Understanding how origination credits became so pervasive requires a look back 40 or 50 years. By the 1980s, governments around the world had passed new regulations in dozens of industries. As the legal needs of most businesses surged in complexity, general counsels transformed into sophisticated and demanding corporate operators. Law firms had to press harder to earn work that, in previous decades, they might have handled by default. “Firms started to need their lawyers to be entrepreneurial,” says Mitt Regan, a professor at Georgetown Law and the director of the school’s Center on Ethics and the Legal Profession. The origination credit emerged as the central tool to make that happen.
Competition within the legal market has only increased. Today, in-house departments can be fiercely choosy about which firm to retain as external counsel. “As the market has become more unstable, client relationships have become more temporary,” says Robert Nelson, an expert on the sociology of the legal profession who teaches at Northwestern University. “Law firms need their lawyers to be out there getting that work.” In such an environment, it perhaps makes sense that the compensation structure would favour the people who bring in clients and revenue.
In practice, however, the origination-credit model can create cleavage, confusion and even conflict. To begin with, it can divide a firm into those who hustle and those who don’t. Partners who lack the skills or inclination to source new business can feel like they’re on the lower level of a two-tier system—especially when the rainmaker vanishes after landing the client. “I think there is frustration when those lawyers who feel they’ve been doing the lion’s share of the work for a client don’t get what they see as a fair share of the money,” says Nelson. Once a sense of exploitation takes hold, it can poison a workplace with bitterness.
It doesn’t help that the rules about who is entitled to origination credits can be subjective and murky. Some firms allow rainmakers to share their credits with colleagues who contribute substantively to the work, a seemingly sensible reform. But a lawyer’s ability to get a piece of a credit depends in large part on the benevolence of the person who holds it. “Often, resentment is born not necessarily from the fact that there are origination credits,” says Regan. “It comes from the extent to which their colleagues are willing to give credit or share it with one another.” If you work with a fair-minded partner inclined to split the pie, you’re in luck; if you’re stuck with a credit hoarder, better luck next year.
Complicating matters is that lawyers will sometimes trade credits—or slices of credits—among themselves as a sort of shadow currency, to call in or acknowledge favours. “There’s a kind of informal bargaining process that goes on,” says Regan. While firms are aware of such machinations, many are quick to look away: “It’s generally not regulated by the firm because they really don’t want to get in the middle of it.”
In light of these shortcomings, some firms have chosen to avoid origination credits entirely. That includes the six-lawyer litigation boutique St. Lawrence Barristers PC. Having logged years in the Bay Street trenches, Alexi Wood and Anna Matas, the firm’s two partners, want to prevent the toxic territorialism that credits can provoke.
Both Wood and Matas handle the vast majority of business development without any who-brought-in-what bickering. “Alexi and I share the idea that a rising tide lifts all ships,” says Matas. “We work together to bring in high-quality work that we want to do and that our juniors want to do. We found the solution that works for us.” Wood acknowledges that a credit-free structure is more feasible at a smaller shop than it would be at a major firm with hundreds of lawyers. But she’s committed to it in the long term. If the St. Lawrence Barristers partnership expands, she has no intention of introducing a credit system—which she views as “inherently antithetical” to the collaborative approach she’s been working to foster since she started the firm in 2017. She simply can’t condone the harm that can come from, as she sees it, pitting colleagues against one another: “I’ve never seen it work where, at some point, somebody doesn’t feel that they have been treated unfairly.”