A general counsel recently asked me, “Why should my company risk hiring a lesser-known, small firm?”
I told him that it shouldn’t. I don’t think any company should unnecessarily “risk” its business without good reason. I’ll be the first to admit that there are some matters that simply demand big firm attention.
But I also told the GC that there were many matters that I thought my smaller firm could handle just as well as could a big firm, and with cost savings that would be relatively significant given the amount at stake.
I wouldn’t ask someone to hire me if I thought that doing so was risky for them. A client should not have to choose to lose or win; it needs to make sure the small-firm attorneys have the necessary skill and experience. But with that caveat, some matters are particularly well suited for boutique treatment.
Assuming a client can afford to hire a Biglaw firm for a particular matter, why might it consider a small firm or boutique — beyond the obvious lower cost?
First, a small firm is more likely to be grateful and appreciative of the work. Clients sometimes feel that they are little more than a client/matter number in some Biglaw shops. A relationship with a small firm is more likely to be a genuine, more personal relationship, and this often translates into the small-firm lawyers being more responsive to the client.
A small firm also is much more likely to be interested in building a long-term relationship with the client instead of maximizing its profits from the particular engagement. Some firms have the luxury of having such high demand for their services that they can become complacent to client service. That is unlikely to happen in a boutique firm. The fewer clients a firm has, the greater the relative importance of each individual client to the firm.
Second, a small firm located near the client is likely to be more firmly grounded in the same community and culture. Silicon Valley is not Los Angeles, which is not New York, which is not Miami, or Atlanta, or any other city. Each city has its own unique culture and a small, local firm will often be more connected to the client in subtle but important ways.
Third, a small firm or boutique might be able to offer more flexible and creative fee arrangements. Some Biglaw firms have a bureaucracy that makes alternative fee arrangements difficult to approve. I’ve encountered several companies who hired my firm precisely because we were willing to candidly discuss alternative billing arrangements, blended rates, etc. In this economy, clients appreciate the flexibility.
On the other hand, there will always be times when it still makes sense to hire a big, name-brand firm. So when should a client choose Biglaw over a small firm?
First, a bigger firm might be necessary when the matter requires a large number of bodies: Some matters might require a large number of associates, paralegals and support staff to manage. Document-intensive cases sometimes are simply beyond the reach of some small shops which don’t have the capacity, knowledge, or experience to quickly scale up to manage big cases. A small firm might consider outsourcing document review, or hiring a team of contract attorneys, but there are serious challenges to address in either situation. Some cases require multiple, simultaneous depositions that are simply beyond the capacity of some firms.
Second, sometimes the relative fees just don’t matter. Some matters have so much at stake that the relative difference in fees between Biglaw and a small firm are minor concerns to a deep-pocket client. Smaller firms compete primarily on price. Assuming a client has the resources to afford hiring a name-brand firm, at some point there is little reason not to if the dispute is big enough.
Third, sometimes in-house counsel must answer to a Board of Directors, and might feel pressure to hire an expensive Biglaw firm precisely because they are expensive. If the firm loses the case, no one will blame the in-house counsel for the loss; after all, he hired the most expensive lawyer. Nobody ever got fired for buying IBM.
These last two reasons really amount to a single reason: A client hires a Biglaw firm when it can afford to, and when it perceives hiring a smaller firm to be a risk it can’t afford to take. For these reasons and more, I don’t think Biglaw firms will soon disappear or become obsolete. They serve a role that smaller firms will simply never be able to fill.
That being said, there also are compelling reasons why a client would be well-advised to consider a boutique firm for the right matter.
Tom Wallerstein lives in San Francisco and is a partner with Colt Wallerstein LLP, a Silicon Valley litigation boutique. The firm’s practice focuses on high tech trade secret, employment, and general complex-commercial litigation. He can be reached at [email protected].