Why It Matters That Solos Aren’t the Main Event

Bruce Macewen’s blog Adam Smith, Esq. is to big law practice what this blog, on its best days, aspires to be for solos and small firms.  Always substantive, always skeptical (one of a minority of credible law practice management types who didn’t unquestioningly embrace Richard Susskind) and always spot-on (read his series on business models or non-equity partners to see what I mean), when Bruce MacEwen blogs, I along with 375,000 monthly page viewers listen.

Likewise, when Bruce MacEwen rejects the “ich bin ein solo” hype that has so many other big law boosters rushing to embrace solos and instead, wonders whether big-firms-turned-solo will ever be the “main event,” I worry. On the issue of whether small firms will ever replace biglaw, Bruce writes:

What we’re witnessing now, I believe, accelerated but not caused by the Great Reset, is people sorting themselves out into the firms they belong to be in.   BigLaw is not for everyone. But its global reach, its wide and deep expertise across practices, its ability to handle the Big Deal at the drop of a hat, all serve clients’ needs in ways for which there is no substitute.  Boutiques, likewise, will always be with us:  From Cartier to Ferrari to single malt scotches, every industry worth its salt welcomes, and is improved by the competition from, boutiques.  But query whether they will ever be the main event….

In other words, don’t read Chaffetz Lindsey as a precursor of the demise of Clifford Chance.  No more than you should read the success of Boies Schiller as implying fissures at Cravath (David Boies’ alma mater).

Why worry?  Well, despite the build-up I gave to Bruce at the outset of this post, I know that most of my readers simply don’t care whether solo practice is, or ever will be “the main event.” Most solos, after all, are an independent lot who march to their own drummer and embrace the road less traveled. Some find safety in numbers, pointing out that majority rules, while others are so grateful to stumble upon any event, be it solo practice or contract lawyering or part-time practice, that lets them salvage a career in the law.

I too share all of these sentiments about solo and small firm practice.  At the same time, as someone who reveres and respects solo and small firm lawyers for what they do and as someone who has been tracking the institution of solo practice for nearly eight years, I urge you to hear me out about why it’s more important than ever that we solos and small firms demand that the “powers that be” (in this case, the state bars, the ABA, the mainstream legal media and law schools) start regarding us as the main event.

Much as we solos like to view ourselves as entrepreneurs – and indeed, we are – we operate not in a free market, but in a regulated industry subject to bar rules rather than the laws of economics. Though adverse bar rules certainly don’t preordain that we solos will flounder ( far from it), at the same time, they stymie our ability to innovate and limit the long term potential for solo and small firm lawyers as an institution to thrive.

How so? Consider these examples. For years, large law firms have offered clients access to documents via extra-nets, while in-house counsel have outsourced document review to India over cloud based portals with nary a peep from the bar. Yet now, as solos and small firms seek to use the cloud, there are ethics opinions aplenty, often with no thought to the need for uniformity or the potential for encroachment on lawyers’ traditional discretion to judge the security of their own practice management systems. Cloud systems give solos the ability to collaborate with others across state lines and combine as a force to be reckoned with.  Consequently, a crazy quilt of conflicting regulations can shut down this potential innovation or inflict a sufficient chilling effect to deter solos from jumping in, leaving opportunities for larger firms who have their own in-house counsel to guide their participation and don’t need to wait for an OK from the bar.

Or what about another recent trend, trashing the billable hour and adopting fixed fees and value pricing? As more lawyers jump on board either for their own convenience, or in response to client demands for fixed fees, the bars are making it more difficult for lawyers to adopt flat fees. In my jurisdiction, Washington D.C., a 2009 Court of Appeals decision in In Re Mance held that flat fees paid to lawyers must be deposited into their trust account and held until the fee is earned. To access the fee, a lawyer must specify in the retainer agreement at what point a fee is deemed earned (e.g., “50% earned after preliminary hearing, remainder after trial) and must notify the client when those events occur to withdraw the fee. The court’s decision thus neutralizes many of the benefits of the fixed fee, including administrative ease and shared risk (presumably, if one of the trigger events for withdrawal of the fee does not occur, the lawyer must refund the fee, which is not the case with a standard flat fee arrangement).  True, lawyers can avoid this problem by taking the fee up front and waiting until the case is finished to withdraw the money, but for many small firms, the waiting period could create cash flow problems (it’s not as much of a problem for better capitalized large firms).

In addition, most court rules continue to favor the billable hour and standard fee arrangements for tracking time.  For solos who often recover fees through statutes like Equal Access to Justice Act, lack of time sheet will effectively disqualify them from recovering fees.   Again, this is not as much of an issue for larger firms, who (with the exception of bankruptcy cases where the estate pays, so no one cares about flat fees) tend to represent clients who pay attorneys fees to other parties, rather than recover fees themselves.  So few care whether this practice changes.

