If you are a lawyer just beginning your career, you probably don’t spend a lot of time worrying about origination credit.  In fact, maybe you never heard of the concept.  That makes sense.  You have a lot of other things to worry about that affect you on a daily basis in pursuit of improving your skills and becoming the best lawyer you can be.

But there is a difference between “worrying about” and “being informed about.”  As far as I am concerned, every private practice lawyer, regardless of experience, needs to at least be familiar with the concept of origination credits.  To be uninformed about them is to be unfamiliar with one of the things rocking the legal world at this point in time.

Origination credit is a lot what it sounds like.  For past generations, the lawyer, who brings the client to the firm, gets some credit for future work done for the client even if he or she never spends another hour toiling away on work for that client.

So, a lawyer can “originate” the client but never work on the client’s matters again and still lay claim to a part of the proceeds generated by the client work.  And on a permanent basis.

The result is that the lawyers currently working on a client matter are not getting credit for all of the time billed because the originating lawyer, who is not working on the matter at all, is skimming off the top based on the origination event and may even be receiving the bulk of the compensation.

If that sounds unfair to you, you are in the company of many others who believe this is an antiquated concept and needs revisiting.  In fact, this alleged unfairness is at the heart of some of the very visible gender and diversity discrimination law suits pending against Big Law today.

To learn more about this concept and from the perspective of an in-house lawyer, see https://www.law.com/corpcounsel/2019/09/02/change-at-the-start/.

In that article, you will read about efforts by in-house lawyers to assure that the relationship partners, who actually work on their matters, receive the compensation credit they deserve.  You will read about the frustration of in-house lawyers, who discover that lawyers they never have met or dealt with, are receiving part of the fees paid — fees that otherwise would go to the relationship partners that these in-house lawyers deal with on a daily basis.

You will also read comments from seasoned partners, who have benefited from origination credits throughout their careers but who also see the unfairness of the system.  Like this comment from Patricia Gillette, who I know and admire:

“[The system of origination credits} ensconces lawyers in a position and rewards them over and over again, and it creates silos rather than teams.  You can get credit for the rest of your life; it doesn’t give room for others.”

This is not to say that origination credit is not important or that the concept should be thrown out as with the proverbial baby with the bath water.  But a compromise where the relationship partner shares in some of the origination credit may be in order.  That would seem fair.

And fundamental fairness should underlie everything we do in the law.  Former Supreme Court Justice Felix Frankfurter said it best so many years ago, and I agree!

Billable hours.  Ugh.  The end all and be all in most law firms today.  Together with client origination, billable hours have been the measure of success for law professionals for generations.

2200 annually.  2000.  1950.  It really doesn’t matter.  The ounce of flesh that is exacted to reach those numbers is considerable and should be of primary concern. Wellness of professionals, wholesome law firm values, training young lawyers to become law firm leaders, and client service should matter most — not billable hours.

Despite these countervailing considerations, we keep concentrating on leveraging and law firm profits, all of which derive directly from billable hours.  Although there have been many commenters over recent years exposing the weaknesses of such a high concentration on billable hours, the profession has not seen a major move in another direction.

But recently, a top UK law firm represents that new direction.  Clifford Chance announced an innovative pilot program in May 2019, which delves into the merits of a concentration on billable hours as a measure of success.  Here is how a law firm executive describes the need for the study and how it will work:

While utilization is widely used as a core metric across the industry, it has a number of broadly acknowledged limitations, most notably that it does not directly incentivize efficiency or contributions to non-billable work that may be invaluable to the firm’s overall strategy and to the continued development of exceptional client service.

By running a pilot on this scale, with a large number of data points, associate input and partner and management feedback, we expect to be in a position to draw informed conclusions on the way ahead for the firm.

The year-long pilot program will consider lawyer performance based on other factors, including demonstration of knowledge, thought leadership, innovation, pro bono work, and business development.  Although lawyers will continue to record billable hours during the pilot, those numbers will be used to compare results at the end of the program and to maintain client records.

Read more here about the Clifford Chance program.  This kind of initiative is long overdue, and many of us, who care about the future of law practice and development of young lawyers into future leaders, will be very interested in the study results.

Stay tuned because you can be sure I will report them.