< PreviousMy last column reviewed the need to periodically assess your firm’s com- pensation system. Here is a link to my previous column https://attorneyat- lawmagazine.com/is-it-time-review- your-firm-compensation-system. Here, I will describe the factors to consider when making compensation changes. TIME FOR A COMPENSATION CHANGE? An effective compensation system must always be tied into the achieve- ment of business and financial goals and recognize activities which most effectively contribute to attaining those goals. People do what is mea- sured and rewarded, and you can’t change behavior unless you can affect compensation. Compensation systems will not work unless a firm’s partners can agree to consider the firm as a busi- ness unit, and not just a collection of individual attorneys. In considering change, partners need to think longer term and not focus on how “their” numbers may change next year. Fac- tors such as realization and profit- ability drive top line growth, aid in re- cruiting and retaining talent, and help to ensure an enduring legacy. Although I recommend a firm evaluate its compensation system ev- ery 3-5 years, there are events which may accelerate the need for assess- ment, including (1) inability to attract or retain associates and partners; (2) declining partner profit/distribution; (3) planning for succession/transition of senior partners; (4) lack of partner accountability; (5) decreased realiza- tion; and (6) partners expressing in- creased unhappiness with existing system. DEVELOPING A COMPENSATION PHILOSOPHY Changes to com- pensation structure cannot be made in the abstract; they must be considered in the context of a law firm’s culture, history, values and goals. Partner compensation should reward overall contribution to the firm and be based upon subjective and objective infor- mation. Compensation in a purely objec- tive or formulaic system is calculated strictly based on financial production, giving credit for hours billed and fees received. A formula is predictable and removes uncertainty and “politics” from the mix. Many attorneys like the concept, “If I do X, I will get Y!” However, there are significant pit- falls to such a system, including ma- nipulation of numbers, unprofitable intake, and little ability to influence behavior. Formulaic systems may un- intentionally result in a system that does not recognize, reward or incen- tivize teamwork, collaboration and “firm first” behaviors. Firms with for- mulaic systems can also struggle with treating fairly partners who had an unexpected down year. A subjective system may not be as precise or easy to implement but can effectively incentivize and reward im- portant non-financial contributions that an objective system would not consider. Under a subjective system there tends to be more teamwork. Many firms structure subjective com- pensation on a points basis or per- centage of profit, based on financial and nonfinancial criteria. Thus, a subjective system can smooth out the peaks and valleys of attorneys’ perfor- mances and income from year to year. The resistance to a subjective system is that it is time consuming to man- age, imprecise, and can be perceived to be political. Some firms use hybrid compen- sation systems in which a high per- centage of a partner’s compensation is based on objective financial data, with a separate discretionary bonus pool set aside to reward efforts that may not result in direct financial gain but are valuable to the firm. CHARACTERISTICS OF A SUCCESSFUL LAW FIRM COMPENSATION SYSTEM In speaking with clients who view their compensation plans as effective and successful, I have identified sev- eral common elements. The system and process must: • Recognize and reward contribu- tions toward the firm’s goals and objectives. • Be perceived as fair, consistent and predictable. • Be fundamentally fair (Do I get paid fairly for what I do?) and rela- tively fair (Am I paid fairly when compared to other partners?). • Recognize and reward consistent contributions to the firm’s histori- cal