My Shingle

Tribute to Joe Flom: Skadden’s Solo Role Model

Carolyn Elefant — Thu, 24 Feb 2011 17:59:34 +0000

As solos, mega-firm Skadden is perhaps one of the last places we’d ever think to look for a role model. But being solo doesn’t just mean working for oneself. Solo is a state of mind; a combination of vision, hustle and sheer doggedness that together, convert adversity into a best friend.

That’s the story of Joe Flom, Skadden’s last living name partner who passed away yesterday at the age of 87. Back in the day, when mega-firm Skadden was nothing more than a trio of three fellows named John, Marshall and Les, they took a chance on a Harvard Law School graduate named Joe Flom who couldn’t find work anywhere else and liked him well enough to work odd jobs to afford his $3600 salary. Meanwhile Flom pitched in wherever he could: when the firm brought on litigation work, Flom litigated and when another partner brought in tax work, Flom became an expert in tax. But it wasn’t until 1955, seven years after he was first hired that Flom found his calling, mergers and acquisitions. M&A wasn’t much of a practice area at all back then – it was a rough-and-tumble brawl of a practice area that big firms wouldn’t touch — so Flom had the field all to himself. And the rest of course, is history.

As the obituaries bear out, Flom was many things: a big firm lawyer and innovator, a humanitarian and philanthropist (his firm funded 620 fully funded legal aid fellowships), a father, grandfather and husband. But make no mistake: he was also a solo.

DLAPiper’s $200k Cover Charge Part II: Ethics Issues

Carolyn Elefant — Tue, 08 Feb 2011 18:50:17 +0000

This morning, I posted about DLAPiper’s $200k minimum annual billing cover charge for clients. But after a couple of conversations, I’ve gotten to wondering how DLAPiper can enforce this minimum charge without running afoul of ethics requirements.

For example, what happens if DLAPiper estimates that defending Company X in a major lawsuit will cost $250,000, but the case gets dismissed after the client spends only $100,000. If Company X paid a $200,000 retainer fee up front, does DLAPiper have to return the remainder? And if the Company didn’t pre-pay, can DLAPiper go after it for the remaining $150,000. Is the $200,000 considered a non-refundable retainer? If that’s the case, what services are being secured for $200,000? Of course, if the amount is not refundable, does the mandatory minimum really have any teeth – since any client could promise to spend $200,000 and fall short. Or perhaps the firm will make up the difference from the generating partner’s paychecks- if a lawyer brings in a client who is supposed to generate $200,000k, the lawyer takes a pay cut for any amount collected less than that amount?

Does anyone have any thoughts on how mandatory minimums work in practice?

Solos Can Provide Cover to DLA Piper Clients Who Can’t Pay Its $200k Cover

Carolyn Elefant — Tue, 08 Feb 2011 15:17:47 +0000

So, last week’s big blogosphere news was that the DLAPiper, the world’s largest law firm has announced a mandatory minimum $200,000 annual cover charge for clients. New clients unwilling to commit to spending $200,000 annually on fees won’t be served, while existing clients who don’t meet the minimum billings requirement may be asked to leave. Ron Friedmann at Prism Legal believes that the minimum charge is legal. Ron writes that there are hidden costs when large firms handle lots of small matters, because of the inefficiencies that occur when lawyers switch from one project to another. In addition, Ron notes that DLAPiper’s minimum cover represents an intentional effort to position itself as a “bet the farm” kind of firm, rather than a law factory. On the other hand, John Wallbillich of Wired GC expresses some concern that a mandatory minimum will put a damper on associates’ client development efforts, since most of the matters they’re likely to bring in won’t make the $200,000 cut. Or, the policy may encourage associates to take their 3 small clients whose billings total $150,000 and leave DLAPiper to start a virtual firm, where they can keep most of what they earn.

What these commenters haven’t considered, however, is that for large clients, DLAPiper’s cover may actually represent a bargain. After all, we don’t know what clients will actually receive in exchange for the $200,000 minimum. It may be that DLAPiper will offer $300,000 worth of service to clients who are willing to lock in and pre-pay the $200,000 minimum. Between the cash-flow benefit of receiving $200,000 up front and use of offshoring or second-tier contract lawyers in house, DLAPiper could still earn a decent profit, even while providing a “volume” discount.

Meanwhile, DLAPiper’s minimum cover proves a boon for solos and small firms, who never had much of a shot at the $200k matters to begin with. After all, most solos and small firms can make a feast of DLAPiper’s $199,000 crumbs. So here’s my message to DLAPiper: if you want to evict those low-rent clients, we solos and small firms stand ready to take them in. Sure, they won’t have the luxury of a global brand or fancy office, but they’ll find high-quality, streamlined service and most importantly, lawyers who are grateful for their patronage.

