Incentives: What Works, What Fails, and Why It’s Never One-Size-Fits-All

I’m Melissa Shanahan, and this is The Law Firm Owner Podcast Episode #304.

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Hey, everyone, welcome to this week's episode. Man, I've got a meaty episode for you today. And actually, this may turn into more than one episode. I will say more about that in a moment. I'm not going to bury the lead here. We are talking about incentives and incentive plans that are healthy for firms.

And the reason I have not done a podcast episode on this topic is because a couple years ago, I started an outline for it. I thought, oh, I have some good tips to share. And I quickly realized as I was creating the outline, oh, there's so many factors. It felt difficult to write this episode responsibly. And so I put it down. And I ended up picking it back up at one point thinking, oh yeah, let's work on that. And I pulled it back out and I thought, ugh, it felt really hard to be as specific as I need to be and make sure I'm having you see all the things.

I have you see just principally speaking what matters and what's important because I can't just give a prescription here. There is no one-size-fits-all. And so this has felt tough to put together. But I have had some clients that have done some really remarkable work with incentivizing their team. Recently, they've had really good realizations. So it's been a topic that is forefront for me.

And also, I have members that have been having some really great discussions as well. One shared an idea that the others hadn't thought of and, you know, I also I've heard of that idea before. I think it's fantastic. I do think though, and I didn't say this on the call, so members, if you're listening, it can be probably a good idea that what was shared in that group, but you have to check it for yourself. You have to play it out to the end. You have to do the math. You have to run the scenarios. And so that's, I'm going to talk about that.

Anyway, that is why I'm doing this episode now. It feels really important to share this information. I just haven't been able to pull it together in the way that felt responsible. I think I've done a decent job, and so I'm going to share information with you here today. Just remember that nothing I say on this episode or in the subsequent episodes should be taken as a prescription. I do not know what's best for your firm. I cannot know what's best for your firm unless I know what's going on under the hood, and I understand the culture of your firm, period. So there's no advice here. I just want to teach you how to think about these things so that you can make the best decisions for yourselves.

All right, so first let's talk about why incentive plans are not one-size-fits-all. And the reason I'm going to talk about this up front is because so often I see law firm owners look at other people and what they do and think that's what we'll do. And they'll run with it. Now, I'm not saying they do it blindly. Some do. Some do it blindly. But even if you do a version of it, it's almost like you got blinders on the second that you heard what somebody else was doing and is working for them.

And also, sometimes you're hearing what someone else is doing, and it sounds like a good idea, but they haven't played it out yet. They aren't sure yet. They haven't had payouts after payout after payout. So really, they think it's gonna work, and they might be right, but we just need to be careful about listening to others and what they've instituted if they don't have proof that it did what you thought it was gonna do for your firm. And I see a lot of that.

Fortunately, I work with members who tend to think for themselves in ways that, you know, it's easy to get swept up in new ideas and be excited about ideas. And generally, I think our programs are built to make people pause and think about what they're doing and be really intentional. So I'm not worried about my members. But I know that there's a lot of listeners that might hear or see what someone else is doing and think they should do it because you heard that it worked well. And I'm telling you, you shouldn't do that because there are different scenarios for different firms. And what's healthy in one firm may be harmful, not just not healthy, harmful to another firm.

There are different financial realities for firms where one firm that's instituting something, they may have healthy profit margins, they might have low overhead, and their cash flow may be very predictable. In another firm, they might be in a growth phase, and the margins are thinner, and it's not the same. So a firm with tighter margins, they can't afford the same bonus pool. Even if they wanted to offer it, it could create real issues for them in terms of stability.

Another scenario that I can point to where it's not so obvious on the surface, but is where you have one team that is a totally different makeup than another team. So one firm that has five attorneys and three paralegals, which right off the bat I would bet that under the hood there's some room for improvement there, but let's just say that's what works for them - five attorneys and three paralegals. Their incentive structure should look very different from a solo attorney that has two support staff. I mean, quite frankly, it should look different even if it's you and an associate and some support staff. So what works in one won't work in another.

