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.
Even in the down economy, a number of new ventures were launched in Silicon Valley. Geographically, the high-tech corridor also seems to be expanding, thanks to Twitter, Zynga, SalesForce.com, and the like setting up shop in San Francisco. You don’t even need a Visa or traditional office space to launch a startup anymore; now you can enjoy Peter Thiel’s “Visa-free entrepreneurship and technology incubator on an ocean vessel in international waters.”
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….
When I started my firm, several mentors gave me the same advice: Don’t work for free. It’s easy to see the problem with working for free. Giving away what you’re trying to sell isn’t exactly in the business plan. Unfortunately, this sage advice can only really be learned the hard way, through experience.
Working for free can arise in many different ways. The most obvious example is a client who wants you to represent him but can only promise to pay you later.
Even if your gut tells you that taking on that client is a bad idea, this can be surprisingly tempting to a new firm or solo practice. For starters, there is such a thrill with getting your first client, or your first “real” client, or your first big client, or your first whatever client, that the excitement can cloud your better judgment. You will be tempted to overlook the red flags that you will not be paid for your work….
This is the time of year when everyone pulls out a Top Ten list of one thing or another. I don’t mind; a Top Ten list is a convenient format for reflection and New Year’s Eve has always been a time of reflection for me, whether that involves setting goals or just thinking about the ups and downs of the past year. So I thought I would use the opportunity to offer my perspective of the Top Ten Differences Between Biglaw and Boutique. So without further ado, let’s push in the button and let the top ten play:
10. Money, Money
When you work at a firm, you get paid either a salary or an hourly rate. You get employer-paid benefits and you might even get a bonus. But you know the firm is billing you out at hundreds of dollars an hour, and your hourly wage comes nowhere near that. When you run your own shop, you don’t get a salary but you keep all the money paid by your clients, or recovered in a contingent fee agreement. Of course, you’re also responsible for all the expenses.
Whether that is a good or bad thing depends on a lot of factors and varies by individual, but no one can deny that the economics between working in Biglaw and working for yourself are very different.
Read on after the jump for the rest of the Top Ten Differences Between Biglaw and Boutique….
Recently, someone remarked to me that the week after Christmas is a “dead week.” He meant that many people take the week off, many companies are short staffed, and business generally is light.
When I was in Biglaw, I always worked the week after Christmas. Even though most partners wouldn’t be around, I figured that left it up to me to make sure my cases were being handled properly. With hindsight, I know that I probably wasn’t quite as essential as I thought, but that was my attitude at the time.
Now that I am a partner in my own firm, you might think that I can finally relax and let my associates mind the store. Negative. First, I care about my associates’ quality of (work) life. Having spent years in Biglaw, I am committed to trying to lessen at least some of the unpleasantness that often entails. So I want my employees to be able to take time off, or at least work a lighter schedule, during a week that is traditionally light. Second, running my own firm just raises the stakes. Now I really do have ultimate responsibility for all my cases, so I feel even more pressure to work harder and better than ever before.
So much for a dead week. Still, the comment got me thinking about what it means to be “swamped” with work versus having a “dead week,” and how those concepts differ when applied to Biglaw versus a running a solo or small firm practice….
I was talking to a friend who is a junior partner in a large firm, and who is thinking of starting her own firm. She knew what practice area she would focus on, and she had at least one client who she felt sure would go with her. But she still had two critical questions to resolve. First, she wasn’t sure if she wanted to open a solo practice, or if she would try to recruit someone to form a partnership. Second, she wasn’t sure if she would form a “virtual” office, or try to start a traditional “brick and mortar” shop.
With regard to her “solo versus group” decision, we talked about the differences in tax treatment, liability exposure, etc. But I offered her my opinion that another important consideration is the practical, day-to-day differences between running your own shop and being in a partnership….