success. • Recognize and reward immediate past year strong performances and the prospects for major contribu- tion in the immediate future. • Foster an atmosphere of unity, teamwork, collegiality, and harmo- ny within the firm. • Avoid significant swings in base compensation from year to year. • Afford a process to allow partners to provide comments and recom- mendation about themselves and other partners. • Consider the success of personal goals and objectives. • Recognize and reward a variety of contributions to the success of the firm by members possessing di- verse strengths, skills and interests There are almost as many com- pensations systems as there are law firms. Most lawyers practice because they enjoy what they do, and the pro- fession provides the opportunity to earn a good living. Lawyers, however, look at their value and contribution through different compensation lens- es and sometimes, like a successfully negotiated settlement, there needs to be compromise. Part II The Key Components of a Successful Compensation Plan PETER A. JOHNSON, M.ED., JD | Practice Management Peter A. Johnson is founder and principal of Law Practice Consultants, LLC of Newton, MA. Law Practice Con- sultants, LLC offers consulting, coaching and training services that help law firms respond to the challenges of today’s competitive legal marketplace. Prior to consulting, Peter was a practicing attorney at a 40-person law firm in Boston where he was chair of the compensation committee and, thereafter, managing partner. He works extensively with mid-sized and smaller firms focusing on management, governance and compensation systems. For more information visit www.lawpracticeconsultants.com or email pjohnson@lawpracticeconsultants.com. ATTORNEY AT LAW MAGAZINE · NORTH CAROLINA TRIANGLE VOL. 7 NO. 6 20EVENT SPOTLIGHT WCBA AWARDS The Wake County Bar Association raised $127,500 for Le- gal Aid at the annual Limine Awards show entitled “Bar Awards LIVE” show in November. Wyrick Robbins Yates & Ponton was named the Law Firm of the Year. SETH BLUM, BENJI TAYLOR, CARMEN BANNON AND SEAN “DANGER” COLE SAM FLEDER CHANNELS THE “HARDEST WORKING MAN IN SHOW BUSINESS” WITH THE SUPPORT OF RICK HUNTER AND SEAN TIMMONS LEGAL AID’S VICTOR BOONE VIDEO OF WCBA EXECUTIVE DIRECTOR WHITNEY VON HAAM AND HER STAFF SERENADE JUDGE ROBERT RADER IN THEIR VERSION OF A JAMES CORDON DRIVE. DEAN J. RICHARD LEONARD ACCEPTED THE GOLDEN LIMINE ON BEHALF OF CAMPBELL FOR THE BEST LAW SCHOOL IN RALEIGH SEAN TIMMONS AND ANGELA CRADDOCK KIMBERLY MILLER, JOHN WARD AND JESSICA VICKERS JOHN CATHCART, BENJI JONES, NEUBIA HARRIS, SEAN DANGER COLE, SEAN TIMMONS, RICK HUNTER, WALTER BROCK, BOB LADICH, CHARLES PUTTERMAN AttorneyAtLawMagazine.com 21LexisNexis Legal Tech Accelerator Program BY BOB FRIEDMAN Companies developing new technology for the legal indus- try face an obstacle course that includes a tight window of op- portunity, a short product cycle, a high hurdle of exacting requirements, and the demand for development capital. Helping these startup legal tech companies navigate these obstacles is the goal of the LexisNexis Legal Tech Accelerator program. “We saw an opportunity to lever- age our commercial experience more broadly and leverage the learnings from quite a few founders of legal tech startups now working in our organi- zation,” said Jeff Pfeifer, chief product officer, North American Research So- lutions at LexisNexis who oversees the program. LexisNexis, with technology opera- tions based in Raleigh on the Centen- nial Campus of North Carolina State University, provides computer-assist- ed legal research, business research, and risk management products. The LexisNexis Legal Tech Accelerator program identifies companies around the country that are about to enter or that just entered the market. “The goal of our program is to help these organizations scale and share with them our commercial expertise in the legal field to help them as they make choices about their business,” said Pfeifer. “The founders of successful startups are a group of people who are