Book of business (law)
Encyclopedia
Book of business is common parlance in the United States legal services sector and refers to the collection of clients that a lawyer
(usually a partner) has assembled throughout his or her career. It is often used to refer to the valuation of such client following.
Since most U.S. law firm
s are organized as limited liability partnerships or professional corporation
s, each partner is usually responsible for cultivating his or her own clients in that partner's specific area of focus, e.g. litigation, tax
or securities. In the competitive legal market, especially in large city markets, partners are evaluated by committees of their fellow partners with assistance of non-legal market and financial professionals both in-house and outside the firm on a yearly basis and set guidelines on billable targets. An equity partner
with a stagnant or declining book of business can be "de-equitized" or demoted from the status of a partner who receives a share of the firm's profits to that of a salaried partner or counsel.
Firms seeking to expand often retain outside legal recruiters and specify the minimum book of business they require for a lateral candidate, usually between $1–$3 million in larger legal markets. When a partner resigns from his or her law firm, American Bar Association
and local bar rules require his or her clients to be notified, giving them a chance to decide whether to follow the lawyer to the new firm, or stay. Given the fierce competition among law firms in the past 20 years, anecdotal reports suggest that partners are informing their clients before handing in their resignations to determine how much of their business is portable.
A conflict of interest
check is also an important step before a book of business can be considered portable. For example, a partner whose primary clients are insurance policyholders would generally be unable to take most of his book of business to a firm that represents insurers.
Lawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
(usually a partner) has assembled throughout his or her career. It is often used to refer to the valuation of such client following.
Since most U.S. law firm
Law firm
A law firm is a business entity formed by one or more lawyers to engage in the practice of law. The primary service rendered by a law firm is to advise clients about their legal rights and responsibilities, and to represent clients in civil or criminal cases, business transactions, and other...
s are organized as limited liability partnerships or professional corporation
Professional corporation
Professional corporations are those corporate entities for which many corporation statutes make special provision, regulating the use of the corporate form by licensed professionals such as attorneys, architects, engineers, public accountants and physicians...
s, each partner is usually responsible for cultivating his or her own clients in that partner's specific area of focus, e.g. litigation, tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
or securities. In the competitive legal market, especially in large city markets, partners are evaluated by committees of their fellow partners with assistance of non-legal market and financial professionals both in-house and outside the firm on a yearly basis and set guidelines on billable targets. An equity partner
Equity partner
An equity partner is a partner in a partnership who is a part owner of the business, and is entitled to a proportion of the distributable profits of the partnership...
with a stagnant or declining book of business can be "de-equitized" or demoted from the status of a partner who receives a share of the firm's profits to that of a salaried partner or counsel.
Firms seeking to expand often retain outside legal recruiters and specify the minimum book of business they require for a lateral candidate, usually between $1–$3 million in larger legal markets. When a partner resigns from his or her law firm, American Bar Association
American Bar Association
The American Bar Association , founded August 21, 1878, is a voluntary bar association of lawyers and law students, which is not specific to any jurisdiction in the United States. The ABA's most important stated activities are the setting of academic standards for law schools, and the formulation...
and local bar rules require his or her clients to be notified, giving them a chance to decide whether to follow the lawyer to the new firm, or stay. Given the fierce competition among law firms in the past 20 years, anecdotal reports suggest that partners are informing their clients before handing in their resignations to determine how much of their business is portable.
A conflict of interest
Conflict of interest
A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other....
check is also an important step before a book of business can be considered portable. For example, a partner whose primary clients are insurance policyholders would generally be unable to take most of his book of business to a firm that represents insurers.