Attorney Members

Professionalism, Autonomy, Performance.

The firm has the following priorities: firstly and foremost, to practice law with the highest ideals of professionalism, ethics and community service; secondly, the meet all reasonable client wishes and expectations; and as a distant third priority, to meet billable hour expectations. However, since compensation is based upon demonstrated billable hour performance, the firm does not seek to control billable hours except to ensure the proper allocation of firm resources and to ensure that the lawyer member can be expected to meet the target billable hours set by that lawyer member. The firm will determine the billable rate to be charged to the clients for each matter.

Lawyer members are encouraged to develop their own client base, especially in particular areas of law. Lawyer members are paid a salary but that salary is based upon demonstrated performance in producing billable hours. All lawyers are compensated based upon exactly the same formula except that senior members of the firm are expected to produce higher return to the firm for distribution to equity members. However, senior members of the firm establish particular types of efforts which will be treated as billable hours even if not billable to a client other than the firm. Compensation reviews are updated quarterly based upon actual performance and actual expenses during the preceding four quarters. Compensation of new hires is negotiable but are based new member commitment to billable hour performance projections. Weekly reports enable all lawyer members to monitor and pace their billable hour performance.

Our compensation basis, and our commitment to each other, is based upon clearly defined performance standards. This permits us to be extremely flexible as long as any changes in these commitments are agreed upon by the appropriate lawyers in the firm, and any changes are prospective only.

The Firm offers maximum autonomy to attorneys who demonstrate legal ability and commitment to fulfill the previously agreed upon responsibilities to the other members of the firm. Every lawyer is encouraged to set their own "business plan". Whatever are the legitimate interests of a lawyer, the firm is committed to help the lawyer fulfill those interests. We work with our lawyers to define those interests, and how those interests can serve the individual lawyer and the collective interests of the other lawyers (which is what defines this Firm).

Some lawyers prefer the courtroom. Other lawyers prefer the boardroom. Other lawyers prefer the conference room. Other lawyers prefer their own office. Whatever is the interest of the individual lawyer, that lawyer can be a resource for themselves, and for the firm. Resources of our Firm can accommodate all these interests, in relative degrees. Lawyers are encouraged to develop those resources for themselves and for the firm.

We recognize that practicing law can be monotonous. Lawyers have different interests at different times. A lawyer's needs at various times may induce that lawyer to emphasize different areas of law at different times in the lawyer's career. As long as the needs of existing clients are being met, shifts in areas of practice are encouraged.

As long as one of our lawyers works to be a credit to themselves, our Firm and the legal system and to fulfill the performance obligations they accept, there is a place for of that lawyer with our Firm.
The Montgomery Law Firm Compensation System

We believe that our compensation gives each lawyer the maximum opportunity to set that lawyer's work hours, areas of practice, practice development and financial rewards.

Our compensation system evolved over a number of years into a system which we believe places great emphasis on autonomy and performance based reward. We have tried to balance these concerns with the attorney's understandable need for a relatively stable level of income for personal budgeting purposes. Accordingly, salaries are determined quarterly, but because they are based upon a floating period of the previous four quarters, they remain relatively predictable. In calculating attorney compensation rates, we have tried to reduce each variable to an objective variable. The principal subjective variable is the hourly rate at which the individual attorney's time is billed to the client.

The best way to describe the system is to track how we apply it to ALL attorneys with the firm.

Each quarter, we print out all income and expenses for the previous quarter. We use the information from that quarter, as well as the previous 3 quarters for an annual analysis. Income is based upon total bank deposits. These are compare with billing for the same period to determine a collection ratio.

Expenses are placed in two categories; mandatory and optional. Mandatory Expenses are best described as "overhead". These expenses are shared by all lawyers in the firm. They include expenses such as rent for the offices, payroll for employees available to all attorneys, utilities, etc. We keep our environment and expectations very modest to provide the highest level of stability and predictability for mandatory expenses, and to ensure that each lawyer has the opportunity to maximize their income from their efforts.

Optional Expenses are those which may significantly vary from attorney to attorney, or which may not be incurred by all attorneys. Examples of Optional Expenses are Bar dues (while all lawyers will have this as an expense, it will not be the same level for all lawyers), memberships, employee fringe benefits for the individual attorney and similar expenses which may vary from attorney to attorney. The biggest factor in Optional Expenses is the salary for the individual attorney. The total of each attorney's share of Mandatory Expenses and Optional Expenses is used with the attorney's hourly rate, the collection ratio, and the rate of return to the firm, to calculate a target number of billable hours per day.

Mandatory Expenses typically do not vary significantly with changes in the number of hours billed or with the compensation level of the attorney. These expenses are shared evenly by all attorneys. The compensation rate of the individual attorney is not a simple proportion of the billable hours actually billed by that attorney. Generally, the compensation rate changes on a progressive scale in which the more that the attorney performs, the higher the percentage of future billings the attorney will effectively realize as compensation.

Since the new attorney does not have four quarters of performance history, the Firm must subjectively evaluate the application of the compensation system. The new attorney suggests compensation levels. Those compensation levels are entered into the spreadsheet and a target number of billable hours per day is determined. The firm must subjectively conclude whether or not the target number of billable hours per day is realistic. Generally, our attorneys can be expected to work 9 hours per day, less 1 hour for lunch. (Week end hours are available, but not expected unless the attorney is not meeting target hours of the caseload and timetables require extraordinary efforts.) In the typical work day, the attorney can expect to bill 5 to 6 hours per day. The new attorney cannot expect to be nearly this efficient in producing billable hours from actual hours expended. New attorneys are encouraged to be very realistic about these efficiency differences.

Work order assignments may come from any attorney in the firm, to any attorney in the firm. Each attorney is presumptively managing attorney for those areas of practice selected by that attorney. As each attorney completes a work assignment, the attorney will log their actual time expended on a time sheet. The time sheet is submitted at the beginning of the next business day. The time sheet is reviewed by a more senior attorney and actual time may be reduced to produce a presumptively billable time entry. That adjustment is reported to the timekeeper to ensure that the timekeeper understands and agrees to the adjustment. Any disagreement is resolved by a more senior attorney.

Time entries are entered into the billing program, Clients are billed monthly, with a portion of the alphabet billed each Monday. With each weekly billing, a report is generated submitted to all attorneys indicating the totals of billable hours and non-billable hours during the pervious week, as well as the average daily billable and non-billable hours over the preceding 52 weeks or portions thereof. Each attorney is expected to monitor their own performance to ensure that targets are met, at a minimum. The individual attorney can adapt the efforts of that attorney to ensure performance in accordance with the commitment made by the lawyer to the Firm in return for the Firm's salary commitment to the lawyer. The individual lawyer can also adapt the efforts of that attorney to perform beyond the levels required for their present salary level, and hence qualify for a raise effective at the start of the next quarter.

The new attorney is not expected to generate a return to the Firm during the first quarter. It is expected that during their first month, the new attorney will not meet target billable hours. It is expected that during the second month, the new attorney will meet target daily billable hours on the average. During the last month of their first quarter, the new attorney is expected to exceed target billable hours by a level which equals of exceeds the level at which that attorney under-performed during the first month. The goal is to "break even" by the end of the first quarter. As the new attorney gains experience, the attorney is expected to generate a return to the firm. Generally, that return will be expected to by 10% by the end of their first year, 25% by the end of their second year, 50% by the end of their third year; 75% by the end of their fourth year; and 100% by the end of their fifth year and thereafter.

PLEASE NOTE: We are an equal employment opportunity employer. We do not discriminate based upon race, religion, gender, physical disability or country of natural origin.
(3/26/2000)