Biglaw, In-House Counsel, Small Law Firms

Inside Straight: Business Development At Firms Small Versus Large

In-house columnist Mark Herrmann notes that it's easier for junior lawyers at small firms to develop business because their Biglaw brethren have to search for clients who are moneymakers.

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A decade ago, I sat in the midst of hundreds of lawyers at a firmwide partners meeting. The managing partner explained that most of our revenue came from our 25 largest clients, and we should focus on expanding those representations. He then noted the conflicts problems posed by tiny clients, for whom we did essentially no work. He urged us to get the tiny clients off the books. To illustrate his point, his PowerPoint slide showed the clients to whom we had sent the smallest bills in the previous year. The firm’s smallest client had been billed a total of $3.25.

The managing partner scoffed: “Three and a quarter? Three and a quarter? Can’t we at least be as selective as the neighborhood bar? Maybe we should set a $25 minimum.”

I’ve inhabited law firms both small (for five years) and large (for twenty). Business development efforts at those firms are similar in some respects — “get famous; make contact; get lucky; repeat” — but differ in other ways. I’m thinking today about the ways that business development efforts differ depending on whether you work at a big firm or a small one….

Big firms reject small cases.

Big firms reject those cases for many reasons. At a large firm, there’s a cost to simply clearing conflicts. It’s not a matter (as it is at some small firms) of walking out into the hall and shouting, “Hey! Any of you guys ever do any work for Tristan & Co?”

Rather, you enter “Tristan & Co” into the database, which returns a conflict form lit up like a Christmas tree, and you pester your colleagues around the world for days (or weeks) to pin down precisely what work which partner did that was adverse to which affiliated entity. If a matter will yield only $5K in fees, the cost of the conflict check may exceed the expected value of the case.

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Big firms also often reject roles as local counsel. “Local counsel doesn’t call the shots, and we’re not putting our malpractice insurance on the line if we’re not the ultimate decision-makers! If we win the case, we won’t get the credit, because we weren’t really at the helm. We’ll create the same conflict issues as though we were doing the national representation, but we won’t earn 10 percent of the revenue. And, besides that, it’s just insulting. We don’t accept local counsel roles, except for longtime clients for whom we’re doing a great deal of other work, who ask us to play a local counsel role as a favor.”

Big firms also often try to avoid referring cases to other big firms. “We need local counsel in Denver. We don’t have an office there, but lots of big, national firms do. Don’t use ’em! If we use Bigg & Mediocre as our local counsel in Denver, they might steal away business from us in New York and LA, where we compete head to head. We’re better off picking some small shop in Denver that doesn’t have other offices.”

What does that mean for business development?

Two things.

First, it’s easier to start developing business as a junior lawyer at a small firm. Your small firm may be delighted that you landed a case that generated $25,000 in fees. That ain’t chicken feed, and it shows that you have your eye on business development. If you were working at a large firm, your firm may well have rejected the case before it came in the door, deeming the fish too small to fry. This can make business development a Herculean task for junior lawyers at big firms: The matters the junior lawyers can attract aren’t worth accepting. There’s thus no chance to parlay small representations of new clients into larger representations. And it’s pretty tricky to have your first business-development success consist of being retained to handle a multimillion dollar case or deal.

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Second, if you work at a small firm, lawyers at large firms can be a great source of business. They’ll refer small matters to you, use you as local counsel, and otherwise support your perfectly nice small-firm practice. If you work at a large firm, lawyers at other large firms are unlikely to prove as productive a source of new business.

This means that lawyers at large firms must aim their business development effort mainly at in-house folks, whereas lawyers at small firms can benefit from marketing to lawyers at other firms.

Big firms feast on occasional whales; many small firms live on a constant diet of minnows. Neither model is necessarily better than the other, but know yourself: Stick to a small firm if you lean toward two-pound-test line.

Mark Herrmann is the Chief Counsel – Litigation and Global Chief Compliance Officer at Aon, the world’s leading provider of risk management services, insurance and reinsurance brokerage, and human capital and management consulting. He is the author of The Curmudgeon’s Guide to Practicing Law and Inside Straight: Advice About Lawyering, In-House And Out, That Only The Internet Could Provide (affiliate links). You can reach him by email at inhouse@abovethelaw.com.

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