In today’s fast-evolving legal industry, law firms must be agile and innovative to stay competitive. One practice that may be limiting your firm’s growth, however, is the “origination credit” model—a system that compensates attorneys primarily based on the new clients they bring in. While this structure once provided an effective incentive for client acquisition, it now restricts profitability, encourages competition over collaboration, and may even erode client satisfaction. I believe originations have become an outdated way to approach compensation and may be holding back your firm’s profitability. In this post, we’ll explore how this model could be limiting your firm’s growth and discuss alternative strategies to support sustainable, long-term success.
Origins of Origination Credit: An Outdated Model
Origination credit was originally developed in the late 19th century and it was designed to both encourage revenue growth and reward the attorneys who bring in new clients. This made sense in the past. In a more straightforward legal market, attracting new business was often the primary path to profitability. But today’s legal landscape demands much more than initial client acquisition. To stay profitable, firms need an approach that emphasizes collaboration, strengthens client relationships, and taps into the expertise of their entire team.
Clients today expect not only excellent legal work but also streamlined communication and strategic value. Siloing relationships with single attorneys under origination credit limits these benefits by creating an environment where internal collaboration is discouraged, attorneys compete for credit, and clients lack comprehensive support from the entire firm. As a result, originations often hinder profitability rather than promoting it, causing firms to miss out on the substantial benefits of a collaborative, client-centered approach.
How Origination Credit Impacts Profitability
To truly understand why origination credit no longer serves firms effectively, let’s look at its biggest pitfalls:
1. Discourages Collaboration and Promotes Internal Competition
Origination credit tends to foster competition between attorneys, as individuals strive to be seen as the primary client originator. This mentality creates silos, with attorneys withholding referrals or leads from colleagues to retain credit. For firms, this discourages the cross-functional teamwork that modern clients often require and can lead to missed opportunities for growth within existing client accounts.
2. Limits Revenue Growth from Key Client Relationships
A focus on origination credit risks narrowing client relationships to one or two attorneys, which can weaken client retention. Clients’ needs evolve, and addressing them comprehensively requires a multi-disciplinary approach that the origination model discourages. Without a collaborative team assigned to each client, firms miss opportunities for deeper client engagement, reducing the potential for increased revenue and long-term retention.
3. Hinders Junior Attorneys’ Development and Limits Firm-Wide Growth
For younger attorneys, origination-based models limit access to essential business development opportunities. When origination credit focuses on senior attorneys, junior lawyers may be prevented from building client relationships or business development skills. This limits their long-term career growth and weakens the firm’s future revenue-generating potential by neglecting to develop the next generation of client relationship experts.
4. Encourages a “One-Time” Mentality Rather Than Long-Term Value
The current model rewards lawyers primarily for acquiring clients, not necessarily for maintaining or growing the relationship. This one-time focus can detract from client retention and satisfaction. When firms prioritize long-term value, they tend to yield more stable revenue over time. Without a strong relationship-building focus, the firm risks being seen as transactional rather than as a trusted, ongoing advisor.
5. Impedes Firm-Wide Scalability and Operational Efficiency
Finally, origination credit complicates compensation structures and makes resource allocation less effective. Disputes over origination credit can consume valuable firm time and resources, detracting from core business goals. Firms that instead emphasize collaboration and transparency can achieve smoother internal operations and ultimately scale more sustainably.
Create a Client First, Firm Centric Model
Moving away from origination credit doesn’t mean removing compensation incentives; it means restructuring them to align with today’s demands. A more modern approach that incentivizes business development while meeting the needs of the firm and its clients can look like this:
1. Reward Team-Based Success and Collaboration
Encouraging team-based compensation allows attorneys to work together for the client’s benefit, drawing on each other’s strengths. In this way, attorneys can focus on meeting the full spectrum of client needs, helping boost both client satisfaction and overall firm profitability.
2. Reward the Right Thing
A system built on originations could provide an unstable future for the firm. Originations are oftentimes tied to a particular attorney whereby the client is more likely to be loyal to the attorney rather than the firm. If a key partner leaves and has a significant amount of originations, the firm could, and oftentimes do, face hardship. One way to strengthen the firm is to reward attorneys that refer matters to other attorneys or practice areas. When you reward a referral, you are encouraging teamwork, rewarding the referring attorney and make the client a “firm client” because the client sees the value of the entire firm rather than one attorney.
3. Create a Profit-Sharing Model based on Metrics
Profitability, not revenue, is what should be rewarded. You should consider creating a compensation model that rewards business development, but not solely on that metric. A subjective system where you share in the profits of the firm based on an attorneys contribution to the overall profitability of the firm. These factors would include originations, referrals, marketing efforts, attorney development, management committee responsibilities and other factors.
4. Invest in Business Development Training for All Attorneys
Firms that make business development training a priority see increased firm-wide revenue and efficiency. By encouraging attorneys at all levels to learn and apply business development skills, firms distribute client acquisition efforts more broadly and create a foundation for sustained growth.
Conclusion: Moving Beyond Originations to Drive Growth and Profitability
In today’s legal market, originations are no longer the best path to profitability. By moving beyond the outdated model of origination credit, firms can foster collaboration, create stronger client relationships, and achieve more sustainable growth. A compensation structure that rewards teamwork and long-term client value not only benefits attorneys but also enhances the client experience, positioning the firm as a trusted advisor.
At 3sixty Consulting Group, we understand the challenges law firms face in adapting to the evolving industry landscape. If you’re ready to explore compensation models that drive profitability, improve collaboration, and maximize your firm’s potential, reach out to us. Our team is here to help you grow Stronger, Better, Together. Connect with us today to start building a more profitable, collaborative future for your firm. Call us at (404) 398-3888 or email chris@3sixtyconsultinggroup.com.