able to diagnose problems quickly and who can continually evolve their ideas so the products for lawyers are finetuned and help solve problems or gaps. They need to get the product to the point where lawyers can use it. At the same time, the companies need to stay lean and progress toward their broader product development road map plan- ning. “Unlike other industries where you may have more tolerance for experi- mentation, failure and iteration on a design idea, in the legal market prod- uct performance expectations are high at product launch,” Pfeifer continued. “Our clients tend to be exacting in their requirements, and they tend to reject quickly things they don’t find directly address their problems.” One of the biggest hurdles for start- ups in any industry is finding capital for growth. “As part of the program, we introduce participants to venture sources who have invested in the le- gal market. LexisNexis does not take equity positions in companies in the program.” PROGRAM MEMBERS FROM THE TRIANGLE More than 60 companies from around the country applied to this year’s program. Nine were selected. “The criteria we use is first, how unique is the idea. Second, where is the company in its commercial readi- ness; and third, we examine the qual- ity of the leadership team.” Two Triangle companies partici- pated in this year’s cohort. Civvis, an online application that helps laymen quickly understand what legal servic- es are available to them based on their needs. Courtroom5 provides tools for people to handle their civil law cases on a pro se basis. Both were featured in recent Legal Innovators stories. IMPROVED LEVEL OF SERVICE Any discussion of legal technology prompts questions about lawyers be- coming obsolete. “The amount of work that would be fully replaced by legal technology is limited, estimated at less than 15% of what lawyers do today,” said Pfeifer. “We see a legal industry that is replac- ing lower value work with work that delivers higher value to consumers. “Today, a lawyer may provide a cer- tain level of advice to a client; when aided by automation activities, the level of service to the client goes up,” he continues. “The lawyer is able to counsel the client in new ways because of the diversion of time and activities to other tasks.” ACCESS TO JUSTICE AND A STRONGER RULE OF LAW Product applications that help im- prove access to legal services are an increasing area of focus. With a large percentage of civil lawsuit participants unrepresented by legal counsel, many see an opportunity for technology to fill the gap. LexisNexis sees technology solutions as a way to strengthen the rule of law more broadly. “Access to justice is a huge focus of legal tech startup activity. We see hun- dreds of companies looking at prob- lems related to access to justice, and we think accelerators like our own and the Duke Law Tech Lab are supportive of those objectives. Building a stronger legal technology ecosystem requires a broader commitment to supporting companies at their earliest stages of development. Longer-term, we believe these products will advance a stronger rule of law.” The LexisNexis Legal Tech Accel- erator program also partners with the Durham-based Duke Law Tech Lab, which also assists early-stage legal tech companies. Pfeifer was a judge at this year’s Duke Law Tech Lab competi- tion, where companies focused on ac- cess to justice solutions. For more information, go to www. lexisnexis.com/en-us/accelerator.page. SPONSORED BY LAWYERS MUTUAL Legal Innovators JEFFREY S. PFEIFER AT THE ACCELERATOR PROGRAMS EXPERIENCE INNOVATION STUDIO, A PARTNERSHIP BETWEEN LEXISNEXIS AND NORTH CAROLINA STATE UNIVERSITY. AttorneyAtLawMagazine.com 23Some law firms in the Triangle were among the 2,500 firms nationwide that use TrialWorks Case Management Software and received this message by email Oct. 13. Trialworks is a South Florida software company that manages electronic records for law firms of all sizes. The ransomware attack restricted access for over 5 percent of their customers. “Reams of digital legal