How Mintz revamped rainmaker pay

(Reuters) - After a challenging collections season, law firm leaders are now busy doling out the dough.

At most big firms, the top factor in determining how much each partner gets paid is origination credit — the “coin of the realm,” as Robert Bodian, managing member of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, put it.

In a conversation in Mintz’s 36th floor downtown San Francisco outpost, which New York-based Bodian was visiting as part of a recent West Coast office tour, he recounted how he revamped Mintz’s system for awarding compensation linked to the clients or matters that a lawyer has brought into the firm.

It’s been long enough now that Mintz’s experiment, which began in 2015, has yielded a track record. Bodian says the changes have proven key in growing the 550-lawyer, Boston-founded firm’s business (he has stats to back it up), as well as promoting teamwork, diversity and inclusion.

Sounds great, right? But tampering with origination credit is not for the faint of heart.

Almost invariably, overhauling compensation means “someone benefits and someone gets the short end of the stick,” said legal consultant Janet Stanton, a partner at Adam Smith Esq — or at least that’s how it’s likely to be perceived.

Bodian at the outset recognized that his initiative, which he said came almost epiphany-like to him while out on a run, would require convincing his partners at the 90-year-old, full-service firm that everyone would benefit in the long term.

The two pillars are simple: No lawyer gets more than 75% of origination credit for bringing in business, and credit is awarded on a matter-by-matter basis rather than across the board by client.

A handful of big firms — generally those regarded as the most prestigious — don’t award origination credit, presuming that their illustrious reputations are key in attracting their clients.

Bodian’s approach, which Stanton called “very unusual,” finds middle ground between that genteel view and an eat-what-you-kill emphasis on individual performance.

Historically, origination credit at Mintz was “largely in the hands of what I’ll call older white guys,” Bodian said. “Once you had it, it was yours, and it could go back in some cases decades to who originally initiated the client relationship.”

The arrangement struck him as less than ideal. “It’s well-known in the industry that the best way to build business is with the clients you have,” he said. “It’s easier than getting new clients.”

Origination credit “rewards someone for going out and beating the bushes and getting a new client,” Bodian continued, “but it doesn’t give younger partners anything for strengthening and expanding the relationships that you have with existing clients.”

Moreover, clients increasingly want diverse legal teams. Yet if women and lawyers of color are shut out of origination credit for the work, Bodian said, it “doesn’t really advance the ball very much.”

Capping the originating partner’s credit at 75%, however, leaves room to recognize and reward those lawyers.

Mintz member LisaMarie Collins, a Black woman who made partner in 2021, said she appreciates the “opportunity to take ownership of matters.”

As a new partner, “building a book of business can be daunting,” she told me. Mintz’s policy on sharing origination credit means she’s getting the “tools and incentive” to develop her own client relationships, she said.

Still, revamping origination credit isn't a panacea for increasing diversity. Women make up 26% of Mintz's partners, while 11% are people of color. That's up from 2015, when the numbers were 22% and 9% respectively — but squarely average for big firms, according to data from the National Association for Law Placement.

It’s easy to see how loosening the reins on origination credit benefits up-and-coming lawyers. But what about, say, a powerful partner who had $10 million in origination credit only to see it bumped down to $7.5 million?

For that matter, such partners might not view sharing “their” clients with colleagues in practice groups across the firm as a plus.

As Tom Sharbaugh, a professor at Penn State Law and former managing partner of operations at Morgan, Lewis & Bockius noted, lawyers have increasingly become free agents — another potential obstacle to liberalizing origination credit.

“A lot of partners think in the back of their minds, ‘If I want to leave, I want to be sure to take my clients with me,’” he said. “That’s antithetical to having other people get to know their clients.”

Honestly, I’m kind of amazed that Bodian got his colleagues to back his plan.

“I think the partners were willing to give me some leash in terms of trying to implement something that could have a positive impact on the firm overall,” he said.

It also helped that he was one of the top 10 partners with the most origination credit, he said. Which meant he put his money where his mouth was.

What he promised — and what according to financial statistics that the firm shared with me turned out to be true — was this: If Mintz lawyers did more work for existing clients, firm revenue and profits overall would grow. No one would get less pie if the pie itself was bigger.

Of Mintz's top 250 clients, 74% are now being serviced by three or more practices, and 88% use at least two, according to the firm. “We’re much more deeply integrated into clients than we were before,” Bodian said. “It’s really dramatic.”

Revenue and profits have increased by double digits every year since, the firm has reported.

In fiscal year 2015, Mintz netted $374 million, and partners took home an average of $604,000. By fiscal year 2022, revenue had climbed to $691 million and profits per partner hit $1.3 million, the firm said.

About "half a dozen" big law leaders have met with Bodian to talk about whether they can replicate the system at their own firms, he said.

"You have to have all the right circumstances and the right partners.”

Our Standards: The Thomson Reuters Trust Principles.