Internal Policies FAQ

As a non-traditional firm, we realize that some of Culhane’s internal policies and risk management strategies may differ from brick and mortar law firms. We encourage you to review the following Q&As to help you better understand some of the differences we have implemented as part of our low-overhead/high-compensation business model.

All members must join the firm in their individual capacity and must cease using any former professional entities upon joining the firm. Similarly, all professional services (i.e., practice of law or ancillary services such as business consulting) must be performed exclusively through the firm, including all timekeeping/billing and document storage through the designated DMS. Moonlighting by members of the firm is not permitted.

Our members are compensated based on collections and members bear responsibility to send regular invoices and to monitor clients’ financial balances. Members should also be mindful about performing work for a client that appears unlikely or unable to render payment (otherwise, such work should be deemed as pro bono because the likelihood of getting paid is low). Based on the recommendations of our risk management advisers, the firm does not bring collection actions (i.e., lawsuits or arbitration) against clients because they often lead to counterclaims for malpractice against both the member and the firm. Therefore, to avoid collection challenges down the road, we strongly recommend that members obtain appropriate retainers, especially in litigation matters where costs can quickly escalate.

We do not impose a monthly or annual quota based on billable hours. However, the business and revenue expectation of the firm is that our members are working as full-time practitioners and will achieve a minimum of $150,000 in cumulative take-home compensation each calendar year. If a member does not reach this low reasonable threshold at Culhane (after the first full calendar year from January 1 to December 31), the partner allocation percentage may be reduced to 60% for the following calendar year (with various merit-based opportunities made available to move back up to the higher percentage in subsequent years).

Given the nature of our distributed business model, facilitating opportunities for personal interaction and collaboration among our members is an area in which we are very deliberate and intentional. We have three areas where we require member attendance: First, our monthly firmwide call is held the first Wednesday of each month (unless it conflicts with a major holiday such as July 4th or New Year’s Day, in which case it is usually moved to the second Wednesday). Second, we expect everyone to attend a monthly regional meeting/event, either with their local office when in-person events are scheduled, virtually when two or more markets meet together on Teams, or by traveling to visit a meeting in one of our other markets (notably, many of our attorneys have found that visiting other markets on a routine basis and getting to know attorneys around the country opens the door for more internal referral opportunities). Third, everyone is required to attend CM’s annual partner retreat (typically 3 nights/4 days).
CM has a number of partner-led committees where our members have an opportunity to voluntarily serve on different committees (e.g. Retreat Committee, Business Acceptance Committee, Wellness Committee, Advisory Committee). Such service is not mandatory, but it does often end up being fun–plus it gives each partner a voice to help make CM an even better place in the future. That’s why all members are encouraged to volunteer for committee service in one way or another.

The firm affords wide latitude for partners to use their professional discretion in most new client development. However, the firm’s primary focus is on business clients and members, therefore, are generally precluded from representing clients in matters related to or arising from certain situations, including but not limited to (i) divorce/family court proceedings, (ii) criminal cases, (iii) personal injury plaintiff-side cases, or (iv) employee-side plaintiff cases. Furthermore, the intake of each litigation case is subject to review and approval by the firm’s Business Acceptance Committee.

It’s also important to keep in mind that large institutional clients often have Outside Counsel Guidelines. Whenever a client has such guidelines that create additional duties beyond the firm’s standard engagement agreement, our risk management policy requires that the firm’s GC Office review and approve the guidelines before CM accepts the engagement. Most of the guidelines we typically see relate to timekeeping policies, billing instructions, expense reimbursement, drafting style guidelines and other business terms. The Originating Attorney is expected to be familiar with those (and also make sure any Working Attorneys are in the loop). However, some companies try to include onerous risk-shifting terms in their guidelines and those are the ones that will raise red flags for CM. Here are some examples of what we’ve had to negotiate out of some clients’ boiler plate guidelines (note: this is not intended as an exhaustive list) –

  • We don’t indemnify the client for anything.
  • We don’t change CM’s PLI coverage to meet a client’s special requirements.
  • We don’t obligate ourselves to conduct background checks on our attorneys or support staff working on the client’s matters.
  • Before we agree to a client’s IT/data security policy, we need to confirm that our systems satisfy the client’s expectations (fortunately, CM’s policies and security often exceed what the client requires).

Our low overhead financial model allows the firm to pay members a significantly higher compensation percentage than most traditional firms. However, that also means that each member bears personal responsibility for the costs attributable to his/her individual practice (e.g., bar dues, local individual professional fees, CLE, Internet service, cell phone). Most of us work from home offices to keep our practice costs low, though a handful of members choose to pay rent for small executive office space near their homes – the choice for how and where to work is entirely up to each attorney. If you only need temporary use of an office or conference room, you can rent space a la carte at any Regus location (at a special discounted rate as part of our national service agreement). Each new member is required to purchase a new dedicated work laptop computer under the firm’s Computer Acquisition Program (CAP), which ensures the computer complies with the firm’s Minimum System Requirements and is properly configured to interface with the firm’s secure technology platform (based on Microsoft 365 for Business). The firm has a preferred vendor for IT support and members have the option to subscribe to such service for a monthly fee or pay for IT services on an hourly/a la carte basis as the need arises.