There may be different business models, different fee structures, different case types. So I guess here I'm talking about contingency versus flat fee versus hourly, but I'm also talking about case length, the complexity, how long does it take for the cash to come in? And so my point here is, a contingency firm, for example, is probably going to bonus on outcomes. And a flat fee firm needs to probably incentivize something different - efficiency, throughput, workflows, all of that quality.

Another set of variables that you have to think about is the stage of the firm. Where are they in their growth? If they're early stage, and they've been lifting off the ground, and there's not a ton of stability but it's a viable business, but there's just not a ton of stability. That firm needs simplicity, needs clarity, needs sustainability. Where a firm that's been around for a while and there's a ton of predictability in it, there's more room there for more layered incentive plans. And not that you never want a complex incentive plan, but there's room there to move around and to test different things and to be more nuanced where you just don't have that luxury without a higher level of risk with an earlier stage firm or a firm that's just not stable.

Alright, so bottom line, before we get into anything else, I wanted to make sure to hit these points. And this is just the things that I can think of that vary. There's more. It's not just the things I've mentioned. These are just the off the top of my head, the things I can think of where firms vary so widely. But it's so easy to just look on the surface at the firm down the street or the firm of somebody in a Facebook group that you're in and see, oh, they have the same practice areas as me. That's what they do. Done. I'm doing it. I see that attitude a lot.

And I hope that this episode makes you pause and take a different approach and be much more thoughtful and intentional about how you enter into incentives, but compensation, like the compensation plan, because some of you have incentives are a very heavy part of your compensation plan. And that doesn't typically, it depends. Very rarely, I do see one that makes total sense for the business. But a lot of times it hasn't been thought through all the way. And so it doesn't make total sense for the business. But here we are now with team members that are used to a certain incentive plan and have these expectations around it. And the whole culture around it is unhealthy.

Okay, culture. That is one that I forgot to reference at the beginning, but values and cultures vary from firm to firm. I mean, generally we all want to do good work, but the vibe and what you rally around is different. So some firms, they emphasize collaboration. Others value autonomy and ownership. And so your incentive structure should reinforce the behaviors and culture that you want to see more of.

Okay, so with that out of the way, now we can get more into the meat of what I originally wanted to share with you. And I think we should start with what I know for sure about incentives. The incentives that you set are telling your team what matters. And if you have incentives right now and you haven't thought about it through that lens, I encourage you to do so because that is exactly what's happening. It tells them what to focus on. It tells them what matters.

Another thing that I wanna say that I know for sure is that most business owners, most law firm owners, don't think about incentives holistically. They think about the money or the bonuses. And healthy incentive structures are about alignment, they're about behavior and clarity. So yes, there's money, there's a bonus involved in it, but it's about the alignment, it's about the behavior, about the culture. It's about people operating in the ways that is the best for the firm. So you have a real opportunity here to not just reward output, which is how people typically think about incentives, and that's where they go wrong. It's not about rewarding output. It's about designing your firm to work better.

So how can you tell if an incentive structure is healthy? Well, it needs to reward the right behavior. It needs to reinforce your firm's values. So that's not just financial, right? It supports your goals as a business. It's aligned with the business goals. It's motivating. And by motivation, I mean, it's clear. People understand it. They feel a sense of ownership in it, and they know how to win. So that's what's motivating. If they can see it, it's clear, they know how to win, they know what to do, and it's all aligned with the values of the firm, and it enforces behavior that makes sense for the health of the firm, then you're on a good path.

Also, healthy incentive structures are sustainable. You've done the math. It works long-term. It works in every different scenario. It's not just in a flush month. It works with different scenarios where everybody wins if people are hitting their marks, if people are on track with what it is that you told them to care about, you told them to focus on.

Now, we all hear about setting KPIs and individual metrics that need to be taken care of. They are the numbers that indicate something very strong for the firm. The best example I have been given about how you know that you have great KPIs or great metrics is if you were sitting on an island and you get reports about your firm, what are the numbers that when you see them, it would make you get up and go back to your firm to help to figure out what is going on?

