As law firms continue to explore ways to cross-sell and collaboratively serve clients, a frequent question arises regarding origination credit allocation. While many firms have modified their compensation systems to encourage collaboration, origination credit often remains a sticking point. The issue frequently occurs when a next-generation partner is doing significant work for and advancing the relationship with a client that a more experienced partner brought to the firm.
Like most topics involving money, this can be a sticky issue with no clear answers. Nonetheless, law firms need to assess the ways they are handling origination credit allocation and lawyers need to have these conversations. Not only is origination credit essential to continuity planning for the client, but it is also a critical factor in promotion decisions for next-generation lawyers. What’s more, if firms are not intentional about how business – and corresponding origination credit – transfers from one generation to the next, they will continue to struggle with attrition among lawyers from underrepresented backgrounds and will hamper their ability to make meaningful advances in DEI.
How Law Firms Can Approach Origination Credit
While there are no bright-line rules or one-size-fits-all answers to questions of origination credit, law firms must take a thoughtful and strategic approach. Law firms can approach origination credit issues by:
- Recognizing the historical context. Law firms continue to struggle with attrition among attorneys from underrepresented backgrounds. Although diversity has improved at the associate level, there are few partners from underrepresented backgrounds at the most senior levels. According to a recent National Association for Law Placement (NALP) report, in 2022, 28% of associates were people of color, but only 11% of partners were people of color. Additionally, the American Bar Association reported that in 2007, 78.96% of associates were white attorneys, and by 2019, white attorneys represented 89.85% of equity partners. In contrast, attorneys of color represented 20.78% of associates in 2007, but in 2019, they represented only 9.78% of equity partners. Attrition among lawyers from underrepresented backgrounds at the most senior levels of law firms is persistent, and one way to counteract this trend is to empower attorneys from underrepresented backgrounds to develop a book of business and gain origination credit.
- Evaluating systems to encourage collaboration, including motivating experienced partners to share origination credit. How is the firm encouraging its most experienced lawyers to bring newer lawyers into client relationships? How is the firm incentivizing its next-generation lawyers to advance the client relationship? In addition to supporting attorneys from underrepresented backgrounds in business development efforts, law firms can also address the attrition problem by taking a different approach to origination credit.
- Looking at the issue from a business continuity perspective. Law firms should consider ways to incentivize next-generation lawyers and attorneys from underrepresented backgrounds to invest in continuity planning. To foster client relationship continuity, law firms should consider how they encourage, empower, and compensate attorneys for their role in the process – including allocation (and possible redistribution) of origination credit.
Navigating Origination Credit Conversations: 3 Tips for Next-Generation Lawyers
While firms can – and should – be intentional about creating diverse teams and take a proactive approach to continuity planning, much of the onus still falls on next-generation lawyers to broach the topic of origination credit. The following are three suggestions when raising the topic:
- Ask yourself: What is my contribution to this client relationship? Doing good legal work is not enough; your contributions should advance the client relationship. Identify these actions and contributions so you can clearly state them to the relationship partner and other firm decision-makers. If you’re lacking in this area, consider ways to guard and get additional work with the client by entrenching yourself and the firm in the relationship.
- Consider origination credit from the perspective of more experienced colleagues. What are their interests, and how can you discuss origination credit in a way that takes these interests into account? For instance, is the relationship partner winding down their career and concerned about their legacy? Is the relationship partner interested in expanding the scope of the client relationship to include an area of law outside their practice area? Are there generational shifts at the client that offer opportunities to build relationships at the peer level with the client? When you understand other perspectives more clearly, you can more proactively address others’ interests as well as your own.
- Go into the conversation with confidence and humility. While these conversations are challenging, it’s vital to have them. Approach the discussion with confidence in your contributions to the client relationship – but don’t forget to have humility. Understand that the relationship partner has invested a substantial amount of time and energy in the client relationship. Expressing your commitment to the long-term success of client relationships will likely land better than focusing only on the financial implications of shared origination credit. Clearly explain your contributions, express your long-term commitment to the firm, and acknowledge your desire to advance within the firm, but avoid making demands. Consider these conversations an ongoing process rather than a one-and-done task.
Like most conversations about money, talking about origination credit can be uncomfortable – but law firms and lawyers shouldn’t avoid it. Sharing origination credit is not only beneficial to continuity planning and cross-selling, but it is crucial for the advancement of lawyers from underrepresented backgrounds and efforts to improve representation at the most senior levels of law firms.