A boutique law firm of exceptional quality and talent where clients' and lawyers' interests are aligned by collaboration and innovation
Following on from my last article discussing “taking control of your career” one linked aspect of their life most people would like more control over is their finances.
Everyone has a different definition of what financial freedom means to them based often on their current financial position versus their goals both short and long term. Most people would consider that they are on their way to financial freedom if they have the financial resources to allow them to live the life (perhaps without the yacht!) they want.
Someone said to me recently that when people are buying a lottery ticket they are buying a chance to dream. That dream being financial freedom.
We all know the small chance of winning the lottery, so how can we take control of our finances and move towards our goal of financial freedom? One way is ensuring you are getting rewarded in a fair and ethical way.
Most people gain most (or all) of their income through being an employee. There may be some element of negotiation, but ultimately your employer will determine what you are paid. Even where an element of your pay is based on your performance, your employer will determine what good performance looks like and how that equates to your pay.
This traditional remuneration system has to balance the needs of the individual versus the company’s needs and goals.
It is worth reflecting throughout your career, if you are happy with traditional reward systems – salaries, bonuses, stock options, gifts, written and verbal praise, job perks, additional holidays and the like? Are they transparent and do they accurately reward you for your contributions? Are they always fair and ethical? How financially free do they enable you to be? Is the pay differential too great between your pay and those who are more senior than you?
Financial freedom can mean earning freely and spending commensurately. How often do we reflect on how freely we are earning and how accurately our earnings reflect our input?
Take base salaries: On the one hand, most roles are salaried at close to the market rate for that particular job. This seems fair and proportionate. You are paid the same as others from across the market who have the same qualifications for the same role. But what if, due to the nature of your particular business model or personal attributes, you are in fact benefitting your company far more than your counterparts are at their respective businesses or even your peers within your business? This would suggest that you are providing competitive advantage to your organisation, but your organisation is under no obligation to reward that contribution. Suddenly that market rate salary seems unfair.
Take pay rises, bonuses and other financial incentives: They can improve performance, no doubt, and people may increase their input to achieve them. But you can only control your input; you can’t control the amount of bonus available, particularly where it is based upon the performance of the business as a whole.
Stock options or share schemes can be offered but without you being able to control the company’s actions that determine the value of its shares or whether an event to crystallise an option will happen.
Traditional remuneration relationships are defined by one party having more discretionary power and information than the other.
These well-known remuneration structures prevail in almost every industry, including law, an industry inextricably tied to the billable hour and yet one where lawyers traditionally get paid around 30% of the fee income they achieve for their business.
While there are economic reasons for this being the case, if the fee income is due to your input (and often input outside of your contractual hours) why do you get less than one third of the reward?
At Bexley Beaumont we remunerate Partners differently, we have a hybrid between the collaboration and the common purpose that can define traditional firms with the autonomy that comes with self-employment. Remuneration arrangements are simple. The lawyers receive a much higher percentage of their income. Partners are directly rewarded for their own hard work and effort. They have control of their finances and can control their input and commensurate output.
We believe this also adds to the sense of community, mutual respect and collaboration that so defines the company. There are no office politics, no competition for promotions or salary raises or clients. There is greater collaboration and unity as the Partners and Bexley Beaumont work together.
This more transparent approach to remuneration can present an escape from the tyranny of traditional reward structures and a better path towards financial freedom.