How the Work-Life Balance Advocates Do A Disservice To Women Lawyers

Carolyn Elefant — Fri, 19 Nov 2010 06:28:33 +0000

[Updated as of 10 am]

For years, Deborah Epstein Henry, author of the just-released book, Law and Reorder , Cynthia Calvert of the Project for Attorney Retention and others have been pushing large law firms to offer part-time and other flexible employment arrangements to retain women. And if the results of the fifth annual report by National Association of Women Lawyers (NAWL) mean anything, it seems that the work life balance (WLB) advocates have succeeded, beyond their wildest expectations. According to the NAWL study, more law firms than ever offer part-time arrangements, and more women than ever are taking advantage of those programs. So much so that women disproportionately suffered the impact of the economic downturn, since part-timers (largely women) were the first group sent packing at two thirds of the law firms that made cuts. (NAWL at 17). That’s not particularly surprising; after all, less job security is one of the costs that part-timers pay for flexibility in any industry.

When I covered work-life balance issues in my gig at Legal Blogwatch, I don’t recall much discussion about the downside of part-timing at a law firm. Of course, back then (between 2006 and 2009), the legal world was different, and a hot economy made for a sellers’ market. Due to the demand for talent (or bodies, if you’re a cynic) in the boom years of the mid-2000s, women lawyers could demand scheduling accommodations. But even as women lawyers won flexible schedules, there were also clear signs that the part-time path was taking a toll on women’s opportunities for advancement. Most significantly, a part-time schedule interfered with women’s ability to build a book of business at a time when their male counterparts were starting to do so.

Generally, associates start to focus seriously on client development and marketing during their third or fourth year at a firm, after they’ve mastered the substantive practice of law and can start handling cases independently. Unfortunately, that’s also right around the time that many women associates embark on starting a family, and cut back on their hours. The reduced schedules barely leave women associates enough time to meet their substantive work obligations, let alone develop business. So it’s no wonder that women lawyers stand at a disadvantage to their male counterparts ten years down the line, since the men have had a substantial lead on business generation. [As an aside, work-life balance isn't just a woman's issue. There are plenty of men who likewise seek saner hours when their children are born. The difference is that most men on the partnership-track are married to wives who stay home or have flexible jobs that enable them to take care of the kids so dad can continue working 80 hour weeks, guilt-free. Truth be told, the same marriage-model applies to women. The three women I know who are partners at AmLaw 200 firms not only have great nannies, they also have husbands in academia or low-key 9-5 jobs who pick up the childcare slack, showing up at school events and shuttling the kids to after-school lessons and sports events].

But whereas most men seem to understand the realities of a part-time schedule, for one reason or another, women have differing expectations. By downplaying the need for women lawyers to make rain and minimizing the difficulty of doing so on a part-time schedule, WLB advocates did a disservice to women. Moreover, now that studies like the NAWL Report make clear that women’s lack of rainmaking is holding them back from leadership roles, WLB advocates are compounding the situation by failing to offer new ideas for improvement beyond continuing to insist that law firms to change their culture (as if!). Meanwhile, there’s little mention of what women can do to empower themselves, including taking advantage of one of the most effective marketing tools that’s come along in while: social media.

Within the past five years, we’ve seen the emergence of social media, a powerful tool that can compensate for the “marketing gap.” Among other things, social media activities such as writing blogs or engaging on Twitter – makes it easier for women lawyers to stay abreast of new trends, establish a reputation and build relationships without spending long hours at networking functions or on the road at conferences. Yet it seems that most WLB programs are oblivious to the value of social media. The Project for Attorney Retention blog discusses topics like the importance of keeping in touch with the office during maternity leave or which large firms offer the best environment for women lawyers, but never suggests that a women consider starting an authoritative blog to demonstrate their expertise and build a following on those days when they’re home with the kids. The gap is even worse for lawyers who seek re-entry: this re-entry program focuses on writing cover letters and resumes – as if LinkedIn or other online directories had never been invented.

Despite the fact that everyone is suffering from a bit of social-media fatigue these days, there is virtually no information about the benefits that social media can provide to women lawyers, and its potential to compensate for the marketing opportunities that women otherwise lose when they go part time. My co-author of
Social Media for Women Lawyers,Nicole Black and I detailed the benefits that social media can provide to women lawyers in this article, and we’re offering a webinar on December 2, 2010 at 3pm EST on Social Media for Women Lawyers . Even if the contacts that women generate through social media aren’t enough to enable them to advance at large firms, social media can help lay the foundation for other opportunities.