documents have been held hostage,” reported the Miami Herald. RECORDS INACCESSIBLE FOR WEEKS Some of TrialWorks’ customers were forced to request the courts to extend the deadline for providing case documents. At least one of the affected firms was unable to access its records for over two weeks. A Florida law firm was forced to request more time to meet a filing deadline in a gender-discrimination employment case in federal court because it could not access its electronic documents stored with TrialWorks. Luckily, an extension was granted. Though the company appears to have hired a cybersecurity consulting firm to assist in recovery efforts, it remains unclear whether TrialWorks paid the requested ransom or whether the company employed a managed security services provider (MSSP) for risk mitigation, data security protection, and/or business continuity services. On Oct. 15, TrialWorks announced that the threat was completely eradicated from its systems and its staff was “actively decrypting and restoring data.” The announcement suggests that the company obtained in some way the decryption keys to restore the files, likely after paying the ransom. PREVENTATIVE MEASURES FOR YOUR FIRM Every breach offers lessons about how to prevent future attacks and how to safeguard your firm. At the risk of sounding like a broken record, it’s not a question of if your firm’s system will be breached, it’s a question of when. For your firm’s own safety and security, I suggest that you back up your files to someplace in addition to what you have with the software management company. This will avoid significant downtime in the event they are hacked. Trialworks began alerting its customers with the message above. In the event you are using a third-party service like this one and you get a similar message, there is little you can do after the fact. So, unless there are proactive measures in place, it may be too late to do anything. Accordingly, your firm should vet a software storage company before you do business with them by asking for a copy of their security risk assessment, pen test and other third-party audits. Your firm needs to demand proof that all the above is actually being done. The TrialWorks attack again brings to the national spotlight the growing trend of ransomware attacks aimed at the massive quantities of protected digital information in cloud storage systems. Now is the time for providers of cloud services (and their customers) to become hyper- vigilant of security procedures and data protection. FINALLY… If you are not fluent in computer speak, a cybersecurity firm like mine can help you review answers from a software storage company (or any provider of computer services used by your firm) and advise you if their systems provide sufficient protection. Special offer for readers: Call 1-877-468-2721 for a cybersecurity maturity assessment to score your firm for just $500.00! Law Firm Records Held Hostage in Case Management Software Hack CRAIG PETRONELLA | Cybersecurity Craig A. Petronella is the CEO of Petronella Technology Group, Inc. (PTG), an internationally trusted IT cyber- security group that specializes in helping law firms with training, security, and Compliance. Get your FREE phishing email test at FreePhishTest.com. Craig has 30 years’ experience, authored multiple books, including “How Hackers Can Crush Your Law Firm,” and “Peace of Mind Computer Support.” For more information about a cybercrime risk assessment call 1-877-468-2721. ATTORNEY AT LAW MAGAZINE · NORTH CAROLINA TRIANGLE VOL. 7 NO. 6 24EVENT SPOTLIGHT NIGHT OF 1,000 JUDGES Judges and other legal luminaries from across the state celebrated the 200th Anniversary of the North Carolina Supreme Court at a Reception and Gala at the Raleigh Conventions Center on October 10th. AttorneyAtLawMagazine.com 25OUT on the TOWN DCBA Annual Holiday Party The Durham County Bar Association held its annual holiday party at the Tower Club. Toys and cash donations were collected for the Durham Department of Social Services’ Foster Children’s Programs. Second