So we all know that we should have metrics that we are shooting for, that they should be assigned to an individual, if everybody owns it, nobody owns it. And we've heard these things. Now, whether you've implemented these things or not, that's neither here nor there. What I want to say here is that when you put these numbers into place, there is a difference between an expectation that you have and a number that they are striving to hit. So expectations are what someone is paid to do. It's baseline performance. It's what is expected at baseline. Incentives are earned by going above expectations. If you blur the two, you either overpay or you'll under motivate.

I just had a client recently, if you're listening to this, you'll know exactly who you are. It's so cool to see how far they've come in terms of the topic of incentives in their firm. And I will maybe at a different point, it'll probably make more sense to share, but this is something that they have gotten so clear on as a leadership team. And so one of their rocks was to put in an incentive program or to revamp the incentive programs based on the number of initial contacts and the meetings scheduled, the meetings showed, like all the way down the funnel to the potential client becoming a client.

And they did such a good job of articulating this to their team. and for themselves as a leadership team. They were that clear to be able to say, this is what's expected. Now you go above and beyond this. Now we're talking and this is where incentives kick in. And I was just so proud of the way that they presented that the last strategic planning retreat that we just had, it was like, wow, they are doing such a great job. This is it. This is a good leadership team.

So expectations versus incentives. And that is something that I made sure to include in this outline because of what they shared and what they did, the work that they did together on this Rock and rolling out a new incentive program that was not in my outline prior. So shout out to them. I don't know if they want me to name them or not, so I won't, but it was just really cool to see.

Now, we're talking about baselines and what's expected. I want to talk about next, how do you set a smart, fair baseline? I have a way I was trained to do this at the consulting firm that I came from. And this is how I think about it when I have set incentives inside of my own company. I have had conversations with clients when I am helping them think through their incentive setups. I have talked about this and said this is a way to do it. And I've offered it. So I'm going to offer it here.

To find the baseline, you find the true average. And it's just a method. I don't think that's really called the true average. But if we were to call it the true average method, you would take the last 12 months and get the average for whatever number you're trying to incentivize. Let's just say, even if it's number of new cases, right? So you take the last 12 months total, and you divide by 12. And that will give you the 12 month monthly average number of new cases, then you look at the last six months, and take the total that happened in the six months divided by six. And that gives you the average for the last six months.

And then you do it for the three months behind you, the most recent three months. So you'll add up how many new clients have come in in the last three months and divide by three. And that gives you the average for the last three months. Then you add all those up, those averages up, and you divide by three. That's meaning you take the 12-month average, you take the six-month average, you take the three-month average, you add all those up. And then you divide by three.

And there's a reason why this matters instead of just finding the 12 month average or whatever you have behind you. It's because it balances the long term and short term trends. So you have historical consistency, you have some recent movements, and then you have the current momentum behind you with the three months and it protects you from reacting too much to a hot streak or too much to a slump.

Another reason is, and it is sort of tied to what I just said, but it prevents an over or under inflation of what really the numbers should be. So if your team had a great quarter and you set your baseline only to that, that's inflated or opposite. Maybe you had a rough season and you base it only to that, then you're setting the bar too low. So the true average gives you a more accurate picture of typical performance before anyone tries to negotiate the number.

Now, what I just talked you through is finding the true average. I don't think that's a scientific term, but that's like the method to find a true average. Now, when you find that, you don't just incentivize anything above that. You add 10% to it, and that becomes the baseline. So 10% on top of the true average, that is the baseline. And it matters because you're not just rewarding someone for what they've always done, you're rewarding for growth and extra effort. That's what the incentives are for.

So you don't just have them beat what they've always done by a little bit, you have them stretch, like figure this out. What do they need to do in order to increase those numbers? So you get the true average, you add 10% and that is a healthy performance baseline and incentives kick in above that point.

One more thing I should share about the perks of getting this true average and then adding 10%. The true average helps them. If you're transparent about this, it helps someone see the math. When they understand that you're getting an average in all three, then they see that you didn't just pull a number out of thin air. And you didn't just go with the best quarter ever. It's evidence-based. So that transparency builds trust. And people are more likely to buy in and stay motivated when they understand how you got to the number.

