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?
For years, it has been common knowledge that the vast majority of associates at most Biglaw firms will leave before becoming a partner. At many firms, it is not uncommon for fewer than one in ten entering associates to ultimately become a partner. As partnership tracks lengthen, the attrition rate goes even higher. The decision to leave a firm to form a private practice, for example, is becoming increasingly common.
We assume (hope?) that the high attrition is because Biglaw offers the most exit opportunities; i.e., the prospects of developing a career as in-house counsel, or joining a business unit of a company, or going into government, or joining to a small or midsize or boutique law firm, or maybe even leaving the law altogether to become a consultant, a blogger, a Lego artist, what have you. Just because you start your legal career with a law firm doesn’t mean your goal is to become a partner.
Often, associates who know that they will not become a partner seem content to just put in their time, try to keep their head down, and collect a paycheck while waiting for their firm to announce their intended bonuses. They rationalize that they know they will leave anyway, so why bend over backwards for the firm?
The festivities were extremely well-attended. Temperatures in the packed bar at times approached the hotness of the Cravath bonus scale — for 2007. Thanks to our fabulous sponsor, the Practical Law Company (PLC), for such a great evening.
Here on the internets, some people like to say “WWOP.” So let’s get some pics up in this joint….
Yeah, some people thought I might be nuts for leaving litigation powerhouse Quinn Emanuel. But the prospects of starting my own firm and building a practice from the ground up were too compelling to ignore. Nearly two and a half years have passed since Colt Wallerstein LLP opened its doors, and still not a day goes by when my partner and I aren’t humbled by our good fortune and our decision to “trade places”: that is, move from Biglaw to start a litigation boutique in Silicon Valley that focuses on high-tech trade secret, employment, and complex-commercial litigation.
I graduated from law school in 1999, and the legal market was very different then. Getting into a “top” law school pretty much guaranteed a job, and most of my law school friends and I had multiple offers and no real concern about landing a Biglaw job, if that’s what we wanted. Offer rates hovered around 100%, and of course the lucrative summers consisted mostly of long lunches at five-star restaurants, luxury box seats at baseball games, open bars, and very little work.
You see partners spinning off from bigger firms to start their own shops all the time. We’ve covered some of these high-profile partners that are still taking the risk during the recession, like the Skadden partners who formed BuckleySandler, or the Boies, Schiller partners who formed Stone & Magnanini.
But starting your own firm isn’t the exclusive domain of partners. Associates start their own shops all the time, even in this market. Last week, we learned that two Quinn Emanuel associates were taking the plunge and forming their own firm, Colt Wallerstein LLP:
Colt Wallerstein is founded by Doug Colt and Tom Wallerstein, two former Quinn Emanuel attorneys. Claude Stern, the managing partner of Quinn’s Silicon Valley office, said of the pair: “For years, I have worked closely with both Doug and Tom. I have trusted them with my clients’ most sensitive information and they have excelled in managing complex, sophisticated, and difficult commercial litigation. Doug and Tom are terrific, client-focused lawyers with a keen sense of the practical.”
These two attorneys weren’t laid off from Quinn. They say they were on partnership track at a firm where profits per partner march ever upwards. So you have to ask, “Why the hell would you leave a stable, well-paying job in the middle of a recession? Do you also enjoy looking gift horses in the mouth?”
After the jump, Wallerstein answers some of our questions.
Hey, have you read Above the Law for like one single minute in the past month? If so, you probably know that we’re having this big blogger conference on March 14th at the Yale Club. Yeah, the Yale Club. You’ll be able to recognize me: I’ll be the only big… blogger guy surreptitiously holding a can of crimson spray-paint.
Speaking of coming, you should come. We’ve got CLE and all that. Click here to buy tickets to get CLE credit for listening to bloggers scream about stuff on the internet.
To refresh your memory, details on the panel that I’m moderating — almost entirely sober, mind you — follow.
My panel is called Blogs as Agents of Change, and we’re going to talk about whether all of these spilled pixels are actually making a difference. You know my view… just ask Lawrence Mitchell, but here are the panelists:
So you spent a considerable amount of time courting, selling and maybe even doing some friendly stalking of that attractive lateral partner candidate with a sizable book. After he or she ignored your emails and didn’t return your calls, a few weeks go by and you read a press release in the legal media announcing the recent move to a competing firm.
Rats. Another one got away from you. You cringe when you consider how much time was spent in meetings that did not bear fruit. Your heart aches when recall how you were led to believe this was a marriage made in heaven.
You have been rejected.
The sting of rejection is painful, even for fancy law firms. But you need to find a way that you can turn this disappointment into a legitimate learning experience.
No, this isn’t a pre-party before we come back next fall for the real thing. This IS the real thing. Quinn Emanuel is pushing the envelope on recruiting. The party is now. This is when you meet the partners and associates face to face. This is when we begin the dance that could land you an offer for your second summer BEFORE school starts in the fall.
First: You come to the party. Second: If you like us, you send your resume after June 1, 2014. Third: If we like each other, you get an offer.
We’re not waiting for fall. We’re not doing the twenty minute thing. This party is the real thing!
We hope you’ll join us, and look forward to meeting you.
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