Businesses thrive only when they have sales—and lots of them. To increase top-line revenue, firms must continually generate new business. In professional service firms, sales, or business development, is generally referred to as business origination. Whether or not your firm tracks originated business or compensates attorneys for new business, it is vital to understand the importance of the top line. A healthy top-line performance allows firms to consider strategic planning as opposed to focusing solely on attorney productivity.
A book of business is the size of the client base that partners are responsible for managing, for which they receive credit in the firm’s partner compensation system. A book of business can either be originated (known as a “finder credit”) or inherited (known as a “minder credit”). Many partner compensation systems pay attention to business origination as an important contribution to the success of the firm. Those who bring in business are typically compensated more by allocating a portion of the revenue generated.
There are five main types of origination. They are:
- Referrals
Many firms generate new revenue from referrals made either by clients or other external sources such as law school classmates, friends, or family. Typically, the sales process is shorter, but it still requires an effort to close the sale. Many firms treat referrals the same as finder sales because it does take additional effort to close the sale.
- New matters from existing clients
Often, the best (and easiest) new revenue is from the existing client base. For example, if your client has generated a litigation matter, are there other litigation matters that can be generated? Another example would be additional trademark matters for a trademark client. There is also the cross-selling aspect of generating new business for other practice sections in the firm. All attorneys should look for opportunities to promote other practice areas within the firm.
The origination credit for new matters from existing clients typically remains with the finder partner, however, on clients who have multiple larger matters, the credit may be apportioned to the minder partner. The minder partner is typically the relationship partner who takes care of the client.
- Finder sales
A finder is the one who hunts for new business. Prospecting for new business through networking activities, sitting on nonprofit boards, cold calling, and business referral networks are all types of finder sales.
- Inherited clients
Inherited clients are clients that have been passed on to another partner either because of a partner retirement, partner withdrawal from the firm, or through firm policy. It may also be the policy of the firm that after a limited period, client origination passes to the firm.
- Firm clients
There are many ways a client can be categorized as a firm client. Calls to the receptionist, referrals from a staff member, or firm policy may pass the origination credit to the firm after a limited time period. When the finder credit is given to the firm, there is typically a generous minder credit to the partner who will manage the client work and relationship.