Celebrating 10 years! 2007-2017

Thoughts on "Eat What You Kill" arrangements

Had a meeting with a major law firm where I'd be looking to spicytuna10/05/18
"but I'm in an in-demand practice area" They'll tell you jeffm10/05/18
You should ask to talk to the others at the firm who have th nycatt10/05/18
Be careful. True story: A friend of mine accepted a jo passportfan310/05/18
Spot on. Those were my exact concerns and that is precisely spicytuna10/05/18
To accept, idk. I would need to have developed some trust wi redemptionsong10/05/18
A few of the non-equity partners at my old firm had this arr jd4hire10/05/18
I would add, the named partner who founded the firm did have jd4hire10/05/18
Great advice. Thank you. spicytuna10/05/18
Despite what you may think, all equity partners are (to some dingbat10/05/18
I read about a former federal cabinet secretary who was offe newyorkcity10/05/18
I doubt it. The cabinet secretary would not be able to, or dingbat10/05/18
Unless he/she decided to grow a firm. jeffm10/05/18
If you have ever grown a firm you will realize that this is napoleone10/12/18
I saw someone on here who was given an offer of a guaranteed thirdtierlaw10/05/18
When it comes to bringing in business, being at a larger fir dingbat10/05/18
*For simplicity sake, I'm not going to discuss having your o dingbat10/05/18
... which could alter your perception of this alternative, m jeffm10/05/18
For discussion purposes I stuck with the extremes. The good dingbat10/05/18
I sort of get your point, except for that if you are a partn jeffm10/05/18
which firm in this country is still a traditional partnershi dingbat10/05/18
I have a friend who was partner in a sizable, medium-sized f jeffm10/05/18
I can understand having a landlord, but what other lenders w dingbat10/05/18
At this point, we would just be quibbling. There's often pa jeffm10/06/18
There are other ways to share the burden of the administrati onehell10/05/18
"... might co-counsel if they need to work together on somet irishlaw10/05/18
I don't disagree, but there are a gazillion variables. A re dingbat10/05/18
"if you're just renting space, the best you'll get is a hand onehell10/08/18
Many excellent perspectives here, including many I had not c spicytuna10/06/18
Good advice given. I've had two jobs in the past where I was cranky10/06/18
I know someone in Japan who gets roughly $6,000/mo. (USD equ shuiz10/14/18

spicytuna (Oct 5, 2018 - 12:22 am)

Had a meeting with a major law firm where I'd be looking to lateral from current position. I have only a tiny book of business, but I'm in an in-demand practice area and have some local credibility despite my otherwise unremarkable pedigree.

The meeting was exploratory, so no formal offer was made, but I was essentially welcomed to join the firm on an eat what you kill basis plus small base. Exact figures would probably be negotiable, but bottom line is that I would need to generate business in short order to make ends meet. Would be coming in as either senior atty or non-equity partner.

Anyone have any experience with making a go of it on an EWYK formula at a big firm? I wasn't even aware many big firms offered these types of compensation arrangements. The question is how long of a runway will I need to build up a substantial book? Otherwise, the firm is great, lots of prestige and good culture.

OTOH, I could maybe get better offers from mid-sized firms, but haven't really explored it yet. Also, could go solo and eat 100% of what I kill, but then no big brand name behind me to attract clients, but also no conflicts to contend with.

Thoughts?

For anyone interested, this post is a follow up from this thread: https://www.jdunderground.com/law/thread.php?threadId=168986

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jeffm (Oct 5, 2018 - 8:04 am)

"but I'm in an in-demand practice area"

They'll tell you there's no such thing here.

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nycatt (Oct 5, 2018 - 11:19 am)

You should ask to talk to the others at the firm who have the same arrangement. The attorneys here have already filled you into the details that such an arrangement can be great or a nightmare depending on the details. Your potential peers can let you know how they like it. As others have suggested, you should also make sure you have no obligation to take on other partners' work without adequate compensation. Also, what if partners try to sell you, essentially? They say, i have a guy who does great work in x area, you should use him. You should not be required to do that work unless you get part of the kill.

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passportfan3 (Oct 5, 2018 - 1:43 am)

Be careful.

True story:

A friend of mine accepted a job like this. She quickly learned that, if she was not billing on "her own" cases, she was expected to be billing on one of the rainmakers' cases; for that work, she was paid a substantially under-market base.

