Given the current market I am reviewing anywhere between 10 and 30 partner business plans at any one time. Every one of them is unique but they all have one major issue to overcome – what is the book of business?
Portability of practice is not guaranteed but frankly, is the most important thing in a business plan. Firms want to know where the money is coming from.
My advice is simple – put down what you think you will bill assuming everything goes perfectly in the first year and assuming you also have a little bit of luck.
This is not to say that you lie or even exaggerate. Partners have done this in the past and I refused to work with them. I am just saying think “best case scenario”.
And I know what many of you partners are thinking already – “but Alberto, I want to under-promise and over-deliver”. That one phrase no longer has a place in lateral partner recruitment.
I understand why some partners and recruiters take this approach. Why over promise and fail to deliver meaning you have a target on your back? What happens if your clients don’t move and you don’t reach these numbers? What if the market tanks six months in?
All of these are valid points. But the question is this – would you rather take a lower salary and be rewarded if you beat these conservative numbers? If so, great – take the higher salary after you reach your targets. However, you can imagine what most partners say when I suggest this.
I recently worked with a private equity partner from a top firm in Los Angeles. Year on year since 2010 his personal billings were $6.5m. He was taking home around $2.3m and expected the same or a small uplift. However, when I saw his business plan he was predicting $4m in his first year. When questioned on this he said to me he would probably do $6m but wanted to be cautious in case clients didn’t come.
I couldn’t help but laugh. When I suggested he take home $1.5m for the first year and then increase this when he hit $6m+ he was astounded.
“Alberto, you’re crazy – why should I take a pay cut?!?!”
“Based on those numbers you aren’t worth $2.3m”
“But I will probably do it, I just want to be careful in case it doesn’t happen”
“Why would you want a firm to invest in you if you don’t have the confidence to back yourself?”
And there it was – that moment of clarity….
The fact is this – law firms will automatically cut your predicted book by 25%. They assume you’re exaggerating! So there is no room for caution. Back yourself, remain positive and visualise your first year going absolutely perfectly. Unless of course you are willing to share the risk and take a massive pay cut until you reach success (I have yet to meet a superstar partner who is willing to do that).
Oh, and that partner I moved. He billed $7m in his first year and is projecting hitting $10m over the next two years….