In traditional businesses, including most large law firms, the financial structure captures substantial income revenue that can be used to fund overhead such as group benefits programs (e.g., in a recent survey, AmLaw 100 firms retained an average of 61% of all revenue collections to cover overhead and used 39% in compensation to their attorneys). Oftentimes, partners or executives are even required to pay higher premiums to subsidize the benefits offered to associates or junior employees. A core aspect of Culhane’s low-overhead business model is that we push a substantially higher percentage of collected revenue directly down to our attorneys, leaving far less “pie” for the firm to spend on expenses like benefits. This approach enables partners to make purchasing decisions based on what makes the most financial sense for their unique needs–for everything from computer hardware and office supplies to CLE courses. Likewise, we adopt the same philosophy with our partner-funded benefits programs because no two partners–or their families–are exactly the same or desire the exact same type of benefits (e.g., PPO with high premium/low deductible vs. HSA with low premium/high deductible, etc.). For these reasons Culhane does not currently mandate participation in group benefit plans nor does it subsidize the costs of partner benefits.

Federal – Attorneys at the Firm are considered non-equity or income members (a/k/a partners) for tax purposes; accordingly, the Firm files a Federal Form 1065 Partnership Tax Return, and its income is allocated out to all of its members through a Schedule K-1 (which the attorneys in turn use to file their personal returns). The Firm does not withhold for your Federal tax liability – you are responsible for calculating and paying estimated taxes.

State and Local – Residents – Taxes payable in connection with your state(s) of residence are generally based off of your K-1 income. The Firm does not withhold for your tax liability to the state(s) in which you maintain residency – you are responsible for calculating and paying estimated taxes.

Non-Resident State Income Taxes – Attorneys at the Firm are responsible for paying taxes in jurisdictions other than the one(s) in which they maintain residency. For the most part, the calculation is based off of the income that is allocated to the member based upon both the percentage of the member’s income in relation to the overall income of the Firm, and the revenues that the state apportions to the Firm’s operations in relation to the state (e.g., usually depending on the location of the client serviced and/or where the Firm’s lawyers performing services are located). States within scope are those with which the Firm has a tax nexus (according to each state’s rules).

Composite or Group Returns. The Firm permits its lawyers to elect to participate in composite/group returns where applicable. Under that arrangement, the Firm files the tax returns and pays the taxes on the attorney’s behalf (from amounts withheld from that member’s draws throughout the year) for the particular jurisdiction. The tax rate is typically a little higher under this option, but the corresponding benefit is that there is no need for the attorney to file his or her own return. Your tax professional can help you assess whether there is a benefit to joining the group return.

Opting Out of Group Return. An attorney may also opt out of the composite/group return. Doing so will mean that the attorney must file his or her own tax return(s) in the state(s) in question. It may also mean that the attorney will need make quarterly estimated tax payments (unless the state still requires the firm to withhold). Your tax professional can advise you as to whether there is a benefit to opting out (e.g., to take advantage of your personal tax situation, etc.).

Other State and Local Taxes (including professional Business License Fees) – There are generally two bases for these types of taxes: flat fee per professional or income allocated to the particular jurisdiction. The former is charged to the account of the lawyer, and the latter is allocated to the applicable members based upon each member’s income in relation to the overall income that the jurisdiction allocates to itself. Each individual member is also personally responsible for any local taxes, professional registration fees or business license fees (e.g., county or municipality) that may relate to their home office location.

Note: The foregoing is for general information purposes. Given the complexities and variances of taxes across our multiple business jurisdictions, the Firm encourages all candidates/members to consult with their personal tax advisers as to how membership in CM will impact their individual situation. 

Attendance at the retreat is required and CM has a Retreat Committee with representatives from most of our markets, which carefully considers the costs and amenities of various cities and venues before selecting the retreat location. Although CM provides significant financial subsidization toward the retreat costs as part of the firm’s annual operating budget, our low-overhead business model means there are still three main out-of-pocket components for each member to attend the retreat:

1. Airfare/Transportation. Partners are responsible for their own airfare or transportation to and from the retreat venue. For this reason, the Retreat Committee takes into consideration the flight regularity (or driving proximity) and costs from our business markets, together with the ground transportation costs to get from the closest airport to the retreat venue.

2. The Member Contribution is determined annually by the Retreat Committee, with the objective of keeping the costs as reasonable as possible. The Member Contribution is paid through installments across several draw deductions leading up to the retreat. When combined with the firm’s annual retreat budget, the Member Contribution typically represents each person’s all-in cost (including taxes/fees) for all three nights of accommodations and all group meals/snacks during the official retreat programming dates.

