Who does the client belong to? The eternal dilemma in law firms
 

Let’s see, bigwigs of the legal world, let’s talk about a subject that in any law firm generates more tension than an unfair inheritance: who does the client belong to?

Is it the partner who brought him in with their irresistible charisma? Is it the one who pampers him with brainy reports, sleepless nights for a closing and brilliant negotiations? Or is it the firm as an omnipresent entity that keeps him in the house with a brand strategy and impeccable services?

Because, of course, we’re not here to hand out sweets, we’re here to talk about billing and how the euros are distributed at the end of the year.

Few things generate more conflict in an office than deciding who gets to bill a client. It’s not just a question of egos, but of money: what appears on your budget defines your weight in the firm, your bonus and, in many cases, your future as a partner.

The three classic models

Firms have tried different schemes to solve this dilemma, with varying degrees of success:

The hunter gets the trophy: The billing is attributed to the partner who brought in the client. It’s a model that rewards recruitment, but discourages collaboration: why share the client with another partner if it doesn’t affect my compensation? This approach can work in firms with a very commercial structure, but if it is not balanced with incentives for management and retention, it ends up fostering individual islands and hunting grounds.

The one who invoices, gets paid: Here, the billing is assigned to the partner who manages the work. It sounds logical, because the one who manages the client is the one who guarantees their continuity. But it also generates problems: someone may be spending non-billable hours cultivating the relationship, while another partner capitalises on their efforts in the firm’s accounts. If the work of sales and customer loyalty is not recognised, the partners with the most commercial talent will look for another firm that values their contribution more highly.

The client belongs to the firm: Invoicing is attributed to the firm as a whole and partners receive remuneration based on global performance criteria. This model encourages collaboration and avoids internal disputes, but if not managed well, it can reduce individual motivation to bring in new clients and make some partners feel discouraged.

The real problem: misaligned incentives

Incentive billing systems are not just a technical issue, they are a lever of power. If a firm has confusing rules or poorly designed incentives, this is what happens:

Star partners look for the exit. If they feel that their commercial contribution is not valued, they will look for another firm that better recognises their work and ‘their’ clients will leave with them.

Clients become fragmented. If clear criteria for collaboration are not established, a partner may be reluctant to involve others for fear of losing turnover share.
The firm becomes a boxing ring. Internal disputes over client ownership generate attrition, mistrust and a culture of rivalry, weakening the firm’s cohesion.

What is the solution?

There is no single model, but the most sophisticated firms tend to combine elements of the three approaches to balance acquisition, management and retention:

Recognition of acquisition. A percentage of the billing is assigned to the partner who introduced the client, but with a time window (for example, three years), preventing it from being attributed indefinitely.

Management evaluation. Another percentage is allocated to the partner who manages the work, incentivising customer loyalty and development.

An institutional component. Part of the turnover can be reserved for the firm to encourage collaboration and strengthen the brand.

If the incentives are not aligned with the interests of the firm and the clients, the partnership model is broken. And when that happens, the departure of key partners is only a matter of time.

The systems for sharing out the dough: choose your own adventure

Firms tend to have three classic ways of sharing out the cake:

Lock Step (the ‘we love each other’ model): Partners set their monthly salaries and withdrawals based solely on seniority. It doesn’t matter how much they sell or how much they invoice; what counts is how long they have been with the firm. As a partner moves up the ladder, their percentage share of the profits automatically increases. It encourages stability, but discourages the more commercially-minded.

Eat What You Kill (the ‘you bring in, you earn’ model): Each partner keeps a proportional share of what they generate. If you bring in more clients and invoices, you earn more; if not, get ready to live on the minimum. It rewards recruitment and motivates business generation, but can weaken the firm’s cohesion and the quality of service if there are no incentives for retention and collaboration.

Mixed models (‘unstable equilibrium’ model): Most firms opt for a combination of both systems. They have a high common base to guarantee stability and cohesion, but include adjustments according to the performance of each partner. This can involve bonuses for client acquisition, retention, intellectual contribution or leadership in the firm. The key is to design it well so that it does not become a system of internal warfare over billing.

And here come the problems

If the distribution rules do not incentivise sales, the star partners start to pack their bags and take ‘their’ clients with them as if they were hunting trophies.

If, on the other hand, there is too much emphasis on recruitment without thinking about the quality of service, the office becomes a festival of empty promises where nobody is concerned with building customer loyalty.

And that, my friends, is a direct ticket to disaster.

So, let’s go back to the million-dollar question: who does the client belong to?

Is it the hunter member who brought them in one day with a networking dinner and a big smile? Is it the member who has provided quality legal support, ensuring they don’t run away as soon as the first contract ends? Or is it the firm, which has invested in marketing, reputation, events and building a solid brand that attracts and retains clients?

There is no single correct answer, but rather a balance between recruitment, management and the firm’s brand.

A well-designed incentive system not only avoids internal conflicts, but also protects the firm’s stability and client satisfaction.

Because if each partner starts to see their client portfolio as a personal asset, the firm becomes a time bomb. And when it explodes, more than one will be left without a chair in the next round of the game.

So, dear lawyers, if you don’t want to end up in a corporate ‘divorce’ with fights over client custody, it’s time to sit down and define some clear, fair and sustainable rules of the game.

Because at the end of the day, the firm is more than the sum of its parts. Or at least, it should be.

About Lidia Zommer:

Lidia Zommer leads Mirada 360, a company that collaborates with several law firms as an external department for communication, marketing and business development.
She has a degree in Law from the University of Buenos Aires and a Master’s degree in Corporate Communication from the Complutense University of Madrid.

She works exclusively in marketing and communications for law firms from Mirada 360, where she combines her initial experience as a lawyer with more than 20 years advising firms on their business development plans, strategic marketing, communications and digital marketing, five of them at Gómez-Acebo & Pombo.
You can find out more about Lidia’s professional background, her contacts and recommendations on her LinkedIn profile.

Credentials:

Member of the organising committee of the Legal Management Forum
Promoter of the Almacén de Derecho project
Co-founder and head in Spain of the Ibero-American Association of Legal Communication and Marketing
Professor of Legal Communication and Marketing in the University Master’s Degree in Access to the Legal Profession at the Instituto de Estudios Bursátiles, the Universidad Complutense de Madrid and the Ilustre Colegio de Abogacía de Madrid
Vice-president of Communication at EJE&CON | Spanish Association of Female Executives and Directors
Founding member of the group Inkietos
Contributor to the blog on Communication and Marketing of the General Council of Spanish Lawyers.


mirada360.es