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Even for those rare firms and practice areas which purport not to require a following, there is a very strong correlation between “potential contacts/ track record” and partner compensation - in my experience this correlation is so strong as to constitute a direct link.As you will doubtless know, determining a client following is often a highly subjective exercise based on a series of assumptions about: your personal relationships, your clients’ perceptions of the reputation of your proposed new firm, the ease at which ongoing matters can be transferred, charge out rates, profit margins, potential for client conflicts, activity and stability of the client, the practice area itself, and the wider economy as a whole.(i) The effect of charge out and recovery rates on your following The effect of a target firm’s required charge out and recovery rates is rather similar to the variables of pressure and temperature in physics; just as a given element’s state is determined as being a liquid, solid, or gas at room temperature and at one atmosphere of pressure, so too your following is instinctively calibrated by you in reference to the existing charge out and recovery rates of your current firm.
Whilst this potential drop off in work can often be more than compensated by your being able to gain other matters higher up the food chain (sometimes even from the same client), it is an important variable which you should not underestimate, particularly as the issue applies equally to work undertaken by your assistants.
Nevertheless, if the fit is right, most firms will allow for mutually agreeable transitional arrangements.
It is all very well having a FTSE 100 client, but if your relationship rests with one individual and that individual gets run over by a bus, you, and your potential firm, run the obvious risk of losing all the work from their institution.
As much as possible, try to assuage this concern in your business plan or you run the risk of your following being unduly discounted.
List all relevant contacts at a given institution, both legal and business.
You should specify their title, position, the length of time you have worked with them and any other factors which demonstrate client loyalty (such as if they instructed you in their previous place of work or recommended you to other lawyers).
It is this principle which forms the basis upon which most jilted senior associates are offered partnership at other firms.
Nevertheless, whilst the “three to one rule” makes assumptions based on profit margin, parity of charge out and recovery rates, and has nearly as many exceptions as applications, it is still a very useful start point for you to calibrate your financial expectations.
Although not essential, it will help if you can demonstrate potential with an upwards trajectory in billings.
Nearly as important as your potential following is how you present this.