And okay, one more thing, I keep saying one more thing, one more thing on this topic. This, when you add 10% to what their true average is, that signals that we're growing, this is what we need to go, where we need to go next, not just here's a random number, good luck. And that's stressful. I think when people are blind to how you pull the number, number one, I think that creates a little bit of stress and anxiety about, okay, where is this expectation coming from? And once you calculate that true average and you add 10%, it's like adding a buffer to what they normally do. And it sets a meaningful stretch goal without being unrealistic.

All right, so now I'm gonna talk about group incentives versus individual incentives. And just talk you through some truths about each of these, give you some thoughts that you can borrow if they feel helpful, some ways or perspectives that you can have over each one of these. And then once we get through that, I think I'll stop and we will pick up next time with how to set the incentives responsibly. And this is gonna involve math and I'll walk you through it. Again, it's not a prescription, it is just how to think. I want you to be able to think for yourself and for your own scenarios in a way that's healthy and not harmful for the long game for your firm.

All right, let's talk about group versus individual incentives. Group incentives encourage collaboration. They encourage alignment. Everyone gets a piece when the firm hits a shared goal. I'll tell you, I really like these. When these are put into place for short-term goals, like there's really a push that you're gonna make. You are wanting to create a new normal for yourself in terms of getting new cases through the door. So you incentivize everybody, like if the team really pulls together and the new cases number meets a certain expectation, then you on the back end, this is where the next episode will come in.

You need to figure out what that means in terms of even just upfront cash, not full case value, the money that is coming into you guys because of the new cases signed in the short term, then you can give them maybe a very small portion of the upfront cash for getting those new cases through the door, the deposit amounts, for example, if you are flat fee and you take a deposit. So short term pushes this group incentive can be great.

There are other times that group incentives can be healthy and I will share more about that. But before I get too deep in the weeds here, basically, this works great for milestones you are shooting for, you're looking to create a new normal and as a team, you want to rally them together and to work together for a team push a team focus, then these can be great for that.

Now, things to watch out for is resentment. I see this all too often. When there is a group incentive and there are certain people carrying the progress towards the milestone and there are other people being carried that people get resentful that they have to split a bonus with someone who's not meaningfully contributing. They're being lazy about it. They're not engaged in the same ways that others are. So that can happen. So you have to watch out for that.

And then also lack of clarity about how bonuses are earned. You just need to be really clear and that's true for any bonus. But sometimes these group pools can get complex with how you think about them. And you just need to be totally transparent upfront. This is a formula. They need to understand the formula. They need to understand how we're getting here or the deal, right? The deal on the table needs to be very clear for them. And sometimes there's things that are open to interpretation or you weren't totally clear. And it's like, well, are we going off of this number off of this number? You have to be really explicit.

I will say this wasn't a part of my outline, but these are best rolled out when it is spelled out on paper and people sign like, okay, I get it. I agree to this and we're going for it. The clarity that's there, it gets everybody rallied around. Everybody knows when it's starting. Everybody has given their thumbs up and it's all systems go. You know, if you're starting it in Q2, April 1st, it's all systems go. Everybody is clear and ready to hit the ground running.

When we start talking about the math, I'll give an example of a group incentives that can be great when it's a percentage of profit, is what the agreement is, and how to think that through. They do tend to work well because it protects the business. It's after the expenses have been paid, what's left over, you will decide a portion of that or you'll decide a certain percentage of that you're willing to split up, that can be super healthy. Again, it matters what your values are. It matters what you are trying to line them up in terms of showcasing certain behavior or operating a certain way at work or telling them what to focus on. If that lines up with setting a percentage of profit as a team bonus, then that can be great.

And this is what one member recently on a call shared that that's what he's rolling out. He has rolled out to the team that there's a percentage of profit that will be dedicated to the bonus pool to the team. And then that sort of begs the question, and this is the discussion that the members got in that day, is that, okay, do you split that evenly across the team members or is it weighted for certain team members? And they talked about the difference between those options.

And what I will say is if you split it evenly between your team members, that can be good when the team is really small, collaborative, roles contribute equally to the profit outcome, right? But there are times where you can totally tier that or have a weighted split that makes sense. That can be based on role, it can be based on tenure, it can be based on impact, however you want to divvy it up.