Annual Light the Way Gala The Friends of Wake Guardian ad Litem’s Second Annual Light the Way Gala in November netted over $50,000. The Friends is a local, all volunteer run nonprofit dedicated to supporting the approximately 700 children in foster or kinship care in the Triangle region. BILL MILLS AND DIETER MAUCH FIGHT OVER THE CHECK FOR THE EVENING NISHA WILLIAMS, JUDGE CLAYTON JONES, JUDGE AMANDA MARIS AND SHAYLA RICHBERG JACOB GOAD, FUNGAI BENNETT AND ANTHONY BENNETT KIMBERLY REHBERG, BONNIE BIGGS AND ALICIA JOURNEY ORGANIZERS CARRIE HAUB AND HEATHER WILLIAMS FORSHEYNATE FORSHEY AND ERIC RUBIN 26 ATTORNEY AT LAW MAGAZINE · NORTH CAROLINA TRIANGLE VOL. 7 NO. 6THE RALEIGH LEGAL MARKETING ASSOCIATION HOSTED A PANEL DISCUSSION ON DELIBERATE DIVERSITY INTENTIONAL INCLUSION AT SAS IN DECEMBER. (L-R) MODERATOR CHRIS KIRBY OF THE BRIDGEFIELD GROUP, SHAUNA LEMON, VANESA HARDEE, DENISE GONZALEZ, TAMEKA WALTERS, BETSY BURTON STRUNK AND TIM WILSON. THE WAKE COUNTY BAR ASSOCIATION PRESENTED IT’S JOSEPH BRANCH PROFESSIONALISM AWARD TO PHYLLIS PICKETT AT ITS NOVEMBER LUNCH. (L-R): DAVID SHERLIN, PICKETT AND MARIA LYNCH. FIRST STEP SERVICES OPENED A NEW OFFICE IN GARNER IN OCTOBER. (L-R): FOUNDER HENRY TARKINGTON, SARA SHOOK- ROSEN, KAI CHATMAN AND KIM MORRIS. JOSH KALISH AND LAURA NOBLE AT THE NOBLE LAW FIRM’S HOLIDAY PARTY AT ITS OFFICE IN DECEMBER. NORTH CAROLINA BAR FOUNDATION ENDOWMENT JUSTICE FUNDS WERE DEDICATED IN MEMORY OF A. WILLIAM “BILL” KENNON IN DECEMBER. (L-R): MARTHA KENNON, REPRESENTING HER HUSBAND THE LATE BILL KENNON, JIM MORGAN, BETTY QUICK AND JIM NARRON. TRIANGLE DIVORCE LAWYERS HOSTED A “HOWL AT THE MOON” NETWORKING EVENT IN OCTOBER AT THE BORDEN HOUSE AT RALEIGH’S FLETCHER PARK. FRONT ROW: LJ FREDRICK, WENDY DAMILOWSKI, MARY GURGANUS, ASHLEY PRINCE AND JEN HALLMAN. TOP ROW: DAVID FRANKLIN AND CODY BOYKIN. AttorneyAtLawMagazine.com 27AWARDS ANNOUNCEMENTS PRESS RELEASES EVENTS PROMOTIONS ACTIVITES HONORS RECOGNITIONS TALK TOWN of the SUBMIT PRESS RELEASES FOR NEXT MONTH’S TALK OF THE TOWN AT WWW.ATTORNEYATLAWMAGAZINE.COM/SUBMIT-TOT/ Raleigh attorney C. Colon Willoughby was sworn in as president of the North Carolina State Bar by Chief Jus- tice Cheri Beasley at the State Bar’s Annual Dinner. Wil- loughby is a partner with the Raleigh firm McGuireWoods, where he focus- es his practice on government, regula- tion, and criminal investigations. T. Carlton Younger, III has joined the com- mercial real estate law firm, Longleaf Law Partners. Younger will advise real estate own- ers, developers and businesses on a variety of commercial real estate mat- ters. Jennifer Morris Jones, a partner at Cranfill Sumner & Hartzog LLP, has been appointed the Chair of the Workers’ Com- pensation Committee of DRI. In this role, Jones will be tasked with leading the Committee to achieve its goals of facilitating industry involvement, in- creasing member engagement oppor- tunities, building referral networks, and producing top-notch publica- tions and educational programming. Tharrington Smith’s Russell Babb has been elected as the presi- dent-elect of the 10th Judicial Bar. He will begin his term on 2021. He is a partner in Tharrington Smith’s criminal defense division. Stephanie Gas- ton Poley, a partner at Cranfill Sumner & Hartzog LLP was elected to membership in the Federation of Defense and Corporate Counsel (FDCC). The FDCC is an organization of leaders in the legal community who have achieved pro- fessional distinction. Tiffany Lesnik, owner of Lesnik Fam- ily Law, in Raleigh, NC announced her candi- dacy for District Court Judge (District 10C) in Wake County, NC. Le- snik is a graduate of Campbell School of Law and has served as a civil litiga- tor primarily in the area of family law for almost a decade and as a Child’s Advocate for five years. Ward and Smith an- nounced attorneys Jeff Bandini and Danny Brader have joined the firm’s real estate and creditors’ rights practices. Bandini is a seasoned real estate at- torney with more than two decades of experi- ence representing pub- lic and private clients