Success in Biglaw often is measured by the size of an attorney’s “book of business.” Not surprisingly, having a book of business is also the best way to ensure the success of a private practice. The bigger the book, the greater your exit options. So whether your goal is to make partner or to open your own firm, everyone knows that the key is to develop a book of business.
That is easy to say, but virtually impossible to do in a big firm setting. Many big firms handle only matters in which the amount at stake is in the millions of dollars. This means that the prospect of an associate landing such a case is slim; a client would never entrust a multi-million dollar dispute to an un-tested associate. Associates are told to attend networking events, but what is the prospect of meeting someone who just so happens to have a ten million dollar dispute laying around, and who has not yet staffed the matter, and who is willing to entrust the matter to a junior associate he just met?
Once upon a time, mentoring relationships were strong, and firms were loyal to their associates. A loyal associate could hope that the partner for whom he or she worked would encourage clients to develop a relationship with the associate and allow the associate to claim ownership of future engagements from that client. If nothing else, a loyal associate could expect to inherit clients from a retiring partner.
Alas, the traditional method of building a book of business no longer works for most associates. Firms now sometimes go so far as to actively discourage associates from forming too-strong relationships with clients, lest the associate leave and take the client with them. And even if an associate is fortunate enough to get client contact, clients are likely to develop loyalties to the partner on the matter, even if the associate is doing most of the work. Unfortunately, just because you do good work doesn’t mean that over time you will magically develop that elusive book of business.
To make matters worse, it’s often impossible to predict future business, especially for litigators. If a client hires you for a patent dispute and pays you $1 million in fees in 2011 before the case settles, does that mean you have a $1 million book of business, even if you have no reason to expect any business from that client in 2012? How can you guarantee repeat business from any client, especially in litigation? Do you need a three or five year average? Those are long time frames for associates.
With all these challenges, how can an associate ever hope to make the rain they will need if they want to open their own firm?
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We currently have a number of active openings for associate roles at US and UK firms in HK / China, Singapore and two new in-house openings. As always, please feel free to reach out to us at asia@kinneyrecruiting.com in order to get details of current openings in Asia, as well as to discuss the Asia markets in general and what we expect for openings later this year. Our Evan Jowers and Robert Kinney will be in Beijing the week of March 25 and Evan Jowers will be in Hong Kong the week of April 1, if you would like to meet them in person.
The US associate openings we have in law firms are in the usual areas of M&A, cap markets, FCPA / white collar litigation, finance, and project finance. The most urgent of our top tier (top 15 US or magic circle) law firm openings in Asia (among many other firm openings that we have in Asia) are as follows:
• 2nd to 5th year mandarin fluent M&A associates needed in Beijing and Hong Kong at several firms;
• Korean fluent 2nd to 4th year cap markets associate needed in Hong Kong;
• 2nd to 5th year Japanese fluent M&A associates needed in Tokyo;
• 4th to 6th year mandarin fluent cap markets associate needed in Hong Kong;
• 2nd to 4th year M&A / cap markets mix associate needed in Singapore.
The last time I flapped my wings your way, I tried to make at least enough noise about your mobile phone to make you more than a little bit uncomfortable. I hope I did. If enough of us become anxious enough about the known and unknown unknowns and knowns in our mobile phones, then we can start making wise decisions about how to manage that information and its resultant investigations.
Today, I’d like to put a finer point on the last installment’s topic by asking a question that seemed to catch most attendees off-guard at a conference panel that I moderated last week: is there discoverable personal information in a mobile app? Our panelists’ answer was a uniform “yes” with one stating that, if he had to choose only one type of data that he could discover from a mobile phone, he’d choose app data. Why? Because there’s simply so much of it and because almost all of it is objective – not just user-created like an email – but machine-tracked like GPS, usage duration, log in and log out times, browsed web addresses, browsed actual addresses. Also, most of us seem to have the idea that data doesn’t actually “stick” to our mobile devices the way it “sticks” to our hard drives. Maybe there’s a disconnect based on the fact that our phones are mobile so we assume the data is mobile to?
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