But for example, if you have attorneys, paralegals, intake team, admin, operations, then you can sort of think through the impact of each of those roles contributing to profit. So not just generating, because of course, attorneys and paralegals can generate income through the legal work, but not just that. How are we contributing to profit? Is everybody being really responsible in their roles? Are we not being wasteful? Are we all contributing in our own ways to pushing the case through as it should be? And are things being taken care of in the background so that that can actually happen? That's administrative duties, operational duties, thinking through the contribution to the ability to have profit.

So I actually went into ChatGPT and asked for an example breakdown on how you could weight the split for a bonus pool. And the immediate one it gave was attorney 30%, paralegal 25%, intake 20%, admin 15%, operations 10%. That was the split it gave. But whatever the split, and you can decide this for yourself, just be transparent about it from the start.

One more thing to consider that I'm just going to give you now I think it probably will come up later. But in terms of best practices for these profit-based bonuses, you should decide on a percentage of the profit. And there's common ranges that I see is somewhere between 5% and 10%. I have seen as low as 2% for profit that is much larger, typically, generally speaking in a firm for the team size in terms of that ratio. So it's a smaller percentage, and everybody wins, everybody's still happy. So you just have to decide on a percentage.

And next episode, we will talk about do the math play it out if they knock it out of the park every single month or every quarter, however often you give them, you good with that? Are you down to have that pay out for incentives in terms of the pool that's going to be dispersed. So you have to think about that now best practices, this percentage, the range of percentage of net profit, this should be after owner salary.

I know some of you pay yourselves in different ways. If you aren't getting paid, money does not go to the team. That is not how this works. So this percentage is after owner salary at a minimum, and you're the owner. You can decide. Like there are some essential reserves that are always going to be set aside from the profit and then maybe what's left over from those essential reserves, you have to decide that stuff ahead of time. Then a percentage of what's left over after that is what gets distributed.

You get to design this, and it is your job to design it in a way and play out the scenarios to see if it works like you thought it was going to work, if it's going to be motivating, if it's going to be enough money that people are going to care about it, and it's not too much money. And it's not happening before the owner gets to take home what they really should be taking home or before essential reserves are set aside.

So you get to decide the terms. The most important thing is that you're clear about the terms. This is true for group or individual, you're clear about the terms before this gets rolled out. You don't have to say 5% of profit after owner distributions and savings, like you don't have to be so specific. But you do have to be specific that it is 5% after x percent of profit has been set aside for the business, period. Like that's what you could say. So you could couch this any way you want. You just need to feel good about it. It needs to be a win-win scenario for your team and for the business, period.

Okay, let's talk about individual incentives. Individual incentives tend to be direct and they're motivating. Direct in that the individual that has the opportunity for the incentive, they are given an incentive for a goal that they can control, that they can affect, that they can influence, that they can nudge. And so, it's direct and it's motivating. It keeps people focused. It keeps them accountable.

Now, this isn't true. If you do not have check-ins with your people, if you do not have any accountability around these numbers, around these goals, then they may struggle and they may kind of hit some barriers and then they just fall off and they don't even stretch for it anymore. It's not even motivating anymore. Or the conversation isn't kept alive. And it's not your responsibility as the leader to keep it alive for them, but it is your responsibility to make sure that it's kept alive in their world, that they are connected to the thing that they can control.

And remember, incentives tell your team what to focus on. So if the incentive is there, but then they're not focusing on it, and you're not calling it out, and everything is just going status quo, that's not good leadership. You have got to have check-ins. There has to be accountability. If you want a culture of accountability, you're going to have to start going over numbers.

Now, maybe even more importantly, which is taking a couple steps back, you should be having meetings around these numbers because remember, there are expectations. There is a floor at which you are willing to accept on certain numbers because you know what their true average is, and incentives start at 10% above that, if they're not hitting their true average even, what is happening? There needs to be a conversation about it. And not in a way that what's wrong with you, why aren't you hitting it? More in a way of, hey, you're likely experiencing some barriers, which is why these numbers aren't being hit. Tell me about that. How can I support you? How can I help? Is there something in the way that I can be useful for? Start a conversation and if you don't make space for the conversation, it's not going to happen.

