I’ve written before about some of the challenges a small law firm faces when hiring employees. But more fundamental and difficult questions are why and when should a solo or small law shop expand by adding employees?
Like all businesses, most firms with excess demand for their services have a natural incentive to grow. A company is leaving money on the table if it is forced to turn away work because all of its lawyers are at full capacity with their billable work.
The incentive to grow might be tempered by concerns over preserving a valued culture. A small law firm might resist growth because it fears disrupting a favorable workplace environment. With each new associate hired, however, the reasons for not hiring the next associate get weaker.
The major disincentive to growth is the inability to predict future business. Litigation is especially fickle. A case might go to trial, and generate hundreds of hours of billable work, or suddenly be dismissed or settled. In litigation especially, sometimes the line between swamped and dead is razor thin.
This uncertainty makes hiring additional associates extremely risky — even if the immediate workload warrants it….
I hate to invoke a cliché, but “David versus Goliath” captures the challenge a smaller firm faces when litigating against an Am Law 200 firm. A small firm can feel like David when facing a larger firm that can bring more resources to bear on legal research, drafting motions, reviewing documents, etc.
The challenge increases when applied to clients. Many of my firm’s initial clients were startups or emerging companies with limited litigation budgets. Their adversaries often were much larger, established companies with seemingly unlimited budgets. Thus, we faced not only the challenge of litigating against brand-name firms with hundreds of attorneys, but we also initially had clients who simply could not afford to spend as much in legal fees as their well-heeled opponents.
So how can a small firm, especially representing a smaller company, effectively litigate against a proverbial army of lawyers representing a client to whom money is no object?
Everyone knows how challenging it can be for lawyers to find satisfying work in today’s economy. Employers who are looking to hire associate attorneys seem to have the upper hand because there are so many qualified candidates available.
Even with an abundance of candidates, however, hiring associates and support staff can be particularly challenging for small and boutique law firms. Although Biglaw firms are notoriously selective, in some ways they are actually less selective than their smaller counterparts.
Unfortunately for most, and fortunately for some, larger firms’ hiring is largely focused on the candidate’s objective credentials. Every firm pays lip service to its unique culture, but for junior associates your resume is often more important than your personality.
In a small or boutique firm, personality and “fit” are more important than they are in Biglaw. A small firm is more likely to have a distinct firm culture that is a reflection of its partners. The more owners, the more diffuse the personalities and culture. If nothing else, in a smaller environment you are going to be working in closer physical proximity to the other employees.
So, how can small firms find new associates who fit best?
For attorneys who bill by the hour, one of the less enjoyable aspects of the job is recording time. For many associates, entering time is a necessary evil done only under coercion. The process also can be fraught with pressure. Associates know that all too often their worth might be measured by their billable hours.
Of course, for big and small firms alike, we tolerate the timesheets because they are our firms’ lifeblood. Recording our time enables our firms to generate their invoices. The inherent purpose of entering our time is to generate this request for payment.
But an invoice can and should do much more, especially for a small firm or solo practice….
This post is dedicated to William A. Rutter, who passed away last week. If you’re not a lawyer in California, you might not recognize the name. But at least in my world, Rutter is the guy who produced the invaluable and ubiquitous Rutter practice guides, covering a wide range of practice areas and procedures.
If you’re not from California, you might be more familiar with other Rutter creations, like the BAR/BRI prep course he founded, or his Gilbert Law Summaries for law students.
My firm, like most firms in California, has a series of Rutter guides on our shelves. And even though we run a virtually paperless office with Lexis, Westlaw, and other electronic research options, I still love my printed Rutter guides. We even have a joke about Rutter. Whenever a colleague questions their ability to handle a particular matter or solve a particular issue, we joke, “I’m sure there’s a Rutter Guide for that.”
The joke has a serious point, namely, that the basics of most practice areas can always be learned. And if it’s easy enough to learn a practice area, why shouldn’t a lawyer forming a solo practice or small firm become a true generalist, handling everything from family law, wills and trusts, civil, criminal, and essentially whatever walks in the door?
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?
When Above the Law first covered my “adventure in shingle hanging,” I remember someone quipping that our only business came from attorney referrals and that we didn’t have our “own” clients. The comment wasn’t true, but I still found it interesting. Is a client who pays you money somehow not “your” client, or not a “real” client, just because the client was referred to you by another attorney? That doesn’t make a lot of sense to me.
But it is worth thinking about the different ways that solo and small law firms try to generate business. There is a valid distinction between approaching a prospective client and asking him to engage you, and approaching other lawyers and asking them to refer cases to you. I’m not sure one is necessarily superior to the other, but they are different approaches. I think of them as “direct” and “indirect” client solicitation.
I also distinguish “active” and “passive” methods. An active approach is where you identify your client and solicit them. A passive approach is where you do something that encourages clients to solicit you. Passive isn’t a pejorative; for example, a good website is an important part of passive business development.
So, I think business development efforts can fall into a matrix. Check it out, after the jump….