3. Incidentals, Extra Nights, and Optional Activity Fees will be paid directly by each partner (e.g., room service/bar charges, drinks during offsite dinner, museum/tour/golfing fees, extra nights before or after the official retreat dates). At check-in, you will be required to present your personal credit card for any incidentals charged to your room during the retreat.

Note: The firm’s retreat budget and venue contract is based on a minimum headcount and rooming commitment. Partners who miss any nights during the retreat without prior approval by the Leadership Team are still responsible for paying the full Partner Contribution.

IP practitioners should refer to the IP Practitioner Cost Guide for detailed information about our patent and trademark docketing system and related costs. All other non-IP docketing, such as customary litigation and arbitration, is managed through the mandatory use of the firm’s internal litigation docketing service. All litigation cases must be entered into the firm’s docketing system and the Originating Attorney for each litigation matter is responsible for the one-time docketing setup fee of approximately $75 per case (note: this cost is subject to change). Docketing fees are deducted directly from the OA’s draw and cover the time and resources to maintain the firm’s docketing processes.

The firm does not advance any out-of-pocket client expenses and the Originating Attorney is responsible for any charges that are inadvertently billed to the firm (e.g., filing fees, court reporter fees, discovery scanning/copying services). Therefore, the best practice is to have clients contract and pay for such expenses directly with the vendors. The next best option is to obtain an appropriate retainer and then the Originating Attorney pays the costs on a personal credit card, which costs can be submitted as a reimbursable expense in the firm’s timekeeping system (Bill4Time). Assuming the client has retainer funds in the firm’s IOLTA, the Originating Attorney will then be reimbursed for such charges out of the retainer balance as soon as the next invoice is issued to the client.

It depends. Based on the current terms of our professional liability insurance policy (which are subject to change each year), members may not perform any legal work for a business or entity in which the member or his/her spouse/domestic partner owns more than 25% interest.

The firm’s marketing budget is designed to fund firmwide branding and public relations initiatives that benefit the entire firm (e.g., PR agency services, website, social media, newsletter). However, individual marketing expenses are not part of the firm’s budget. For example, if you want to sponsor an event at your local bar association or develop custom marketing materials or advertisements for a local chamber of commerce, those costs would be your responsibility. Similarly, members pay for their own business development, client meals, entertainment and travel costs. The firm has developed a useful library of marketing materials and templates to help members with their personal business development efforts or to respond to Requests for Information from prospective clients.

We recognize that some members rely on non-attorney support staff to manage their practice. Therefore, we have procedures in place where members can hire personal admins/paralegals as independent contractors. However, the firm does not allow contract attorneys or law school interns/clerks. We have several different structures available to members who desire to engage support staff, all of which require the member to bear responsibility for any costs incurred in connection with the hiring of those resources (e.g., compensation, technology license/admin fees to use firm’s IT resources, payroll taxes). Members are expected to carefully supervise any support resources and, as a result, are required to indemnify the firm against any claims or damages that may arise from the hiring of such resources.

At the advice of the firm’s Advisory Committee, the firm entered a multi-year subscription for all partners to have access to the Lexis/Nexis Professional Package with a modest monthly pass-through cost charged to each member in the form of a draw deduction (about $75/month as of April 2023, but subject to change in the future). This robust package provides a wide array of legal research tools, transactional forms templates, treatises, case law research, Law360 and Wall Street Journal online access, and much more. Beyond this primary firmwide resource, the cost of any other practice-specific software, database, treatise, or other services specific to a given practice area is not allocated to all partners at the firm but is instead allocated only to the partners in that given practice area or those who elect to subscribe as part of a group membership rate. For example, patent and trademark practitioners bear the cost of IP docketing software and related infrastructure as well as the cost of the services performed by the firm’s IP docketing paralegals. Similarly, some groups of members will occasionally get together and decide to subscribe to an additional research tool like Bloomberg Law or a corporate/transactional forms library like Practical Law using volume pricing. When that happens, the firm will typically enter into a contract at the members’ request, with the understanding that the monthly cost for such subscriptions will be deducted from the participating members’ draws.

Yes, but if you serve as an officer/director of any entities, you’ll have to abide by our risk management policies, including but not limited to a review of the D&O insurance coverage of such entities and you will be asked to indemnify the firm against any claims or damages in connection with or due to your officer/director activities (i.e., your non-legal work for the entities).

If an attorney anticipates joining Culhane directly from a solo practice or following the wrap-up/dissolution of a prior firm, we require that the attorney provide us with documentation of his/her extended professional liability coverage (also known as a “tail policy”) for any legal services rendered prior to the official start date at Culhane. This is to protect the incoming attorney from a lapse in coverage for any claims arising prior to the start at CM and it also helps protect the firm from having to defend claims arising from such prior acts where the attorney is transferring active client matters over to Culhane. Of course, if the attorney is leaving an AmLaw 200 firm or another stable and established firm with no indication that it will end business operations or cease its professional liability coverage, then this requirement can be waived.

NOTICE: Culhane reserves the right to amend, suspend or terminate any benefit plan or internal operations policy, in whole or in part, at any time.

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