Moreover, there are other non-law specific, political issues that affect us solos. Remember the Health Care Reform legislation? As discussed in the MyShingle-sponsored White Paper, the legislation impacts solos in so many ways, yet I’m not aware of any groups that intervened in the debate on solos’ behalf. Tax Girl and small firm lawyer herself, Kelly Phillips Erb mentions another issue bound to impact solo and small firm lawyers who rely heavily on outsourced help: new requirements for 1099 reporting. Kelly writes that the IRS is expected to issue further clarifying rules, with opportunity for comment – but I’m not holding my breath that any of my bar associations will weigh in on this one.

My point here is that if solos were the main event, we could drive decisions that favored our interests. We could advocate for interpretations of our obligation to charge reasonable fees that favor fixed fees, or for rules on cloud computing that are consistent nationwide and allow us discretion to select those systems that in our professional view protect our clients’ security.  We could mobilize and file comments on the IRS’ rule instead of waiting to see if just maybe the bar will weigh in.  Because we’re not the main event, our interests are not on the bar’s radar.

Well, what about the ABA? After all, didn’t it just open its arms to solos? Well, yes…and no. Yes, the ABA added a nice looking, fairly useful solo portal and yes, the ABA Journal is featuring solos as Legal Rebels. But when it comes to pushing an agenda that matters for solos, the ABA Brass (as distinguished from the members and staff) haven’t changed a bit. ABA President Zack moved with all deliberate speed to denounce the European Union’s decision in Azko Chemicals which refused to extend the attorney-client privilege to communications between in-house counsel and the corporate client, finding that “an in-house lawyer does not enjoy a level of professional independence comparable to that of an external lawyer.”  No wonder – because the Azko decision is fatal to large corporate ABA members.

By contrast, where is the ABA’s uproar over the Florida Bar’s overly restrictive advertising rules that violate the First Amendment? Though a few large firms have taken up the challenge, ultimately, it is largely solo and small law firms who are dependent upon online advertising that will suffer most from the added costs and restrictions inflicted by the new rules. Likewise, it was small firms that were left on their own to challenge unconstitutional restrictions in Louisiana and New York .

Of course, solo and small firms don’t always have the resources to carry the ball, and when that’s the case, we’re left with vendors and marketers to pick up the void. Take a look at the list of commenters weighing in on the ABA’s Commission on Ethics 2020 Initiative : it’s almost all vendors. Don’t get me wrong, I endorse many of the vendors who serve solo and small firm lawyers including those who support this site. Yet, I’m not comfortable with bar association priorities and decisions being driven by a “vendor-agender” simply because there’s no cohesive solo and small firm voice.

Which brings me to my last point. A cohesive solo and small firm voice is wanting for several reasons: partly because we’re a divisive, independent lot, partly because we’re so busy serving clients and running our firms that we have limited time and resources to devote to molding policy and moving bureaucracy.  But what’s lacking most of all is serious scholarship on the institution of solos and small firms of all types (not just general practitioners, but also big-law boutiques and niche practices).  In a thirty-second Internet search, I found four law schools — Harvard, Stanford, Georgetown and Indiana — that host “centers for the legal profession” that focus on biglaw and biglaw trends. Though a down economy and reduction in legal jobs would seemingly render law school academia useless, law schools are far from dead yet and they have both the resources and the influence to effect change in the profession.  An academic institution or think tank that focuses on the changing institution of solo and small firm practice in an educated and objective manner could help pave the way for the kind of real, institutional change needed for solo and small firms to thrive and more importantly, improve service to clients and expand access to law.

I know that most of my solo colleagues would prefer that law schools offer law practice management and skills training on opening a law firm.  While I don’t object to making these classes available, truth is, any real lawyer who’s gone through the rite of passage of starting a law firm can teach or mentor a colleague on how to do it. By contrast, there are few organized entities, other than the bars (assuming that they’d play nice and pool their resources) or law schools, with the resources and influence to actually focus on solo and small law firm practice the way that schools like Harvard or Indiana do, or even the way that someone like Bruce Macewen does for biglaw at Adam Smith, Esq.

My goal for the coming year is to explore ways that my blog can help make solos the main event.  In that spirit, I will be delivering this site’s first State of the Solo and Small Firm address via webcast, some time in mid November. If you are interested in participating in this free event, please register for MyShingle for additional information or follow me on Twitter, @carolynelefant.  And please send me your comments and thoughts about the issues that you believe ought to comprise part of the solo and small firm agenda.  We are the majority in numbers, now it’s time for us to make sure that our numbers count.