In addition to failing to educate women lawyers about the tools they need (like social media) to overcome the disadvantages of part-time work, my other beef with the part-time advocates is that they view partnership at a large law firm as the only meaningful barometer for equality in the profession, ignoring the hundreds of women lawyers who run their own practices. This myopic view of biglaw as the brass ring partly explains In Search of Perfect Client Service blogger Patrick Lamb’s puzzlement as to why women lawyers continue futilely and insanely to “fight the man” at big law instead of finding places where they can truly thrive.

Unfortunately, by continuing to pine for biglaw like a desperate woman clinging to a jerk of a guy who has no interest in her (and overlooking the nerd who adores her), women lawyers aren’t just dooming themselves to unhappiness; they’re missing out on enormous opportunities. More than ever, big firm lawyers are jumping ship to start their own law firms and provide value to clients, free from biglaw’s suffocating overhead, bureaucracy and bloated rate structure. Yet, strikingly, not a single one of the biglaw refugees profiled last month at Above the Law’s piece on the exodus from biglaw to solo was a woman.

Ultimately, biglaw is driven (or more accurately, pushed along) by market forces and client demand. The economic downturn lead to the jettisoning of the billable hours in favor of flat fees and increased outsourcing and reliance on contract lawyers to save costs. Likewise, if there’s a sound economic case for part-time practice as the WLB advocates suggest, biglaw will be receptive to part-time programs, just as it has been receptive to alternative billing and reduced associate leverage. But if that doesn’t happen, then perhaps women lawyers ought to start focusing on a Plan B.

By the way, if you’re ready to start looking for a Plan B for the coming year, consider our upcoming webinar, Social Media for Women Lawyers, December 2, 2010 at 3 pm EST. Visit here for more details.

Biglaw to Yourlaw: A Trend, But Nothing New

Carolyn Elefant — Wed, 25 Aug 2010 01:10:08 +0000

Earlier this month, both Slate and Crains New York carried articles describing the recent trend of biglaw attorneys starting their own practices. Summarizing these articles, an Above the Law post called the biglaw to yourlaw move a “new trend.”

Not. Well, not if you’re a regular reader of this blog, anyway. I’ve been documenting the biglaw to yourlaw trend for half a decade. Here’s a round-up of posts on the subject, as well as my ebook (free with registration), From Biglaw to Yourlaw.

Biglaw to Yourlaw: A Recipe for Success

Leaving the Land of the Loss Leader

Biglaw practice on a budget

Biglaw to Yourlaw: Pros and Cons

Round-up of posts (2005-2008) on biglaw to solo practice .

To access the ebook below (you don’t need to register but please consider doing so):

Biglaw to Yourlaw

Why Biglaw Billing Is Like Brown M&M’s

Carolyn Elefant — Thu, 01 Jul 2010 04:37:05 +0000

In the context of $201 million in legal fees, a superfluous $1600 charge — for a fancy dinner and reading a newspaper article — is chump change, something that wouldn’t have registered a blip on the client’s radar screen but for this New York Post article. Yet while the monetary value of the $1600 charge may not be great, the symbolic value is enormous because it stands for everything that’s wrong with the way that biglaw bills clients.

First, a bit of background. A few days ago, the New York Post ran a story on the “legal billing blitz” stemming from Ground Zero worker lawsuits. According to the report, firms like McDermott, Will and Emery and others hired to represent the City owned WTC Captive Insurance Company, ran up a “blizzard of charges” totaling $201 million, including items like:

$409: Call to Captive CEO and “read article in New York Post.”

$1,252: Dinner for eight at Giovanni Ristorante in Midtown after court hearing.

Frankly, if this firm represented me, I’d fire them. Why? First, because a lawyer who isn’t reading several dozen newspapers and blogs daily through a newsfeeder – and instead, reads these materials only when they’re billable – lacks curiosity and initiative — two traits I value in a lawyer. And a law firm that would make clients pay for a lavish meal that the lawyers themselves could have readily afforded themselves has such a sense of entitlement that it’s willing to put its own interests before those of its clients.

Small actions often have big meaning. Perhaps the best example of this is the popular (and true) story about the rock band Van Halen and its “no brown M&Ms” standard contract clause. Under the terms of Van Halen’s contracts, venues hosting the band’s concerts were required to provide a bowl of M&Ms backstage, with all of the brown M&Ms removed. The “no brown M&M” clause was typically buried in a huge contract that contained pages and pages of other technical requirements that the band needed in place for its performance to run smoothly.

