Private client lawyers are essential to the very wealthy, since they are able to deftly address the various wealth planning needs and wants of the affluent. Their services are also essential when it comes to transferring clients’ wealth across generations, including clients’ business interests and other assets.
Elite Private Client Lawyers
To better understand this cohort and the potential they provide other professionals, we surveyed 148 lawyers using the following criteria:
• All had to be practitioners in law firms.
• All had to have at least one single-family-office client.
• All had to deliver succession planning and related support to clients worth a minimum of $30 million.
• All had an annual compensation of $1 million or more annually for each of the last three years.
Generally speaking, private client lawyers are specialists in the field of tax and related planning services. In our survey, they were professionals with very wealthy clients and offered planning services including estate planning, asset protection planning, income tax planning, cross-border and international tax and related planning, business planning for business owners and the development of charitable giving programs.
These lawyers also offered broad-based personal and business advice incorporating legal considerations. They furthermore offered administrative services tied to these planning offerings, as well as opinion letters and services such as due diligence on selected tax strategies.
About a quarter of the elite private client lawyers in our survey were based in North America (Figure 1). Slightly fewer came from Europe. The primary jurisdiction for a fifth of them was in Asia. South American lawyers represented 17%, and the remaining number, nearly 14%, came from jurisdictions that offer tax advantages—including the Cayman Islands, Bermuda and Mauritius.
When we considered the attorney’s compensation of $1 million or more for three years, we included the lawyer’s salary, equity participation and any other payments such as bonuses. We did not include any other benefits.
Overall, the average compensation in the most recent year among those we surveyed was $1.5 million and the median was $1.4 million (Figure 2). The compensation ranged from $1.0 million to $3.6 million. The most well compensated private client lawyers are in tax-advantaged jurisdictions. The least well compensated are in Europe.
Though we used chain-referral sampling to build our list of private client lawyers and the sample size is small, the findings are useful in that they reinforce and add context to our research findings about single-family-office senior executives.
Elite Private Client Lawyers Are Thought Leaders
Most elite private client lawyers at this level are not selling time. Instead, they are providing expertise and are charging significant fees for their knowledge and experience.
But being talented is not enough to generate these levels of compensation. To rise above the competition, they must also be thought leaders. Almost nine out of 10 of the elite private client lawyers surveyed believe themselves to be well-recognized authorities in their fields (Figure 3).
Elite Private Client Lawyers Making Referrals
Thought leaders are magnets both for clients and other professionals looking for wealthy clients. Because elite private client lawyers have high-net-worth clients, other professionals naturally want to work with them, and many of these lawyers will indeed refer their wealthy clients to other professionals (Figure 4).
Almost all the elite private client lawyers said they would refer their wealthy clients to peers for legal expertise they cannot provide. This referral can be made within or outside their law firms. About 70% of private client lawyers said they will often direct business to accountants, while a fifth will do so sometimes. Only about 10% percent said they rarely or never do.
Almost 65% of elite private client lawyers will regularly refer wealthy clients to insurance agents, and slightly more than a fifth of them will do so sometimes. Only a sixth of them said they do so rarely or not at all. About half the elite private client lawyers said they regularly refer their wealthy clients to investment advisors. Thirty percent said they refer sometimes, while almost a fifth said they refer rarely or not at all.
Most elite private client lawyers want to work with leading authorities and experts in their fields. Thought leaders prefer to send people to other thought leaders.
If you are a thought leader, it makes it that much easier for private client lawyers to introduce their wealthy clients to you. There is usually little if any pushback from the clients, and it is easy to explain why you are the person the wealthy client should be working with.
Again, being talented isn’t enough. It is expected that you are capable and well known in the right circles. Motivating elite private client lawyers to refer their wealthiest clients to you requires more.
What The Lawyers Want
Most elite private client lawyers are looking for more business. An annual compensation of $1 million is nice, but $2 million is nicer, and $3 million even better. Your ability to help these lawyers be more successful means they will provide you with a steady stream of new wealthy clients.
Many professionals, when they think of referrals, think in terms of “trading clients.” Unfortunately, that approach rarely works well. It is highly unlikely you have enough wealthy clients to go one-for-one with elite private client lawyers and get the results you are looking for. So a different approach is usually needed.
Instead, you should look for opportunities to help them grow their practice by showing them how to work better with their current clientele and business relationships. In most cases, that’s the best way for them to bring in significant new revenues.
It all starts with discovery. You have to develop a deep understanding of the lawyer’s practice. You need to know things like:
• Generally, where are their new wealthy clients coming from?
• What are their compensation models?
• What is the nature of their clientele?
• Are there any wealth planning specialties the lawyers are focused on?
• What would they like their practices to look like in three years?
• What are their experiences with professionals like you?
• What steps are they currently taking to become more successful?
With this information in hand, you can identify ways to add value to their practices—in ways that will help them become more financially successful. You benefit when you’re introduced to the private client lawyer’s very wealthy clients yourself.
Russ Alan Prince is president of R.A. Prince & Associates.