A New Law Firm Model Where Compensation is Transparent and the Same for Every Attorney
By Cynthia Morgan-Reed
Growing up, we were all taught never to talk publicly about money. Women especially were always told not to tell others what they earned, don’t ask for too much money, and keep information regarding your raise to yourself. Otherwise, society would frown upon you.
While not appearing ungrateful is certainly a virtue, the idea of not talking about what you’re worth has contributed to a culture of secrecy that has hindered women from earning what they’re worth in the workplace. This is especially true for attorneys. The culture of secrecy, coupled with a flawed compensation model, has led to sexism, discrimination, and pay inequity.
I experience that culture first-hand. At one law firm I worked, the salaries of all of the attorneys were transparent and everyone knew what every other attorney was paid. At that firm, I knew that I made as much as my counterparts with similar experience and background.
At another firm, the salaries were not transparent and I quickly learned that to be paid more, one had to have the right relationships in the firm and advocate strenuously for your own advancement. I knew I was underpaid because I interviewed and was offered a $100,000 salary increase if I switched firms. Rather than leave, I approached management for a moderate raise only to receive half of what I requested. When I asked why, I was told I was already paid too much. Paid too much compared to whom? I knew other attorneys at the firm made equity partners by threatening to leave. I didn’t threaten to leave. I simply left.
Six months later, when my first child was four months old, I started my solo practice. Within six months of starting my firm I made more than my yearly salary for the previous year. And I worked substantially less billable hours. Because I believe in transparency, I share the fact that I earned $484,188 after two and a half years as a solo.
It was scary to go public and tell people how much money I made. But I believe that all people, regardless of race, gender, color or creed should be paid what they are worth and treated fairly. But how do we know if we are being paid fairly if we don’t know what other people are being paid? And fortunately or unfortunately, we often judge our worth by comparing ourselves to what other people are making. Therefore, we must be open and honest about what we earn. Since going public with my earnings, I have had numerous women tell me that it helped them to understand their worth by knowing what I made.
Jordan Furlong, a leading analyst of the global legal market, wrote what’s killing today’s law firms is their lawyer compensation systems:
“Law firms incentivize their lawyers to act in ways that are counter-productive to lawyers’ happiness, clients’ satisfaction, and the firms’ effectiveness. They do this by rewarding lawyers for bringing client business into the firm and billing hours to the firm’s clients, and for hardly anything else. In the vast majority of firms that I’ve encountered … these two activities account for at least 75% of lawyer compensation; in more than half those firms, they account for 90% or more.”
Furlong goes on to suggest that a new law firm model is the only thing that will change the culture. This is one of the reasons I founded Vanst Law.
Vanst is a modern law firm that operates virtually. It cuts out the traditional law firm overhead costs and is transparent with attorneys about their benefits and pay distributions. This transparency is then passed along to the client. Most obviously, clients are not charged hourly rates that reflect personnel and physical office overhead paid out of the fee charged by the attorneys working in traditional law firm settings.
We know how the traditional law firm model can grind attorneys down and make them feel worthless. At Vanst, attorneys are paid what they’re worth; treated like the professionals they are; and supported so they that can live a meaningful life while practicing law.
If you’re an attorney at Vanst, you take home 70% or more of what you collect for clients you originate and work on. It’s that simple! Most traditional law firms pay their attorneys between 30-50% of what the attorney collects on their own work, with bonuses and other compensation determined subjectively. Our attorneys earn more because we cut out the outrageous overhead costs that force attorneys to work harder to pay for expensive office rent, fancy conference rooms, and high personnel costs.
Our formula-based compensation model is easy to understand, transparent, and the same for every attorney. There are no side-deals or subjective favoritism. It’s an objective system that rewards our attorneys’ entrepreneurial abilities. And pays attorneys what they are worth.
Additionally, at Vanst Law there are no billing requirements. The attorney is free to work as much or as little as they desire. Our attorneys can tailor their work to make the money they want for their lifestyle. You control how much money you make; not a compensation committee in some faraway boardroom. By removing the traditional law firm inefficiencies, our attorneys can earn more while billing less hours.
Attorneys need to realize they cannot succeed in a model that doesn’t value them or compensates them fairly. Vanst Law disrupts the old model by creating a new model that allows attorneys to live a meaningful life on their terms while reaping the financial rewards they deserve. I encourage you to learn more about our modern law firm model to see if it’s for you.
Cynthia Morgan-Reed is the CEO of Vanst Law, LLP., a modern law firm that is changing the culture one attorney at a time. If you are interested in joining Vanst, complete the New Partner Candidate Questionnaire.