Biglaw Firms Can Be A Liability To Clients

One of the biggest liabilities of Biglaw shops are their high fees.

Many people believe that Biglaw firms are the best shops to handle a given legal issue since they have the most experience and resources to work on a matter. It is true that many matters that require substantial effort, and in which the stakes are high, might be best handled by Biglaw shops that can flex their muscle in order to solve a client’s issues. However, in many situations, Biglaw firms can actually be a liability to clients. As a result, clients should use a mix of firms in order to handle their legal work so that they can avoid situations in which Biglaw firms present challenges for clients.

One of the biggest liabilities of Biglaw shops are their high fees. It is well-known that Biglaw firms charge rates that are sometimes double, triple, or more than the market rate for legal work in their area. It is not uncommon for Biglaw shops to charge the same rate for a first-year associate that a seasoned partner at a smaller firm charges, and this can impact a client’s bottom line. The rates charged by a Biglaw shop can impact the amount of effort a client wishes to exert in order to solve a given matter and which strategies they wish to pursue in their case.

For instance, many clients have a figure in mind that they view as “nuisance value” on a case. This is the amount of money that will be spent on legal fees and expenses in order to not be involved in litigation. Many clients would rather pay what they believe is nuisance value in order to resolve a matter rather than litigate a case since they would presumably have to spend this money anyways and paying this cost ensures finality in the litigation.

When a client uses a Biglaw firm, the amount a client views as nuisance value could be double, triple, or even higher than the amount would be if the client chose a smaller shop. This makes it more likely that a client will just pay nuisance value than litigate a case, even if the client has meritorious arguments. Indeed, I have been involved in matters with Biglaw shops over the years in which my adversaries flexed their muscles at the beginning of the litigation but then settled earlier on than I was used to. These Biglaw attorneys sometimes told me that their clients knew they would spend more money if they litigated a case than if they just settled, and this issue is exacerbated with higher-paid Biglaw firms. Clients can have more flexibility to keep litigating matters if they choose counsel that is less expensive.

The high rates charged by Biglaw firms can also impact the strategies employed in a case. Clients may be less willing to pay for certain strategies since it might cost tens of thousands of dollars for a Biglaw firm to prepare papers, and clients may not wish to spend the money if they are not assured of a favorable outcome. For instance, at the beginning of a lawsuit, parties are usually able to either answer the complaint or file a motion to dismiss. If a motion to dismiss is denied, clients then need to answer the complaint anyways.

Clients who are worried about the high cost of a Biglaw firm may be less willing to pay for a motion to dismiss, thinking that this will just waste time, and they will need to answer the complaint at some point anyways. However, sometimes clients have at least some chance of getting some or all causes of action dismissed, and they should file a motion to dismiss to at least try to dismiss counts against them. Nevertheless, clients can sometimes be hamstrung by Biglaw shops that can indirectly limit the options they have at their disposal during litigation.

Moreover, the way that Biglaw shops delegate work may be a liability to clients. At Biglaw shops, partners usually interact with clients and delegate work to associates. This allows the partners to work on business and client development, which can help the firm maximize billing. Sometimes, partners need to assign projects to associates. Associates are billed out at a lower rate, and partners know that they can get more work done on a budget if associates work on tasks. This is very different from other firms in which attorneys are more likely to handle all aspects of a case, including client interaction and all of the other tasks that are involved with working on a matter.

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Some bigger clients may not mind not interacting with the people that are actually doing the work. However, some clients appreciate talking directly with all of the attorneys performing work on a file. In addition, this helps ensure that attorneys who are performing the legal work have all of the information needed for a representation without going through a partner, who can distort the details. How Biglaw firms are structured can lead to communication issues and problems in workflow that are not present at other firms.

In the end, Biglaw firms can be a great resource, but they should not be used on all types of work. Sometimes, Biglaw firms can be a liability to clients since they can limit the options available to clients and create barriers between clients and the ones who perform their legal work.


Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothmanlawyer.com.

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