Silver Spooners Or Boostrappers? Billionaires Teach Law Firms About The Most Incentivizing Compensation Models

Ebola on American soil, ISIS and Iraq troops not coming home, unemployment rates still not where they should be… there’s so much despair for Americans these days.

However, today we reason again to be proud of our nation. No money? Low-paying job? Victim of abuse or discrimination? Today is your day to become a billionaire.

The American dream is still alive and well—perhaps more so than in previous decades, reports Forbes.

A new study conducted by Forbes examines the wealthiest people in the U.S. and the lengths they had to go through to make their way to the top.

It turns out, when you look at the numbers over time, the data shows that in 1984, less than half of people on The Forbes 400 were self-made; whereas today, 69 percent of the 400 created their own fortunes.

In fact, many of today’s wealthiest people were born into poverty, or lower middle class, and had to overcome obstacles such as being left an orphan, forced to work low-paying jobs, or faced abuse or discrimination.

“Oprah Winfrey… grew up dirt poor, raised alternately by her single mom and her grandmother, and was sexually abused by several male relatives,” writes Agustino Fontevecchia for Forbes.

“And George Soros… survived the Nazi occupation of Budapest, fled Hungary under Communist rule and worked his way through the London School of Economics as a railway porter and a waiter.”

Howard Schultz, creator of Starbucks, is the son of a New York truck driver and was the first person in his family to go to college. With a personal net worth of $1.5 billion, Schultz only gets ranked 354th richest person in the U.S. Not bad for an ex-Xerox employee.

Jan Koum, entrepreneur, grew up outside Kiev in Ukraine and moved with his mother and grandmother California in 1992, where a social support program helped the family to get a small two-bedroom apartment. Koum worked as a cleaner at a grocery store and only became interested in programming at the age of 18. He enrolled at San Jose State University and simultaneously worked at Ernst & Young as a security tester. Today, you may have heard of his little mobile messaging application—WhatsApp—which was acquired by Facebook for $19 billion.

But if you’re in a law firm office, thinking, “I’m not an entrepreneur.” That may be true, but you can still act like one. What does it take to live the American Dream? Hard work.

The common thread among all these stories is the “pulling yourself up by the bootstraps.” These success stories aren’t about luck or timing. They’re all stories of persistence and patience.

Lawyers are no strangers to being cash rich, time poor. It’s the price you pay for working hard. But even our bootstrap billionaires had help.

Before developing WhatsApp, Koum visited his friend Alex Fishman and the two talked for hours about Koum’s idea for an app over tea at Fishman’s kitchen counter.

Gayle King, now a co-anchor of CBS This Morning, is most famous for being Oprah’s right-hand (wo)man.

In a discussion at the Los Angeles World Affairs Council in 2006, Alvin Shuster, former foreign editor of the Los Angeles Times, asked Soros, “How does one go from an immigrant to a financier? When did you realize that you knew how to make money?” (via Wikipedia).

Soros replied:

“Well, I had a variety of jobs and I ended up selling fancy goods on the sea side, souvenir shops, and I thought, that’s really not what I was cut out to do. So, I wrote to every managing director in every merchant bank in London, got just one or two replies, and eventually that’s how I got a job in a merchant bank.”

That job was an entry-level position in Singer & Friedlander, whose help and training was crucial in making the business magnate and investor who he is today.

When it comes to compensation models, it’s important to reward hard work and bootstrap attitudes. But hard work is often bolstered by teamwork, which does not temper or take away from any individual person’s contribution.

Teamwork should be encouraged. According to a recent New York Law Journal article, the ‘eat what you kill’ compensation model for law firms does not motivate partners to share intelligence or collaborate; it lowers firm efficiency and profitability.

This is why many law firms are transitioning their methods of allocating origination credit, transferring some to other members of the firm and not just senior partners.

Failure to handle this crucial compensation component correctly could kill your firm’s competitive advantage—and your own chance at becoming a billionaire.

The Center for Competitive Management (C4CM)’s audio course “Origination Credit and Partner Compensation: Incentivizing Collaboration for Increased Efficiency and Profitability” details the best management practices for when and how to track, allocate, transfer and transition origination credit for partner compensation in a manner that enhances firm collaboration.

With your order you also get C4CM’s top-selling best practice guide, Law Firm Origination and Cross-Selling Credit—a $249 value—absolutely free. Even if you struggle with the financial side of law, that’s the kind of math you can get behind.

The big difference between silver spooners and bootstrappers? For young entrepreneurs–or young lawyers–the monetary impact of hard work on your life is much higher. With the right incentives, your firm can incentivize all of its attorneys, not simply the senior partners, to attract clients and promote new business at the firm.

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