Origination credit. It’s a term well known by veteran attorneys in private practice, but too often a factor ignored by beginning and associate level lawyers who are seeking their first law job or a lateral move.  Yet, for those who stay in private practice, a law firm’s origination credit policy is arguably one of the most important factors to consider when job hunting.

A law firm's origination policy determines how the partners receive credit for bringing in clients, managing relationships, and generating new work.

The above definition of an origination policy from performlaw.com is a good starting point, but doesn’t go far enough to help starting attorneys evaluate potential job offers.   The clarity, methodology, and enforcement of a firm’s origination credit program can positively or negatively affect associates’ upward mobility.  As performlaw.com’s website states, “A good program encourages business development, supports collaboration, and helps firms transition client relationships from one generation of partners to the next.”

For women and underrepresented groups, the impact of a firm’s origination credit policy can be especially harsh.  Indeed, women partners in the US reportedly receive an average of 67% of the origination credit given to their male colleagues. This disparity may be attributed to business development opportunities and client relationship transitions that favor men, and therefore play a central role in perpetuating gender disparities in partnership economics. This is why women attorneys in particular need to query potential employers and receive a clear explanation of the firm’s origination policies.

The first step in conducting this due diligence is understanding the different types of compensation programs, including compensation for client origination.

The First Touch Rule

Firms that follow a rigid structure of allocating a hundred percent of origination credit forever to the attorney who initially brings in the client (also known as the “first touch” rule), regardless of who is managing or billing for a particular matter, tend to underestimate the value of the working and billing attorneys, the lawyers who actually do the work and manage the client account.   Since those attorneys are not a part of this type of origination credit formula, they may be stuck with a typical “black box” process used to determine raises and overall compensation.  As Velocity Work, a law firm business consultant, noted recently, a pure first touch system can “incentivize partners to hoard client relationships rather than cross-sell services”.  This is good for neither the other lawyers working on the client’s matters or the firm itself, which must seek to grow, or at least maintain billable matters in order to stay in business.

Other firms follow a modified first touch rule, in which the attorney who had the first contact with the client gets a portion of the origination credit, but the attorney or attorneys who generate billable matters for that client receive an allocated share.  For example, Partner A may be the neighbor or social contact of the GC of a large company, and introduces the GC to the law firm.  But Partner A is a bankruptcy specialist, not a corporate attorney, and so must collaborate with Partner B in order to monetize the relationship.  Partner A may (and probably should) still receive a portion of the origination credit, but Partner B will receive a portion as well.  While this would seem to mitigate the disparity between the introducing partner and the partners who grow the business from a particular client, it may encourage originating attorneys to practice outside their area of expertise in order to keep 100% of the origination credit.  One method of resolving this tension is to cap origination credit at a set amount, and provide for ongoing (partial) origination credit for matters generated by other specialist attorneys.

Other Structures

Lockstep Policy

The reverse of a first touch or modified first touch policy is a “lockstep” formula that bases compensation strictly on years of service. Associates become partners, and partners receive regular pay increases, as they gain seniority.  Velocity Work believes the lockstep method of compensation “promot[es] loyalty and teamwork since everyone advances together…[and] often leads to better collaboration and information sharing between partners.”   In fact, according to Velocity Work, such law firms “tend to be the happiest, most successful, most team-oriented firms around….[F]reed from worries about holding onto their credits, attorneys can put their clients first and ensure that the most appropriate lawyer gets assigned to a matter.”  The downside of this compensation model is, like the first touch origination credit model, in its rigidity.  Because no one receives additional compensation for bringing in business, the lockstep formula fails to encourage business development, and can leave high-achieving junior partners who bring in new clients feeling frustrated because their contribution to the growth of the firm doesn’t translate to higher pay. The system can also make it harder to address underperformance since compensation isn't tied to output.

Hybrid Policies

More and more law firms are instituting hybrid compensation policies allocating partial origination credit to the attorney bringing in the client or creating new matters, as well as rewarding impressive billables, while ensuring that intangibles such as taking on firm management responsibilities, mentoring new associates, and developing practice area expertise and depth, are also compensated fairly.  But even such well balanced compensation schemes can fail to equitably distribute firm profits, especially when it comes to women.  Velocity acknowledges this, stating that “Research continues to show persistent gaps in compensation between male and female partners, highlighting the need for greater transparency and objective evaluation methods. Effective compensation models must therefore be flexible enough to address both pay equity concerns and evolving partner priorities.”   In other words, while the origination and compensation policies may be important, there may be other considerations, such as work-life balance, remote work opportunities, and family leave policies, that take precedence for some.  The best compensation plans will be clear and specific with definitive benchmarks that trigger predetermined financial or other rewards.

Strategies for Job-Seeking Attorneys

Given the importance of origination credit to a lawyer’s overall career trajectory, how can attorneys, especially women attorneys, ensure they will be given full access to economic rewards from business development, client management, and good old billable work as well as client origination? Esquire Talent Associates and Momentum Search Partners offer a few suggestions for attorneys interviewing for jobs at private practice firms:

1. Seek Transparency: Don’t shy away from asking how origination credit is structured at your firm. If policies are unclear, push for clarity.

2. Assess Fairness and Sustainability: Does your firm’s system reward both rainmaking and client retention? If senior attorneys hold credit indefinitely, younger partners may face career roadblocks.

3. Negotiate Beyond Salary: When considering a lateral move, ensure origination credit policies are part of the negotiation—this can have a more significant long-term impact than a higher base salary. 

4. Origination Sharing: In firms where credit can be shared, determine whether there is a pre-established policy for origination sharing between client acquisition attorneys and long term client relationship management attorneys.  If not, be cautious, and find out if there is an avenue for resolving disputes over origination sharing. 

Once you’re employed by a firm, don’t be deterred by origination policies.  If you contribute to client acquisition or development without receiving credit, track your involvement and present a case to firm leadership. And remember, law firms are adapting origination credit policies to attract and retain talent. If your firm’s system is outdated, it may be time to explore firms with more equitable structures.   Above all, don’t undervalue yourself!  Remember, if you’re smart enough to graduate from law school, pass the state bar, and get an interview with a firm, you’re allowed to be a little picky.  Make sure you’re considering your future with any firm a year, five years, and ten years from now.

As a veteran of thirty years of legal practice, Melanie Houk welcomes the opportunity to look back on a career nearer to completion than commencement. A graduate of Loyola Law School, Melanie initially took a nontraditional direction, leaving a first-year position at Whitman Breed Abbott & Morgan to take a job as a consultant. Eventually returning to private practice, Melanie spent nearly a decade developing further public law expertise with redevelopment agencies and municipalities before gravitating to an in-house position at Lennar Corporation, where a markedly convoluted path led her to a promotion to Deputy General Counsel, a position she has held for close to fifteen years.