alt.legal: The $21BN Contract Lawyer Marketplace is Up For Grabs, 'Hire An Esquire' Plans to Catch It

The startup looking to make the temporary legal market more transparent, liquid, and fair to both buyers (law firms and corporate legal departments) and lawyers.

unnamedThe founding team at legal startup Hire an Esquire began our interview with a number that blew me away: $21 billion dollars — the annual spend on legal contract labor in the US according to an IBIS World report. The Hire an Esquire team is determined to “rebuild this massive market with technology, and to provide an entrepreneurial path off the beaten partner track for lawyers.” Pretty alt.legal to me.

Hire an Esquire’s goals aren’t just to make a quick buck on this huge market (that too), but are genuinely noble: to make the temporary legal market more transparent, liquid, and fair to both buyers (law firms and corporate legal departments) and lawyers. While many in the legal profession believe that temporary lawyers = failed lawyers, Hire an Esquire CEO and founder, Julia Shapiro will persuade you otherwise. She left the associate track for contract attorney work where she reported meeting some of the best and most interesting lawyers of her career.

Obviously, I had to ask — why would good (or even great) lawyers want to brave the freelance economy? Well, she argued, in part it’s because the next generation of lawyers don’t want their boss’s jobs. Not only does the job of law firm partner seem less financially appealing and stable than in previous generations, but Biglaw has become an increasingly brutal.

She ran me through the numbers, which showed that Biglaw today requires associates to bill 2,000-2,200 hours per year (and we all know firms that demand more), dramatically more than our lawyerly parents were required to work. In the 1970s, for example, Biglaw required only ~1500-1700 hours per year. So for those of you counting, that’s 50 more 10 hour days per year. Yes, that’s brutal.

So What is Hire an Esquire?

Hire an Esquire is a technology platform designed to be efficient and transparent, putting attorneys — not recruiters — in control of their freelance destiny. It also cuts down on human overhead, making freelance work economically attractive to top-tier attorneys.

As an ex-lawyer, Julia observed firsthand how staffing agencies treated attorneys like widgets instead of skilled professionals and made wages a race to the bottom — all with a high cost to law firms. At the same time, she saw how the online marketplace model could be leveraged to inaugurate the era of “the indie attorney.” Her vision was lawyers building entrepreneurial careers with the freedom and flexibility previously reserved for writers, artists and other free-spirits (but with better pay).

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Julia’s Legal Entrepreneurship Story

Julia’s inner-city school-teacher parents discouraged her from going to law school, describing the lawyers they knew as “unhappy.” While she didn’t pursue a creative career as they suggested, she heeded her father’s advice to go to undergrad and law school on academic scholarships for future career flexibility. Still, she ended up on the Biglaw associate track as a summer associate at White and Williams in Philadelphia.

Unfortunately, she didn’t consult Fortuna. In her third year of law school she became inexplicably ill. In and out of medical care, she began working as a contract attorney before finally being diagnosed with celiac disease.

And now, the twist. Julia actually fell in love with the diverse group of people she was working with: one lawyer was living Tim Ferriss’ 4-Hour Workweek, putting in absolutely savage hours by choice, and then taking off for months at a time to travel the world; another was an opera singer in her off hours; another was a part-time mystery novelist; another was… well you get the picture. (Tim, if you are reading this, as a self-proclaimed legal outsourcing guru, I’m ready to start drafting the 4-Hour Lawyer… call me!).

And so it went. From 2008-11, Julia worked at Pepper Hamilton as a contract attorney in commercial litigation where she observed firsthand how backward, inefficient, and expensive the hiring process was for firms (and this was not a knock on Pepper, which she LOVED, but a knock on the state of the market).

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But worse than that, for the contract attorneys, staffing felt like inhumane treatment. She described to me how seasoned attorneys were treated like widgets by impersonal staffing agencies and found their career fate in the hands of an overstretched and taxed 20-something recruiter. Moreover, Julia was disgusted with the delta on what staffing agencies were charging per hour versus the hourly rate they were paying the contract attorneys. Wages and morale were becoming a race to the bottom as agencies tried to maintain profit margins while supporting their own antiquated overhead in a competitive staffing market.

