When law firms are asked to describe themselves and their "cultures", they all sound the same. All firms want to believe they have (i) congenial atmospheres, (ii) excellent attorneys and support staff, (iii) produce a high quality work product, and (iv) foster the "client driven" approach to the practice of law. In fact, marketing experts will relate that all law firms that go through the trouble of formulating a mission statement end up with essentially the same one. This introspective soul searching is typically done from the perspective of the consumer -- the prospective client.
This essay examines the question of what differentiates Flaster/Greenberg from the perspective of the attorney.
The last 36 years have witnessed the evolution of our Firm from a two-person tax boutique to a 70 attorney regional commercial law firm. Attracting lateral attorneys from other firms has fueled much of our growth. We attribute this success to several characteristics that distinguish our Firm from other law firms:
Firm Governance
Most law firms that evolve from a solo or two-person practice follow a predictable path. The founding partners are the principal rainmakers and gradually add attorneys to support their increasing practices. At this stage of development, the founder(s) typically govern as benevolent dictators and their authority is not questioned. At some point in this evolution, other attorneys begin to develop independent practices/clients. These attorneys eventually initiate a more democratic management structure or leave with their "book." Frequently, resistance from the founding partners effectively limits the development of the firm past a relatively small size. In situations where the founding shareholders are willing to share power, the firm enters a democratic phase where each partner is given a say in management; however, ultimate power is often still concentrated with the rainmakers. As these firms continue to grow, the rainmakers increasingly control compensation decisions -- the ultimate source of power at a law firm.
Unlike many law firms, all shareholders at Flaster/Greenberg have an equal number of shares in the Firm. The day-to-day management of the Firm is delegated to a managing shareholder and non-attorney administrative personnel led by an Executive Director. The shareholders meet as a group once a month to discuss strategic initiatives and major business decisions. The Firm has an Executive Committee consisting of the Managing Shareholder and four shareholders elected to staggered terms. This Executive Committee makes recommendations to the shareholders on issues discussed at the monthly shareholder meetings. Finally, on an annual basis, the shareholders hold a weekend retreat to formulate the business plan and discuss major policy initiatives.
Unlike most law firms, shareholder compensation is not determined by a subset of shareholders; but rather, by an objective formula equally applied to all shareholders. The mechanics of the formula are discussed below. The effect on the Firm of having this form of compensation system is dramatic. The typical politics present at many firms is absent. New shareholders need not worry about alliances, voting blocks or existing loyalties among more senior attorneys. Management and the shareholders are not preoccupied with compensation issues and instead focus on strategic decisions. Shareholders are content because they feel like owners and are confident that every shareholder is treated equally.
Many sociologists will tell you that the most efficient form of governance is a dictatorship where the dictator has unquestioned authority. Our form of governance is not as efficient but is dramatically more inclusive. Our belief is that when shareholders are treated as owners, they act like owners and have a genuine concern for the long-term health and success of their business.
Our Objective Compensation formula
As discussed above, shareholder compensation is determined by an objective formula. Our compensation formula tracks each shareholder's production (cash collected on a shareholder's time), client responsibility or "minding" (cash collected on files that the shareholder manages) and originations (cash collected on files originated by the shareholder).
Each year, the shareholders determine the total amount available for distribution. Twenty-five percent (25%) of this amount is then allocated proportionately to the shareholders based on origination, nineteen percent (19%) is allocated proportionately to the shareholders based on client responsibility and fifty-six percent (56%) is allocated to the shareholders proportionately based on production. Each shareholder is provided reports showing these figures for all attorneys. All financial information at the Firm is shared with every shareholder.
The administration of the compensation formula involves quite an extensive spreadsheet and the firm has modified the formula to address contingent fees, associate profit and certain firm service by shareholders; however, the formula is applied equally to each shareholder. The primary benefits of the compensation formula are:
- Shareholders receive the same production credit regardless of whether they work on a client file they originated or another attorney's file.