Then she noticed something odd: The promised business development assistance never materialized. There was no budget for conventions or client meals. Buying a table at a non-profit or bar association fundraiser was out of the question. The deadlines in the rainmakers' cases always took precedence. And, when she did land a client, there was a 50/50 chance of a conflict.

She left after a year realizing she'd been had. The firm just used the EWYK line to hire cheap labor. When one associate wised up, there was always another sucker dreaming of the millions he would surely enjoy eating what he killed.

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spicytuna (Oct 5, 2018 - 6:58 am)

Spot on. Those were my exact concerns and that is precisely the type of insight I was looking for. It's a tough call for me because the firm is solid and I like the people I know there, but as you point out, the devil is in the details. At a minimum, we'd need a to come to a mutual understanding- probably in writing- for me to feel comfortable with the arrangement.

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redemptionsong (Oct 5, 2018 - 3:57 am)

To accept, idk. I would need to have developed some trust with the employing firm.

To offer, I would see it as providing a base that would keep the associate at a healthy weight but still hungry. There needs to be some skin in the game to build the firm.

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jd4hire (Oct 5, 2018 - 8:57 am)

A few of the non-equity partners at my old firm had this arrangement. I was not privy to the financial aspect. They seemed happy and one constantly talked about how nice it was not to handle the stuff he used to when he ran his own firm - billing, IT, rent, malpractice, etc. He would always say it was so nice to be back to practicing law and not managing his own place.

So those are a few considerations, but I would want to know budgets for business development, etc. If I were billing on others files, I'd want my base to be commensurate with that. Also, not sure how large the firm is, but some understanding as to cross-selling...if you are an estate planner and there is a corporate department, I'd want to be plugged in with any of the growing business clients who may not have an estate plan, etc.

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jd4hire (Oct 5, 2018 - 8:58 am)

I would add, the named partner who founded the firm did have some disdain to one of the non-equity partners with the EWYK arrangement as that non-equity partner had a huge book of business and was making more than any other person at the firm.

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spicytuna (Oct 5, 2018 - 10:34 am)

Great advice. Thank you.

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dingbat (Oct 5, 2018 - 10:59 am)

Despite what you may think, all equity partners are (to some degree) eat what you kill.
The non-equity partner bit just means you don't have enough of a track record yet.

The real question is, how much do you feel confident you can actually bring in, and will you be compensated accordingly? Don't assume you'll magically be able to grow your tiny book of business merely by having a more established name on your business card. Either you're rainmaker material (in the making), or not.

Based on the offered compensation, if your current book of business stays at its current level for the next 24 months, will you be comfortable with your total take-home pay? If you can only grow your business 10% per year, will you be happy with your total take-home pay?

If the answer to either question is "no", don't do it. If the answer is "yes", the follow-up is: will the firm be willing to keep you on for the long haul under those circumstances?

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newyorkcity (Oct 5, 2018 - 1:26 pm)

I read about a former federal cabinet secretary who was offered an "Eat What You Kill" of counsel position with a top-top firm, and the cabinet secretary was to keep 33% of all collections. The cabinet secretary wisely said, "I'll rent a virtual office, and keep 100% of all collections."

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dingbat (Oct 5, 2018 - 3:44 pm)

I doubt it. The cabinet secretary would not be able to, or even want to, do all the work the cabinet secretary could bring in

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jeffm (Oct 5, 2018 - 4:18 pm)

Unless he/she decided to grow a firm.

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napoleone (Oct 12, 2018 - 12:09 pm)

If you have ever grown a firm you will realize that this is not a simple thing to do and it would be unlikely that a cabinet secretary would even bother to try

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thirdtierlaw (Oct 5, 2018 - 3:20 pm)

I saw someone on here who was given an offer of a guaranteed base of "x", but for the first 2 years they'd pay him "x+y". However, the catch with the "y" was that he'd be paying that back with the collectibles he brought in that year, then he'd get to keep a decent percentage of everything above that. Then starting year 3, his "base salary" was just "x" but he got to keep a slightly larger percentage of everything he brought into the firm. The logic behind it is that it'd help incentive the firm to help him grow.

EWYK arrangements can be great as long as you can meet your basic expenses on the guaranteed income and the firm will actually let/help you grow. Is there a reason you can't grow your book where you currently are while making more money?