For some, the phrase “small law firm” implies certain stereotyped practice areas, clients, and attorneys. At its worst, the stereotype invokes unsophisticated clients and matters that are routine and uninteresting. I doubt the stereotype is wholly true anywhere. I know for sure it isn’t true in San Francisco or Silicon Valley.
I know many attorneys in small firms who have specialized, high-end practices. These specialized practices are often called boutiques, and they are perfectly suited to serve the entrepreneurial, high-tech client base that abounds in the San Francisco Bay Area.
It remains to be seen whether we’re experiencing a boom or just another bubble, but I guess it doesn’t matter anyway. I’m not an economist and I’m not making predictions. I am only remarking on some great practice opportunities for smaller law firms which exist here, maybe because we are fortunate to have so many imaginative, passionate, and savvy entrepreneurs working on exciting projects in so many different industries….
Thanks to everyone who has sent me emails; really, I’m flattered. I promise I will get back to everyone. A lot of people have asked me questions. For example:
“I am currently a third-year law student . . . . I am hoping to eventually open my own firm (sooner rather than later perhaps) as I am willing to suffer the first few years of practice and not making money in hopes that I can recoup that years down the road . . . . I do not feel that my best years should be wasted working for somebody else (my opinion of a firm is that they are useful right out of school to ‘learn the trade’ but outside of that the firm benefits more from an associate than the associate benefits from the firm . . . .”
I’ll answer this one publicly:
If you are in law school and you have the choice between working for an established firm — big or small — or working for yourself/starting your own firm, it’s a no-brainer that you should go with the established firm first. You can always leave the firm to pursue your own practice at any time, but the converse isn’t true: Once you go out on your own you might forever lose opportunities you have as a student.
In any event, I disagree that a firm necessarily benefits from an associate more than an associate benefits from the firm. I’ll stick with the only thing I really know: my own personal experience. I wrote in my first-ever blog post that “none of my limited success would have been possible without my Biglaw experience.” I think there are three reasons this is true for me….
The other day, I was at dinner with some Biglaw friends. While I prefer to associate only with my small-firm kin, I needed someone to pick up the check. And, I thought I could do some missionary work and convert my friends in to small-firm lawyers (so I could mine them for story ideas, obviously).
Something unexpected happened during dinner. One of my friends asked me why I believe small-firm life is so different from Biglaw. I went through my standard list of reasons: quality of life, money, autonomy, mentoring, etc. I even cited Tom Wallerstein’s Top Ten.
That was where things took an unexpected turn: my friend did not buy it. Indeed, by the end of our dinner he had me questioning my beliefs. Does size matter, I thought? Needless to say, as a woman who has devoted her “career” to writing about small-firm life, this experience shook me to my core.
Let’s see if you can help me make sense of that night….
Jiminy jillickers! ATL editors are going all over the place over the next month or so. Or at least all over the Eastern Seaboard. If we aren’t heading to your neck of the woods on these trips, never fear, we may hit you up on the next time around. We’ve already hit up Houston, Chicago, Seattle, San Francisco, and Los Angeles in the past year.
Kinney Recruiting’sEvan Jowers is currently in Hong Kong for client meetings and still has a few slots available through October 22. Evan will also be in Hong Kong November 14 to December 15. Further, Robert Kinney has been in Frankfurt and Munich this week and is available for meetings with our Germany based readers.
One of our key law firm clients has referred us to one of their important clients in the US, Europe and China – a leading global technology supplier for the auto industry – in order to handle their search for a new Asia General Counsel and Asia Chief Compliance Officer.
Kinney is exclusively handling this in-house search.
This position will have a lot of responsibility and include supervision of eight attorneys underneath them in the Asia in-house team. The new hire will report directly to the global general counsel and global chief compliance officer, who is based in the US. The new hire’s ability to make judgement calls is going to be as important as their technical skill set background.
The position is based in Shanghai and will deal with the company’s operations all over Asia and also in India, including frequent acquisitions in the region.
It is expected that the new hire will come from a top US firm’s Shanghai, Beijing or Hong Kong offices, currently in a top flight corporate practice at the senior associate, counsel or partner level. Of course, the candidate can be currently in a relevant in-house role.
The JOBS Act created new tools for companies to publicly advertise securities deals online. As a result, thousands of new deals have hit the market and hundreds of millions in capital has been raised, spurring a wealth of new business development opportunities for attorneys.
Fund deals, startup capital raises, PIPE deals and loan syndicates are just a handful of the transactions benefiting from the JOBS Act. InvestorID FirmTM is a platform designed to help attorneys equip their clients with the workflow, marketing and compliance tools to publicly solicit a securities offering online. By providing clients with the tools to painlessly navigate the regulatory landscape of general solicitation, InvestorID FirmTM helps attorneys add value above just legal services.
The Jumpstart Our Business Startups Act (JOBS Act) went into effect in 2013 and permits Regulation D offerings of securities to be advertised publicly. This means that funds and companies can now use social media, emails and web sites to market transactions to new “accredited” investors.
However, with these new powers come new pain points. InvestorID FirmTM provides a secure, fully hosted, cloud-based platform with a breadth of tools for your clients, including: