My Shingle

Solos, Are You Afraid of Big, Bad Axiom Legal?

by Carolyn Elefant on October 20, 2011 · 12 comments

in Solo Practice Trends

Print Friendly

Like most solos who compete with big firms, my sweet spot is my ability to offer potential clients exceptional value — high quality work, longstanding experience and industry contacts, a seamless experience through use of technology and an assurance that clients will always deal directly with me and not a low level flunky. Of course, that’s just my official pitch.  I know that in most cases, what brings clients to my door to begin with is that I’m an affordable alternative to biglaw.  Though I generally bill flat fees, I have an official hourly rate that is roughly 40 percent lower than a lawyer of comparable ability at a large firm.

Even though I can undercut big firms on price and value, that’s not to say that I discount competition from them.  When it comes to attracting clients, large firms can out-resource and out-market me any day. For every e-book that I painstakingly produce, they can churn out an entire library; for every blog that I struggle to find time to update, they publish post after post without skipping a beat, for every $1000 industry conference that I save my pennies to attend, they can pay to sponsor a $10,000 cocktail party at the event.  Yes, blogs and social media and the web level the playing field for solo and small firms, particularly early adopters – but large firms that recognize the power of these tools can still bulldoze the playing field right back to ground zero.

Even so, my own secret weapon against biglaw is that I’m nimble and engaged and still not too proud to hustle, or too egotistical to think that I don’t have to. If a given practice area is saturated, well so what? I’ll just create a new one. I’ve done it before with ocean energy, with representation of landowners in federal court in eminent domain proceedings brought by pipelines and most recently, with social media, utilities and privacy and smart grid. And if I have to, I’ll do it again until the end of time or at least until I move on to another career.

Ultimately, what scares me more than competition from traditional big firms is competition from Axiom Legal. Earlier innovations such like virtual law firms – think  Virtual Law Partners or FSBLegal- those never bothered me as much because in many ways, my practice mirrors those slimmed down, efficient models of big firm practice.   But Axiom is different.

Billed as a “new interpretation” of a law firm,  Axiom is best described as a type of high-end placement agency.  Axiom hires experienced lawyers with ten years of work experience and often more and dispatches them in-house on temporary assignment where they handle fairly routine, but complex legal matters for corporate clients – compliance, litigation, and transactional.  At rates like $130/hour for regulatory compliance matters or $150 an hour for litigation, there’s simply no way that I – or any solos I know for that matter – can compete. Maybe Axiom doesn’t have the ability to identify new practice areas, but once I’ve developed them, Axiom can swoop in and take over the work for less than I could.

Even if Axiom can’t make a play for my existing and target clients who may be too small for its clutches, Axiom impedes my ability to expand. Used to be common in the energy industry, and I suspect many other regulated industries, for large corporations to retain one or two solo lawyers in DC or other hubs for routine matters.  In turn, those routine matters would create a steady stream of revenue that might occupy the one or two lawyers or perhaps a paralegal or associate nearly full time.  That kind of steady, baseload work  neutralizes the short-term cash flow issues that solo and small firm lawyers experience, thus allowing them to outsource more work and occasionally take on the kinds of high risk cases that can produce larger returns.  During the boom days of the mid-1990s, much of this routine regulatory compliance and filing work was gobbled up by rapidly expanding and increasingly aggressive large firms; in down times, much of it has gone in house.  Now, companies like Axiom offer an alternative.

Why can Axiom vie for corporate business when solos and small firms can’t?  Several reasons.  For starters, many large companies are justifiably concerned about a solo or small firm’s reliability.  What happens if you get overloaded? What if you take a vacation…or die? These are commonly asked, real-world questions.  Even with my ability to put together a “team” line up comprised of other well qualified lawyers and lobbyists, the team approach doesn’t always give large clients the same comfort as well a large, multi-leveled company with several layers of back-up takes over.  In addition, because Axiom has enormous resources (and presumably, as a non-law firm, can also accept outside investment), it can afford high end technology, legal research tools and other resources, not to mention benefit from economies of scale.

Axiom also has advantages on the marketing side of the equation.  With former biglaw and corporate partners on their staff, Axiom can get through doors to decision makers both in the US and globally who won’t even return my phone calls.  And with more than $100 million in revenues last year, that I can’t afford.

Axiom isn’t the only model of its ilk. As I said, while I don’t put virtual law firms like VLP in the same category there’s also Clearspire, a shop that opened here in Washington D.C. last year and is described in more detail here.

So here are some questions I throw out to all of the thought leaders and futurists who laud these new developments without offering any real analysis of what it all means for solos and small firms (the writing is pretty clearly on the wall for the impact to biglaw). Specifically, can big-law oriented solo and small firm lawyers compete with the Axioms and Clearspires for corporate work – and will these entities begin to encroach and offer services to smaller companies that solo and small firm lawyers typically handle? Are my concerns simply a product of paranoia, or is a bonafide competitor chasing me and my solo and small firm colleagues? I’d love to see some discussion of this question somewhere.

  • http://www.whichdraft.com Jason Mark Anderman

    I think solos should not be particularly afraid of Axiom. Clients that are open to solos and small firms will find Axiom to not be a great fit, because a solo, especially one operating a low overhead virtual firm, can still greatly undercut Axiom. This is because Axiom still is pretty aggressive in its fees (while cheaper than a major law firm it charges more than many solos), requires a significant time commitment on fees from the client up front, and Axiom is unable to cover all needs and experience levels. 

    However, your point on marketing is well taken. Axiom does an outstanding job of branding, and many lawyers could learn from their efforts in this area.

  • J kowalski

    Nice piece.  But I think the guys you should be more
    concerned with are Internet based providers of legal services.   (http://kowalskiandassociatesblog.com/2011/08/11/are-law-firms-going-to-be-replaced-by-internet-based-providers-of-legal-services/
    )

  • Guest

    Why would a good lawyer work for Axiom?  Clients must understand that they’re getting junk for $150 per hour.

    Lawyers should compete on quality and not price.  

  • Susan Cartier Liebel

    Jason, I agree with you.  A friend of mine is being ‘onboarded’ by Axiom.  I know what her requirements are and what Axiom is offering including benefits, vacation, etc. and there is no way the two can ‘come to terms’ if Axiom is not requiring a guaranteed upfront and ongoing financial commitment from those she will be providing legal services for and for a contracted period of time.  Therefore, between being highly specialized and providing a huge ongoing financial commitment, I don’t see this as a threat to solos.  That being said, if a solo is highly specialized already and his/her clients are in Axiom’s sweet spot then they could be vulnerable if they operate in the same manner – requiring an ongoing financial commitment.  I also noted on Axiom’s site they put together teams to service clients in many cases.  Then you are talking about multiplying that $150 per hour by number of team members.  Carolyn has noted many times that putting together teams is a very attractive way to retain big clients so you can compete.  In conclusion, if Axiom is a threat it is to a very small group of specialized solos.

  • Carolyn Elefant

    @susan, @3c3dedbc5f6cf5f2dd5b9131b8f6da64:disqus- These are good points.  I am always a little concerned though when I see the analysts raving about new “alternative business structures” that the pros- and cons – to solos are rarely discussed. It is the same with Legal Zoom now offering lawyers’ services bundled with its products – yes, it expands access to law but what is the impact for solos?
    For the record, I do not oppose putting these companies out of business – though I am on the fence about my position about expanding alternative legal business structures in the US.  However, I do think it is important for solo and small firms to follow these trends, not to fight them but to figure out better ways to compete with them.  At least we will not all get complacent.

  • Carolyn Elefant

    I’m not so sure they are getting junk.  I mean, the lawyers have large firm and in house GC experience – but my impression is that they are not rainmakers and prefer the certainty of ongoing work and steady pay to a higher rate.

  • http://www.whichdraft.com Jason Mark Anderman

    Carolyn, what fascinates me about Axiom is that I’m not sure it actually is an alternative business structure. I know that’s how they view themselves, and that’s also the centerpiece of their marketing. But, essentially, their business boils down to serving clients by charging a fixed, weekly/monthly fee (or other periodic fee, as Susan adroitly notes above) to provide legal services, then engaging lawyers as independent contractors to fulfill those services for less than the client fee. In sum, I’m hard pressed not to view Axiom as a temporary staffing firm. Axiom itself would consider this description insulting, but other than having superior branding, and relationships with lawyers who have strong pedigrees, I’d love to know the difference. 