- The typical credit for origination is divided into two categories origination and client responsibility to allow for sharing between attorneys. Accordingly, an
attorney is rewarded for bringing in a client to the firm and where another shareholder manages the file; the minding attorney(s) is rewarded for servicing
and growing the client.
- All politics associated with compensation are removed from the Firm.
- The delicate balance between rewarding originators and rewarding the working attorneys is maintained as evidenced by the fact that both the Firm's high
originators and high billers have remained at the Firm.
- Our compensation formula recognizes the varying contributions of all shareholders and the Firm does not need to differentiate shareholders by
de-equitizing all but the highest originators.
Profitability
Clearly, the stability of any law firm is largely dependent on its profitability. Unlike many other firms, Flaster/Greenberg is not obsessed with profits per partner ("PPP"). At Flaster/Greenberg, we can accommodate a broader range of practices and don't force each shareholder to perform at the same financial level in order to remain a shareholder.
We believe revenue per lawyer is a better measure of a firms' health. Ultimately, shareholder compensation at our Firm compared to lawyers at competing firms, with similar performance figures (comparable production, minding and origination) is the best indicator of profitability. In discussions with numerous lateral candidates, our shareholder compensation consistently compares favorably with attorneys at both larger and smaller firms.
Our Business Plan
No law firm can accommodate all types of practices. Many times, attorneys switch firms because they need a different "platform" to accommodate their practice. As a regional commercial law firm, we see tremendous opportunities ahead for our Firm. Over the last 25 years, the legal profession has experienced a transformation where large national and international firms have emerged. This consolidation continues with many area firms electing to merge or be acquired. A majority of our attorneys have joined us from these larger New Jersey and Pennsylvania firms because their client base or practice focus was no longer consistent with their firm's business plan or because the larger size and or greater geographic reach was not necessary to service their existing and target clients.
Our Firm is committed to taking advantage of the opportunities created by consolidation in the legal marketplace. An examination of our practice areas and their client focus will illustrate this strategy. In each area of our practice, we seek to focus on areas where we can compete with the national and global law firms or target practice areas or clients that are outside their focus. For example, because real estate matters involve state and local laws, a national firm with offices throughout the world has no competitive advantage over our firm. In fact, in many cases, the cost structure needed to support their practices places them at a distinct disadvantage to our Firm.
A business with environmental contamination at their local facility in Trenton, N.J. gains no advantage from a firm because it maintains an office in Paris, France.
Our corporate practice concentrates on representing companies based in the region. Unlike the national firms, we desire representations of privately held and family-owned entities. Increasingly, public companies with interests in our region are recognizing that they receive better service from a law firm based in this area.
Our newly expanded intellectual property practice has been able to attract and service institutional clients throughout the United States and the world with no resistance regarding our location or size from these clients.
Each year, we evaluate the market opportunities for each of our practice areas to identify areas where we can achieve a competitive advantage. In speaking with attorneys interested in joining our Firm, we take great care in making sure their practice and client focus is consistent with our business plan. This process minimizes the chance that an attorney's practice becomes incompatible with our platform.
Our People
Many attorneys believe that the best legal talent gravitates to the largest law firms. While it is often the case that 
the top graduates from the nation's best law schools start their legal careers at the largest law firms, we have been successful at attracting these candidates after they have practiced at these firms for a couple of years. In fact, many of our recent lateral hires have joined us from AMLAW 100® law firms. Equally of note has been the Firm's ability to attract attorneys from smaller firms that saw a benefit to being at a multi-disciplinary firm. These attorneys have seen their practices rapidly expand as a result of the additional cross-selling opportunities available at Flaster/Greenberg.
In Conclusion
We welcome inquiries from qualified shareholder candidates. If Flaster/Greenberg sounds like a place you could thrive, you owe it to yourself to investigate all we have to offer. There is a difference - let us prove it.