The other thing that is important that newyorkcity points out above, it's worth doing the math on how much business you think you can drum up on your own. Let's say you'll be moderately successful on your own growing you book, or very successful with the big firms name on your card. You need to remember that you'll be taking a 66% haircut on each of those clients you bring in. So you may actually make more money being "moderately" successful on your own.

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dingbat (Oct 5, 2018 - 3:50 pm)

When it comes to bringing in business, being at a larger firm only makes sense if you can bring in significantly more business than you yourself can handle, and the work is being doled out to someone else.

for example, let's say you personally bill $500/hr. If you're spending decent time bringing in clients, even if you have no life, you probably can't actually work more than 40 hours per week, or 2000 per year. So you're capped at bringing in more than $1,000,000 per year.

But if you're a partner at Dewey, Cheatham, & Howe, you can spend all your time networking, and not waste time doing actual work. Let's say you can bring in $5,000,000 and dole it all out to underlings, you get to keep $1.67 million, which is significantly more than you could service as a solo.

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dingbat (Oct 5, 2018 - 3:51 pm)

*For simplicity sake, I'm not going to discuss having your own firm with your own underlings, nor how much work a rainmaker actually has to do on the matters they bring in.

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jeffm (Oct 5, 2018 - 4:21 pm)

... which could alter your perception of this alternative, making it a better choice. Obviously, for some people, growing their own firm is a good deal or there would be no firms in the first place.

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dingbat (Oct 5, 2018 - 4:48 pm)

For discussion purposes I stuck with the extremes. The good part about joining a firm is that you don't need to go through the trouble of dealing with all the administrative stuff like hiring, finding and setting up an office, dealing with technology matters, etc.

Furthermore, when joining a larger firm it's extremely rare to lose money, whereas if it's your own firm, there may be times where you're spending more than you're bringing in - salaries and bills need to be paid, even if you're having a drought for a couple of months.

Some people are happy to delve into the management side of the business, other people enjoy doing the work part, and still others just want to bring in the bacon. Not everyone wants to (or even can) do all of the above. The less you want to deal with 'distractions', the more you should stay in a big organization. The more you're able and willing to deal with the crud, the more suited you are to building your own.

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jeffm (Oct 5, 2018 - 5:27 pm)

I sort of get your point, except for that if you are a partner in a firm and liable for some, if not all, the firm's debts, you better hope you stay lucky if you don't want to be involved in administration, including at least enough oversight to know what's going on and to make decisions. That also means, of course, you'll be paying somebody to do that for you.

You can build the same, exact structure on your own. The question is whether you think it's worth it to share your goodwill with others who, in turn, will share theirs with you. Sometimes, the deal is just too lopsided on one side. This is not always known up-front. Also, it is always subject to change over time.

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dingbat (Oct 5, 2018 - 9:34 pm)

which firm in this country is still a traditional partnership? That's crazy talk.

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jeffm (Oct 5, 2018 - 11:10 pm)

I have a friend who was partner in a sizable, medium-sized firm that took up 2 floors of a Galleria building. Their lenders and landlords required personal guarantees. I bet this is the rule for all but maybe the smallest number of big firms. My guess is there are very few partners in law who aren't personally on the hook for at least some law firm debts. On the other hand, maybe my friend and his firm were just an anomaly.

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dingbat (Oct 5, 2018 - 11:21 pm)

I can understand having a landlord, but what other lenders were there?

Generally speaking, for a new company, a personal guarantee will always be required, but once a reputable company has a sufficient track record, the company should be able to borrow on its own credit-worthiness. If a firm's finances are so shaky it can't get loans without personal guarantees, it shouldn't be borrowing money.


-- side note: a personal guarantee was traditionally required if the business has no assets or on shaky financial ground. Proof that the company's finances was generally sufficient to avoid needing one. The commercial lease industry was hit hard during the recession, and started asking it off everyone - particularly if the building makes expensive accommodations they want to make sure they're gonna get paid. Doesn't mean it can't be negotiated. If a company is financially stable enough, it can get a letter of guarantee from its bank, which will generally be a suitable substitute for a personal guarantee. It's also possible to negotiate limits to the personal guarantee, such as that it terminates after a set time period (especially for longer-term leases)

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jeffm (Oct 6, 2018 - 9:12 am)

At this point, we would just be quibbling. There's often partner liability. In addition to leases, consider lines of credit to make payroll, lease payments, float cases, etc.

