It used to be that the world of corporate transactions was the sole province of Biglaw. After all, handling complex matters like mergers and acquisitions required manpower and overhead — and lots of it. Well-paid junior associates were an integral part of the process, and the costs of doing business were driven by corporate clients’ expectations of grandiose reception areas and white-glove treatment as proof of both commitment and excellence.
These days, however, technology has leveled the playing field, making it possible for boutique law firms to compete with Biglaw in ways never before possible. Many of these boutique firms, comprised of Biglaw lawyers seeking to practice law on their own terms, have sprung up in the wake of large-firm mergers and dissolutions. Creative thinking and the innovative use of technology have been the keys to their success, allowing these boutiques to reduce overhead costs and run their practices more effectively and efficiently, saving their clients time and money.
Don’t believe me? Well, look no further than Bailey Duquette, a Manhattan-based boutique law firm….
The firm consists of former Biglaw lawyers who handle both transactional and litigation matters, sometimes serving as de facto in-house counsel for certain clients. Bailey Duquette’s clients range from large companies like American Express to private-equity and hedge funds to technology start-ups.
According to partner Jamie Sklar, his firm effectively competes with its larger counterparts by always keeping the clients’ needs and expectations front and center. “In any business what’s important is to determine and allocate your resources in ways that have the biggest impact on the client’s experience,” he says. “For example, originally JetBlue was a budget airline so people started using it. But what really impressed their customers was JetBlue’s customer service and timeliness. Now, JetBlue is no longer perceived as low end, but as an airline that provides better service at a lower cost. That’s what we try to do with our law firm as well.”
Sklar explains that providing top of the line legal services at a competitive rate results in happier clients and more referrals in the long run: “It’s all about building a solid, sustainable law practice, and I’m not sure those thinking short-term are going to be able to effectively compete. Don’t get me wrong — Biglaw is definitely making money, and some clients continue to be willing to pay for a brand name. But I’m finding more and more clients unwilling to do that. Increasingly, clients expect value, and our low overhead, use of technology, and high level of experience provide a combination that allows us to achieve just that.”
His firm reduces overhead while simultaneously providing a seamless client experience and meeting client expectations by subletting office space from another company and sharing their reception area and conference rooms. Making use of a VOIP phone system also reduces costs while giving clients with a more personalized experience.
“When I was on the client side both in terms of entrepreneurial ventures and as in-house counsel, overly extravagant offices didn’t impress me. Personally, I’d rather pay a firm for a firm’s services, not expensive art and furniture,” he relates. “Even so, with our current arrangement, in terms of that soft appeal, we’ve managed to be able provide that — an attractive reception area and a receptionist — without incurring significant expense. We also use a VOIP system, so calls are routed directly to us no matter where we are, instead of using a receptionist for incoming calls, and that’s a deliberate choice. We know that when a client calls they want to speak directly to us rather than having calls screened.”
The firm also employs value billing with the end goal being to stand out in a competitive market by offering more value at a lower cost. According to Sklar, Biglaw’s reliance on outdated hourly billing is one of its biggest downfalls: “Biglaw views the product as billable hours. That’s very old paradigm thinking and clients are fed up with the billable rates Biglaw firms are charging and the amount of time — and warm bodies — it takes to get things done. Instead the key is to provide value. We often bill on a fixed-fee basis, so we try to spend our time on work that requires our value and judgment as lawyers. Our goal as a new generation law firm isn’t to bill as much as we can but to provide as much value for our client as we can and get paid for that value. Every decision we make and every product we use is intended to do just that.”
To achieve that goal, the firm makes every effort to selectively use technology to increase its efficiency. For example, Sklar explains that one of the tools in its arsenal is eBrevia, a software product released in beta that streamlines the due diligence process and effectively negates the need for costly junior associates: “At large law firms, junior-level associates learn about the M&A process by reviewing reams of documents, often focusing on details that aren’t relevant, and billing huge numbers of hours while doing so. Using eBrevia, this process is simplified and much more efficient. The software extracts relevant provisions from documents based on the parameters that you set. It includes more than 20 different types of typical provisions that you’re looking for when representing a buyer in an M&A deal, such as consent requirements, choice of law provisions, and confidentiality. Within seconds, with just the click of a mouse, you have a summary of the provisions you need.”
Importantly, the software doesn’t replace legal expertise, it supplements it. “It works best when you combine human and machine in the due diligence process,” Sklar emphasizes. “It allows you to split your screen and see the full source document on one side and the extracted provisions on the other. You then pull provisions into the summary or delete those that aren’t useful and create summaries that way. It doesn’t actually replace the lawyer but cuts down significantly on time by performing 50-60% of the work up front and then you work from there.”
His parting advice to law firms seeking to compete in the changing legal landscape? Don’t be shortsighted. “To build a practice, you’ve got to be prepared to make a short-term investment for a long-term benefit. If that means offering value billing and investing in technology to provide long-term benefits for your clients, you should consider it even if it means making less money on a project in the short term. That way your clients keep coming back. In the end, that makes sense.”
Nicole Black is a Rochester, New York attorney and Director of Business and Community Relations at MyCase, web-based law practice management software. She’s been blogging since 2005, has written a weekly column for the Daily Record since 2007, is the author of Cloud Computing for Lawyers, co-authors Social Media for Lawyers: the Next Frontier, and co-authors Criminal Law in New York. She’s easily distracted by the potential of bright and shiny tech gadgets, along with good food and wine. You can follow her on Twitter at @nikiblack and she can be reached at email@example.com.