    Also, as a result of their use of independent contractor lawyers, Axiom can only ethically do work for companies who employ in-house counsel to ostensibly oversee the work. That leaves the huge number of smaller, middle market businesses that don’t have in-house counsel for solos.

  • thesolopeanut

    “Ethically do work for companies….”  My view, simple as it may be, is that Axiom is a very large business providing legal services to clients.  As a “non-law firm”, it must draw some fine lines between its business practices and those subject to a Code of Professional Responsibility.  Sharing fees with non-lawyers?  Advertising?  What happens with one of those routine, but complex, matters that goes boom in the night?  Say, because one of these attorneys, no, I meant to say, independent contractors, misses a statute of limitations?  Is there no concept of conflicts here?  They can place independent contractors at competing businesses?  To work on opposite sides of the same transaction? More interestingly, one of their independent  contractor attorneys comes across one of those situations where withdrawal from the engagement and mumbs the word is required.  Does Axiom just place someone else there?   That’s probably handled contractually between Axiom and their client. Contractually.  They must just handle the ethical issues contractually.   They are described as just a big version of a placement agency, but it is suggested that they develop significant relationships with its clients.  Tell me again where the line is drawn between law firm and non-law firm?

    I don’t see how the economics work longterm.  Overhead?  Benefits? Salary, Profits and Equity to the non-lawyers? Compensation to the attorneys experienced in those complex matters?  Maybe law schools have just produced so many lawyers, who have, of late, swelled the soup lines, but who “need” the “large entity” to provide for them.  Tell me again where the line is drawn between law firm and non-law firm?  They must just draw the lines contractually.

  • J kowalski

    Solopeanut –

     

    The lines have completely
    disappeared. LPO’s are directly competing with law firms in providing legal
    services:  http://kowalskiandassociatesblog.com/2011/10/12/lpo%e2%80%99s-have-become-legal-project-outplacement-firms-they-are-outplacing-legal-work-from-traditional-law-firms/

  • Businessman

    $150 per HOUR? Why does that equal junk? That is $1200 per day, which is an extremely high income for most talented people.

  • Guest

    Axiom gets $150/ hr. The attorney gets a tiny fraction of that…and no attorney who could get a job in a real firm or legal department would settle for that. I have only had experience with one lawyer who works at Axiom. That person was fired from the legal department of a Fortune 100 (where I’m a senior counsel and then fired from a subsequent job as an in-house lawyer. Now, that person is being held out as a subject matter expert by Axiom. I don’t know if this person is representative of the attorneys at Axiom, but I’ll never risk the quality of legal work at my company to find out. My guess is that, based on the salaries Axiom pays, that attorney is not an exception to the rule.

  • Andrew

    I find this to be a really weak argument. $150 is a good salary. Even if the attorney is only pocketing $100 of that, it’s a good salary. That’s 200k salary per year at just 40hrs/week. I’m sorry, but law school just isn’t that hard. It’s asinine that a guy with a BA in history and a JD should be making that kind of money while a guy with a BS, MS, & PhD in engineering is making less. I know several IP attorney’s and they all thought engineering school was much harder than law school. It should say something that there’s an engineer shortage but an excess of lawyers.

    Attorney billing is highly inflated. It became inflated because of an elitist culture that developed as a result of lawyer shortages and an intentionally-convoluted legal system. Now the scales are tipping in a different direction. The legal system is still convoluted, but lawyers are a dime a dozen. And the truth is, graduating from Harvard doesn’t make one a better legal mind than someone who graduated from BYU. These days most attorney’s can’t find jobs, because the insanely-priced biglaw firms want the prestigious graduates or they are simply laying people off and hiring nobody to save the high-dollar billing for the old farts.

    Here’s a fun article.

    http://www.forbes.com/sites/quora/2012/03/06/why-are-lawyers-so-expensive-even-with-the-excess-supply-of-lawyers/

Previous post:

Next post: