Fee-sharing law firms offer an interesting and potentially rewarding alternative to traditional law firms. But how do you know if such a structure is right for you and are you prepared for the commitments and risks that come with it? Fee-sharing law firms are not for everyone, but for those who embrace the forward-thinking mindset it takes to join one, it can lead to more flexibility, entrepreneurship, and exciting opportunities. Ultimately, it’s an individual choice, and as long as you understand what is involved with fee-sharing, you can decide what works best for you and your career.
What is a fee-sharing law firm?
A fee-sharing law firm offers lawyers the opportunity to become part of a team of self-employed individuals and get a share in the fees they generate. This model can provide lawyers with flexibility, autonomy and a sense of ownership or partnership within the firm, allowing them to reap the benefits of their hard work.
Fee-sharing law firms have become increasingly popular as they offer lawyers more control over their careers and potential reward for their success. Some firms have found that this alternative business model has enabled them to attract and retain some of the best talents in the legal sector. Some UK firms offering fee-sharing include Summerfield Browne, Spencer West LLP, Gunnercooke LLP, and Setfords.
How does fee-sharing work?
Generally, you are not employed directly when you join a fee-sharing law firm as an associate lawyer or partner. Instead, the fees generated by a lawyer's work in a fee-sharing law firm are typically split between the firm and the lawyer based on an agreed percentage which can be on average 70% of their billables. Although the specifics can vary from firm to firm, this percentage will depend on each agreement and can be negotiated between the firm and the lawyer.
For instance, if you join Summerfield Browne, you will receive a percentage of the invoiced and paid net fees on matters that you undertake. If you introduced the client, you get 75%, and if the client was introduced by Summerfield Browne, you get 60%.
What should lawyers consider before joining a fee-sharing law firm?
When considering joining a fee-sharing law firm, there are a few factors that you should take into account.
Clients
As a fee-sharing lawyer, you must be prepared to take responsibility for bringing in new clients and maintaining existing relationships. This is because your success depends on the quality of your client relationships and referrals. If you are someone with a vast amount of experience and a large client following with repeat work, then you will be highly compensated for this. The reality is that people do business with people, so if you have a well-known or likeable personal brand as a lawyer, the chances are you’ll probably find it more rewarding to join a fee-sharing law firm and you will likely gain more than if you were paid a standard salary.
On the other hand, if you are just starting out or haven’t built a reliable client base, the idea that you could earn 60% or 70% back from the work you do may spur you on to find your own clients. It may give you the drive to learn extra skills like business development or lead sourcing to allow you to flourish in your career.
One of the points that a fee-sharing lawyer at Spencer West LLP noted was that the fee-sharing setup has allowed him to engage with clients in a way that was not possible as an in-house lawyer. If you are someone who enjoys spending time speaking with and advising clients, this alternative business structure can aid this as you’ll spend less time managing teams and training new starters and more time dedicated to your clients.
Time commitment
This can be both a positive and negative factor depending on what your values are. You must commit significant time and energy to your work as a fee-sharing lawyer to ensure client satisfaction and earn money. This means that a certain level of commitment is required, and you should be prepared to dedicate yourself fully to the role. The reason is that you will only be rewarded for your hard work, so if you are not willing to commit fully, the fee-sharing model may not be suitable for you.
Culture of the firm
When you’re looking for a fee-sharing law firm, it is essential to assess the firm's culture and ensure that it is a good fit for your personality and working style. Different firms can have different cultures, so you should ensure that the environment will support your workload and allow you to feel comfortable.
As a self-employed fee-sharing lawyer, you may think that this work can be isolating as you’re ultimately working for yourself. So it is worth asking different firms how they encourage collaboration, for instance. Gunnercooke ran a “Coffee Roulette” programme throughout 2020 so that partners could meet each other over a video call to feel better connected.
You may also want to ask questions about a firm’s marketing strategies to establish whether you will solely be relied upon to bring in work or whether they have ideas and plans in place to attract new prospects. This can help you figure out whether the culture is supportive and promotes overall team success. For instance, Summerfield Browne actively puts marketing strategies in place to bring in new work to assist its lawyers.
What are the downsides of working for a fee-sharing law firm?
As we’ve already mentioned, you will need to put in additional effort to bring in and retain clients, which may require a significant investment of time and energy. Also, fee-sharing lawyers are not eligible for some of the benefits that traditional employees may receive, such as health insurance and other benefits.
Does a fee-sharing law firm offer more work-life balance?
By using a fee-sharing law firm, it is possible to achieve a better work-life balance than in other traditional models. This is because you control when and how much work you take on, and you can tailor your hours to fit your lifestyle.
However, even with a fee-sharing law firm, it is important to remember that your success will still depend on the quality of your work. Therefore, an excellent work-life balance requires hard work, dedication, and discipline. Depending on the firm and your desire to gain more clients, you may find that in the initial stages of becoming a fee-sharing lawyer, you are working more on your business than you are relaxing. For example, you may attend evening networking events, and business meetings or spend time building a personal network through social media.
But this isn’t a bad thing as you’ll be constantly upskilling and developing yourself.
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