So every week, have a conversation about the numbers. And sometimes people will come back to me and say, every week? I'm like, yeah. What are you gonna do once a month and talk about the month that's already happened? That doesn't make any sense. Yes. And it can be quick. It can be 15 minutes. But there has to be a touch base on the numbers. So there's expectations that we talked about earlier. And then there's goals that they can be incentivized on. And so having a conversation about their numbers is important just to keep the conversation alive, not to micromanage, to keep the conversation alive and make sure your team has what they need in order to be successful.

Now, individual incentives work great and are easier to implement quickly and checking the math and all that with producers, so attorneys and paralegals, but also intake because of conversion rate. And in some cases, marketing. If you have in-house marketing and they're doing a great job making sure that a percentage of the leads coming in are qualified, they're doing a good job. So they could be tied to a number or a percentage of qualified leads.

So there's certain positions in your firm, it's so much easier to see a number that they have control over or influence on that they can push at, they can drive, they can stretch, they can grow. And when that's the case, it makes it very easy to see how an individual incentive could be a great way to go. Again, on the next episode, I will talk through some math and different scenarios just to get your gears turning. There's so many different scenarios you could run, but I'm going to give you a couple.

Things to watch out for with individual incentives. Siloed thinking or siloed behavior inside of the firm. Also, undermining teamwork. Like, they see an opportunity to sort of pull things in closer to them because they want to control it and they want to get a bigger number, but they're not really cluing in the team or allowing the teamwork to be happening as it should be. So you have to watch for that when there is individual incentives.

And when I meant siloed thinking, it's just like, there's no collaboration and that does have an effect on culture. And there are different ways to go about getting results. And when there's no collaboration, someone can really run with a way that you would prefer that it's not that way. Like there's no input, it's like one brain is coming up with it and that's it. Now, if you don't care, if it's just about the number, get there any way you want to get there, then you don't really have to worry about this, but siloed thinking truly can be a symptom of being on your own and having a number that you're focused on. And if there's a pretty significant importance on that number, it tends to drive more lonely behavior, siloed behavior. So you do need to watch for that.

At the firm I used to work for, this was the case with me, especially in the role that I was in towards the end of the firm. I had things that there was significant importance placed upon in terms of numbers. And no one else had responsibilities like that. It was the role that I was in was a little bit newer. It was the first time they hadn't had someone on site. So I was in this hybrid role living 4,000 miles away from headquarters, and so they threw some things at me and they incentivized me on something that I think was smart.

We came up with it together, but in hindsight, looking back, I was criticized for working in a silo. It felt very difficult to work collaboratively when I was told what was important, and there's no one else working on that stuff. I'm not saying I couldn't have done a better job. I absolutely, I'm sure it could have, but I was doing my best and I was criticized for the siloed working.

So you have to think about what you're doing when you give someone an individual incentive and just watch for it. It's not a reason to be afraid of individual incentives. I'm a huge fan of individual incentives, but you just have to watch for it. And when you start to see behavior that it's lining up behavior that really wasn't what you were going for, then you may need to adjust the incentive that was put into place so that it fosters more collaboration and teamwork.

Now, I'm gonna end on this. When it comes to incentives, people ask a lot. Should I do individual incentives? Should I do group incentives? And I really believe that a hybrid is the best approach. There are certain people in your firm that they should have individual incentives. It makes a ton of sense based on their role. Producers are one of them. Just like I mentioned earlier, intake in some cases, marketing. There can be other instances, but those are the three easiest to mention producers, intake, and marketing.

Now it makes sense in so many cases for them to have individual goals. I don't know that I can think of a scenario where it doesn't make sense for them to have an individual goal. They have direct control over a number. And so they should be tied to something. I really believe that. At a minimum, they should be tied to standards and expectations. Whether you decide to incentivize on top of that, that's up to you. But they have a responsibility in the firm to do a good job with very specific KPIs that directly impact the top line and in some cases, the bottom line.

So for sure, I think they should have individual incentives. Now, I also think for small firms, it should be group incentives. You're not a big law firm with department after department after department and you guys are collaborative. You all do rally together to push cases through and to make sure that the client experience is top-notch and to make sure that quality stays high. And that takes a village. That is not just one producer. And that is not just the person who got them through the door. There's a lot in between of support that matters deeply for the success, long game success of this firm. And in that instance, I think it can be fantastic to have a group incentive as well.