Julia saw the potential for transparent and efficient marketplace technology being used elsewhere to create an alt.legal track for lawyers. She reached out to friend Edwin Watkeys, former product manager for half.com with her idea who put her in touch with Dave Martorana, a seasoned engineer who signed on to work on the project for equity in late 2009.

By 2010, they had a minimum viable product (“MVP” in the parlance of Silicon Valley) ready for attorneys to sign up. In late 2011, with a few clients and a growing network of attorneys, Julia finally quit her job at Pepper with six months saving and moved into the basement level of her sister and brother-in-laws’ 750-square foot Philadelphia trinity.

From MVP to Real Business

Meanwhile, Julia’s high school friend Jules (confusing I know!) was working in the heart of startup land in San Francisco, consulting in environmental sustainability, and fresh off a job with tech giant Salesforce. Jules had been watching the businesses progress and struggle, all the while providing advice and introductions.

In late 2012, Jules took the plunge into start-up land and abject poverty. Jules explained how they lived off of “vapor” with no salaries whatsoever, and how she stretched six months of budget to a year-and-a-half of “living” in New York City. Jules laughed remembering “the dark days” in the freezing NYC winters of 2013. With no budget for cabs, the metal rod in Jules’s leg (from an old skiing accident) was painfully frozen when they arrived at investor meetings after brisk winter walks. They suffered for their business.

With Jules on board, the team pursued a complicated “W-2” placement model — meaning that Hire an Esquire becomes the employer of record — which forced them to integrate state-by-state rules on overtime, workers compensation, and insurance compliance. This is a complex HR operation that most startups avoid, but it allowed them to work with AM Law 200 and Fortune 500 clients. They assured me that they are the only legal tech marketplace company that does this, though I look forward to the inevitable comments below challenging that!

By 2013, their perseverance and expanded model finally began to pay off, and they landed their first Biglaw client. This tripled their lifetime revenue in three weeks and shortly afterwards they secured a lead investor for their seed round of funding. Co-founder and current CTO Andrew Somerville, joined the team shortly afterwards bringing his experience as a robotics engineer and former lead DARPA engineer to the team to focus on the data and matching technology of the Hire an Esquire platform (he’s also Julia’s cousin!).

Lead investor Dixon Doll, founder of Venture Capital Firm DCM decided to invest because:

“I could tell from the beginning that we were onto something big. The team-work, tenacity and ability to execute that Jules and Julia demonstrated is exactly what I look for in founding teams. When Andrew joined the team with a robotics background, I saw a new level of potential to utilize matchmaking technology and I now believe we are activating one of the biggest untapped areas of the on-demand economy.”

Today, the company has raised almost $2M and counts amongst its investors many industry heavyweights including Ulu Ventures (the fund of Google’s Lawyer #2, who responded to a cold e-mail outreach), the former CEO of ALM, BigLaw Partners and the former CFO of a prominent brick-and-mortar legal staffing company.

Where Are They Now

The company has seen an uptick in Fortune 500 legal departments signing on as clients in the last six months and now counts over ten percent of the Am Law 200 as clients.

Jay Hull, Chief Innovation Officer at Davis Wright Tremaine LLP, commented on how his firm is using the platform to better service their clients:

“One of the central tools our firm leverages to drive value for clients and rethink the way we deliver legal services is alternative staffing models.  We’ve used multiple resources to find qualified attorneys, and without doubt Hire an Esquire’s platform not only streamlines the process, but has enabled us to better align the needs of each phase of a project with the capabilities of skilled attorneys in a manner that helps contain costs for our clients.”

Will your firm or legal department be next?


Joe-Borstein-extra-LinkedinJoe Borstein is a Global Director at Thomson Reuters’ award-winning legal outsourcing company, Pangea3, which employs over 1,000 full-time attorneys across the globe. He and his co-author Ed Sohn each spent over half a decade as associates in Biglaw and were classmates at Penn Law.

Joe manages a global team dedicated to counseling law firm and corporate clients on how to best leverage Pangea3’s full-time attorneys to improve legal results, cut costs, raise profits, and have a social life. He is a frequent speaker on global trends in the legal industry and, specifically, how law firms are leveraging those trends to become more profitable. If you are interested in entrepreneurship and the delivery of legal services, please reach out to Joe directly at joe.borstein@thomsonreuters.com.

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