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onehell (Oct 5, 2018 - 6:40 pm)

There are other ways to share the burden of the administrative stuff. There are solos in my town who do this thing where they rent individual offices inside the same space and share the receptionist, common areas, conference room, etc. To a casual observer it might look like a law firm, but they're really just roommates. The receptionist's W-2 employer is some temp/staff leasing agency and they just split that bill too.

They refer cases between one another or might co-counsel if they need to work together on something bigger, but it allows for an eat-what-you-kill arrangement without them all creating conflicts for one another.

If someone offered me no or nominal-salary arrangement inside their firm, I would say why not just rent me space? The advantage of being an associate is supposed to be a steady paycheck. Either pay me a real salary, or just lease me space. It's fine if the salary is relatively low and due to a significant eat-what-you-kill component, but as EWYK approaches 100% of total comp, well at some point I don't want to inherit all your conflicts and give you a cut of my fees just so I can use your damn copier or whatever.

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irishlaw (Oct 5, 2018 - 7:10 pm)

"... might co-counsel if they need to work together on something bigger." Sounds like you can run into ethics/conflicts problems?

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dingbat (Oct 5, 2018 - 9:44 pm)

I don't disagree, but there are a gazillion variables. A really good rainmaker doesn't just originate business in the area he or she specializes in, but also generates additional business they know next-to-nothing about.

Let's say you do insurance defense, and you do it quite well, so you've roped in a few insurance companies. While you're having drinks with your contact at X firm, the contact complains about having a tough day. You ply him/her with a few more drinks, and he/she talks about some regulatory issue that's been bothering the company for a while. So you order a few more shots, find out that the matter has been dragging on for far too long, and they're losing confidence in their outside counsel. "Well, buddy, maybe I should introduce you to Bill in our office. He used to be second in command for the insurance commissioner, and I'm sure he can help you cut through the red tape".

Boom. You just landed a six or maybe seven figure case for which you'll get origination fees, but won't ever work on. But if you're just renting space, the best you'll get is a handshake and a smile, and an empty promise that maybe one day the other attorney might be able to throw you a referral or two.

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onehell (Oct 8, 2018 - 7:00 pm)

"if you're just renting space, the best you'll get is a handshake and a smile"

Not so. If you paper it right and the overall fee is reasonable, attorneys can share fees with other attorneys; being associated with the same firm is not a prerequisite to that.

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spicytuna (Oct 6, 2018 - 8:20 am)

Many excellent perspectives here, including many I had not considered. The bottom line seems to be that an EWYK arrangement can be a good deal, but is highly situation dependent. There seem to be people that have done well under EWYK, while others have been badly burned. It really comes down to what you can negotiate.

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cranky (Oct 6, 2018 - 10:08 am)

Good advice given. I've had two jobs in the past where I was paid a base salary and then supposedly given commissions, based on a percentage of what I got on cases that I primarily handled or brought in. At the first job, the base salary was woefully pathetic, less than 30k with no benefits. When I told the boss that I had to move, he got mad and cut me out of a bunch of commissions, capping my pay at what he'd thought that I was going to make in a year. That was totally unfair and illegal, but of course I needed him as a reference for future jobs, so I didn't go after him for the money I was entitled to. At the other firm I was paid a more decent base salary with some benefits. However, my employer kept all the good cases and I wound up with the dregs that didn't make much money, or cases that flat-out were ridiculous. So there are definitely ways employers can screw you over with the so-called eat what you kill set ups.

I have a friend whose firm did a similar thing to him. When he was entitled to a huge payout on a case, they decided to turn the tables on him and booted him out. Another friend of mine worked for a solo, but wound up doing more administrative type work for next to no pay, because he kept all of the paying, good work to himself and really had nothing good to hand down to her. So definitely beware.

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shuiz (Oct 14, 2018 - 9:48 pm)

I know someone in Japan who gets roughly $6,000/mo. (USD equiv.) to take assigned firm cases and 80% of what she brings in herself. She complained there was often tension between prioritizing the two types of cases and the firm trying to lower the percentage of what the associates could keep (they are allowed staff support on their private cases!), but I thought it sounded like a great deal.

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