And so you really do need to play this out to the end, which we're going to talk about the math in the next episode, and take into account that there certain people that are eligible for two incentives, two different types of incentives. And so not only do you need to make sure that the incentive payouts, the business is still going to be okay, but you also need to make sure that you are okay with the compensation level that that means for the people that have individual and group. You have to play out their specific scenario, not the firm scenario with total payouts. That person's specific scenario, does it make sense for them to be compensated in the ways that they could be compensated if they hit their goals, if they have both incentives in place? And it very well may be.

I actually just had another firm revamp their bonus structure, and they did such a good job. It was so inspiring to watch them. I'm actually talking about a different firm than what I was originally talking about here. So inspiring, very different model than the two firms I'm mentioning did a really good job, very different models. One is flat fee and more transactional work, and the other is contingency fee, really high value cases.

And watching them both roll out these structures in a way that is responsible, and they did play it all the way till the end. They did do the math. They did think through what that meant in terms of what was possible for compensation for their team members. And it's just so cool to see people approach this thoughtfully. It takes work.

There is no world in which I can sit down and design an incentive structure for someone, even if it's a private client, where I can design it and I can ship it off and say, this is what you should put into place. No way. I would need conversations about the culture, about the behavior they want to drive, about what they care about, above all else, what they care about. And having that conversation helps to craft these in the ways that make the most sense for the firm that you're dealing with.

So I've just been really impressed watching these two teams do what they've done in terms of the work and now putting them into place and having rolled them out, seeing the clarity that the team has, seeing the excitement that they have, maybe nerves at first, until they see, no, no, this is possible. We're already kind of doing this. It's just a little extra before incentives start to kick in, right? And then that's motivating. They see a path.

So hopefully this episode was a really good start to get you to consider certain things that maybe you haven't considered and to have a perspective about how to approach incentive structures. Next time, we will get more nuts and bolts into the math and how to think about it. And I actually think that'll be a much shorter episode.

But it's just a lot to stack on to what we talked about today. So we will split this up. And once I have that episode recorded, then there's a couple other things I want to share with you guys. And it just makes more sense to go in that order so that it's after this conversation, where we're really digging into incentives.

All right, everybody, play around with this, have fun with this, and hopefully I can tee you up to play around even more deeply from a math perspective, but my recommendation is sit down. I'm not telling you to work on your off hours, but if you're anything like me, I like when I have some free space and some time to myself, which isn't a ton.

On the weekends or in the evenings, I'll open up my laptop and I'll start playing and I'll start running different things and like, well, if this, then that, and I'll run. I put different numbers in a spreadsheet and see how that bakes out and then I'll rework it because it just doesn't feel quite right. I think if you can sit down and maybe just play with these numbers, what are ideas that you have had for incentives? What have you thought about putting in place? Start to run those scenarios and what it looks like over time and what the payouts would be like and how you would structure those and just play with it.

And also, if you have incentives in place and you haven't done this work, do it, sit down, really think it through. And with the incentives that you have set into motion, what does it look like if they knock it out of the park? And what does it look like if they fall short every single time? What are the impacts of that? Just start playing with this because then I think the next episode will be much easier to digest because I'll be going through the math and your head will have already been there, so you could probably pick up on it easier. It's always tough doing math on a podcast, but listen, I mean, what am I supposed to do? Not give it to you. I'm going to give it to you.

All right, everybody have a wonderful week. I'll see you here next Tuesday.

Hey, you may not know this, but there's a free guide for a process I teach called Monday Map/Friday Wrap. If you go to VelocityWork.com, it's all yours. It's about how to plan your time and honor your plans. So, that week over week, more work that moves the needle is getting done in less time. Go to VelocityWork.com to get your free copy.

Thank you for listening to The Law Firm Owner Podcast. If you're ready to get clearer on your vision, data, and mindset, then head over to VelocityWork.com where you can plug in to quarterly Strategic Planning, with accountability and coaching in between. This is the work that creates Velocity.