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1ceman

When to Ask for A Percentage of Billings

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2 hours ago, 1ceman said:

Thanks Quincy. I can't see my employer agreeing to a raise equivalent to 1/3 of my receipts...that would effectively double my income. Maybe I'm misunderstanding the math?

Again, maybe I'm not understanding the math...

I was also thinking a $10K salary increase ($90K total) plus a bonus if I achieve a certain billable target (i.e. 10% of $300K in collected billings). That might be a bit more reasonable, no?

Thanks for all the advice, everyone. Clearly I'm not well-versed in this area.

Isn't that $90K plus a $30K bonus = $120K? 

That's more than 1/3. In fact, it's 40%, which is possible (I had such a compensation structure, at one point), but more likely under a fee-spit scenario. 

EDT: It was also my practice to almost never discount a bill, nor to render a bill without having enough in trust beforehand. So, all that I billed was collected. 

Edited by QuincyWagstaff
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Keep in mind if you touching a file becomes more expensive to the boss than the associate down the hall, you may find less work flowing your way. 

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1 hour ago, JohnStuartHobbes said:

I don't understand your point about doubling your salary. You say your receipts come to $300,000. 1/3 of that is $100,000. You say you are at $80,000 now.

Also, I can't speak to smaller practices, but there is ample discussion in other threads how bonuses are usually paid at larger firms. 10% is commonly thrown around, but that is of salary (i.e. 10% of $90,000, not $300,000).

Bringing it together, the consensus in this thread seems to be that if you are billing around $300,000, then a compensation package of around $100,000 is reasonable. The form of that compensation is what is up for debate.

It's certainly more than anyone on Bay gets on a relative basis. If OP can get that it'd be a pretty good deal I'd say.

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OP, the 1/3 of collected billings isn't about the raise, it's the total compensation.

To @Rashabon's point above, the extent to which this is reasonable will differ on market (practice, location, maybe firm size, etc.) as well as other factors (availability of other associates to replace you, performance, etc.)

In my experience (private practice in a city outside the GTA), the 1/3 guideline is still in common usage. YMMV

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On 12/9/2019 at 2:28 PM, 1ceman said:

Good point. FYI my principal asks for my input before billing on my files. It's usually my signature on the bill, but would be a good idea to review all billings so I have a number in mind.

If your firm uses PC Law, you can check and it will show you how many dollas you have billed out and how many people have paid.

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I'm a new call and my working conditions are fairly comparable to what OP has described (as far as level of responsibility, size of firm, and type of work). I receive a base salary, a monthly bonus for meeting certain billable targets, plus a percentage of collected billings over a certain annual threshold (roughly $200,000). I like that my arrangement provides some stability, combined with the potential to increase my earnings. My boss has mentioned a few times that this type of arrangement for collected billings works for the firm because the initial chunk has to go towards overhead, whereas after a certain amount, my collected billings become pure profit for the firm. 

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