in real estate, real estate develop- ment, and zoning and land use mat- ters. Brader joins the firm’s creditors’ rights practice, representing banks and financial institutions in Chapter 7, 11, and 13 bankruptcy matters in- cluding automatic stay, objections to proposed bankruptcy plans, and chal- lenges to the valuation of collateral. Raleigh attorney and Gray Styers has filed as a candidate for the North Carolina Court of Appeals in the March 3 Democratic primary. Styers is seek- ing a seat on the court currently held by Chris Dillon. Styers is a partner at FoxRothschild and a former Wake County Bar Association President. Campbell Law School announced the formation of a business law clinic to provide le- gal services to startups while providing its stu- dents on-the-job expe- rience to complement their legal education. The Innovate Capital Business Law Clinic at Campbell Law School – in Partnership with HQ Raleigh will allow upper-level law students, under the supervision of li- censed business attorneys, to address a wide range of business and legal is- sues faced by individuals, small busi- nesses, and other early-stage organi- zations. Attorneys Jim Verdonik and Colon Willoughby Russell Babb Stephanie Gaston Poley Tiffany Lesnik Danny Brader Jeffrey Bandini Gray Styers Benji Jones Jim Verdonik Carlton Younger, III. Jennifer Morris Jones ATTORNEY AT LAW MAGAZINE · NORTH CAROLINA TRIANGLE VOL. 7 NO. 6 28AWARDS ANNOUNCEMENTS PRESS RELEASES EVENTS PROMOTIONS ACTIVITES HONORS RECOGNITIONS Benji Jones, will serve as the inaugu- ral clinic co-directors. Tharrington Smith LLP announced that Alice Stubbs has been admitted to the Bar of the Supreme Court of the United States. Stubbs is admitted to practice in all North Carolina State Courts, The United States District Courts for the Eastern, Middle and Western Districts of North Carolina, and the United States Court of Ap- peals for the Fourth Circuit. Smith Debnam an- nounced that Manag- ing Partner Jerry T. Myers was named the 2019 Midtown Hero by the Midtown Ra- leigh Alliance. Myers was selected for his volunteer work with Operation Airdrop in the wake of Hurricane Florence. The Conference on Consumer Fi- nance Law (CCFL) an- nounced that it elect- ed Smith Debnam’s Caren Enloe to the Governing Committee. Enloe has been named Chair of the Debt Col- lection Practices and Bankruptcy Subcommittee of the Consumer Fi- nancial Services Committee of the Business Law Section of the ABA. Smith Debnam an- nounced that partner Christina McAlpin Taylor has been named to the 2020 class of East Carolina University’s 40 Under Forty Leader- ship Awards. She represents a wide range of businesses through all stages of creditor representation, including pre-suit collection efforts, lawsuits, judgments, and executions. Conner Gwyn Schenck PLLC an- nounced that Sheldon L. Schenck has joined the firm as an associate in our Raleigh office. At Con- ner Gwyn Schenck, Schenck plans to focus on appellate practice, professional liability and building defects. Christine Mumma, executive director of the North Carolina Center on Actual In- nocence has filed to seek the Republican nomination for Attor- ney General. Ann Groninger of Copeley, Johnson and Groninger has pub- lished a second and updated edition of The Ride Guide. It is a resource foranyone in N.C. who needs to understand the rights and responsibilities of bicyclists and the responsibilities of motorists in certain commonly occurring inter- actions with bicycles. Alice Stubbs Jerry Myers Caren Enloe Christina McAlpin Taylor Sheldon Schenck Christine Mumma Ann Groninger DID YOU KNOW THERE IS NO COST TO RUN YOUR LAW FIRM’S NEWS? SUBMIT PRESS RELEASES FOR NEXT MONTH’S TALK OF THE TOWN AT RFRIEDMAN@ATTORNEYATLAWMAGAZINE.COM Awards • Announcements • Press Releases • Promotions Events • Activities • Honors • Recognitions • New Hires • Honors & Awards • Board Appointments • Association Elections • Promotions • New Office Locations • Mergers & Acquisitions • Speaking Engagements TALK TOWN of the AttorneyAtLawMagazine.com 29Next >