, and very attractive, but be prepared to live with your promise or you will have a disgruntled employee. Obviously, if you make it part of a written offer of employment, you will have to live up to it. But some (small) firms also make vague promises of this nature to associates in the guise that a percentage of billing will be considered in bonuses; those associates get very disgruntled when the managing partner decides he needs a new Porsche more than he needs to share profits. This fortunately has not happened to me, but it has to a couple of friends. Also, make sure you are prepared to show the figures to your "associate," who's now going to be a lot more like a partner. I didn't care about the books when I was an associate as long as I got my salary and bonus, but if I'm getting a percentage of billing you better believe my nose is going to be in the firm's finances. I only mention this because many firms are reluctant to open that information to non-partners.

Looking at the compensation another way, I've always been fond of the rule of threes as roughly matching the intuitive expectations: total her expected revenue, then take 1/3 for her salary, 1/3 for overhead, support and benefits and 1/3 for you. It's a rule of thumb with a lot of flexibility, but if these numbers get too far out of wack, you need to reexamine the situation. If her portion is too low, she won't be around for long. Even if she doesn't figure it out according to the rule, she'll know it intuitively.

[cpj04]

Thanks for your reply. Just so you know, she left her previous in-house position about 2 months ago wanting to make a go of it on her own, but I think now feeling she needs an association with an attorney/firm.

I agree with the 1/3, 1/3, 1/3 rule of thumb. My concern is going in too high and then realizing I can't take it away once given. I am just trying to get in a fairness range, as the ability to generate clients and business is unknown at this time, but will always make sure the 1/3 formula is working.

Thanks for your comments.