The ban on brown M&Ms wasn’t about the band members acting like divas, but rather, as explained by David Lee Roth, served an important function:

So when I walk backstage if I saw a brown M&M in that bowl…well, line check the entire production Guarnateed you’re going to arrive at a technical error. They didn’t read the K guaranteed you’d run into a problem. Sometimes it would threatened to just destroy the whole show. Something like, literally, life-threatening.

A few brown M&Ms isn’t much in the greater scheme of things – but for Van Halen, they served as proof that show organizers couldn’t be trusted to follow directions. Likewise, $1600 hardly amounts to anything when it’s buried in $201 million worth of law firm bills. But it speaks volumes for the way that biglaw treats its clients. Just like it took a single straw to break the camel’s back, or a single brown M&M to throw David Lee Roth of Van Halen into a rage, perhaps this $1600 charge will make big firm clients wake up and realize that large firms are so myopically focused on billing that they can’t even think for a non-billable second what those bills say about the firm, its values and its treatment of clients.

Can Outsourcing Innovation Make Biglaw Firms Heros?

Carolyn Elefant — Wed, 12 May 2010 17:32:09 +0000

I’ve been enthralled by the concept of large firms outsourcing innovation to small fry ever since I first posted about the topic in 2008. As I describe (very rapidly!) in myIgniteLaw presentation, outsourcing innovation is a win-win for both sides of the bar: the big firm gets the benefit of a new practice area at a low cost while the solos can attract a steady stream of revenue that enables them to get their practice off the ground. Outsourcing innovation can take lots of forms; in some ways it resembles the franchise legal services business model that Professor Larry Ribstein described in his presentation at Georgetown Law School’s Symposium on law firm evolution.

But in addition to the obvious profit motive for oursourcing innovation, turns out there may be a benevolent reason as well. This week’s Business Week summarizes a talk by Harvard Business School competitiveness guru Michael Porter, who argues that corporate investment in small business in inner cities can “give purpose to capitalism and represent our best chance to legitimize business again.”

Just as the public image of corporate America has taken a beating in the recession, big law too has lost its shine. Yet big firms are comprised of smart lawyers who like corporate leaders have much to offer. By outsourcing innovation to small firms and solos – for example, funding solos to devise innovative and profitable ways to deliver affordable legal services to the poor and middle class (instead of just paying unemployed lawyers to volunteer for legal aid), large firms could reap the benefits of new business models and help a new generation of lawyers in the process. What do you think?

Newbie Lawyers Sidelined in NALP-Biglaw Smackdown

Carolyn Elefant — Thu, 18 Feb 2010 00:03:10 +0000

I’ve never been a fan of NALP, the National Association of Legal Professionals. So far as I’ve been able to tell, the organization focuses almost exclusively on supporting law school career offices in helping students get jobs at biglaw and promoting diversity within biglaw’s ranks. Even NALP’s public interest initiatives are aimed not at helping law students find public interest positions, but rather — you guessed it — helping biglaw firms identify public interest programs where they can place downsized associates.

Even though NALP never helped the majority of students find jobs, it’s never received much criticism. Until now. NALP’s policies on law school recruitment are coming under fire, not because they’re useless or even detrimental to many students, but rather, because they threaten biglaw’s hiring practices.

NALP wants large firm employers to put off hiring decisions until January and then, give students 14 days to make a decision. The NALP proposal represents a change from the current practice, whereby firms interview students before the start of second year of law school and allow 45 days for students to make decisions. In a recent opinion piece in the National Law Journal, Peter Kalis of K&L Gates criticizes both of NALP’s recommended practices, arguing that they unreasonably constrain biglaw’s flexibility over hiring decisions. As such, Kalis issues the battle cry to Abolish NALP Now, a charge that Bruce Macewen echoes with a lengthy post at Adam Smith.

As I said at the outset, I’m no fan of NALP. Because it serves only a small segment of the population, it fails to provide law school career offices with resources that would enable them to make other options – like government or public interest jobs or solo practice accessible to law students and alumni. So NALP has always been a huge waste of time and further, has done little to serve student interests. But naturally, no one ever thought to eliminate or criticize NALP until its actions started hurting biglaw.

Moreover, does biglaw really need protection from NALP? What about the law students who are issued offers, which are then deferred which are then revoked when they show up for work? Or law students holding their biglaw careers in abeyance while marching off to work at public interest jobs while waiting for the firm to bring them on board? Let’s face it. The present NALP system doesn’t do much to help students. It puts students in a situation where they’re forced to make job decisions months in advance of starting which is risky business in a volatile job market. And rather than help students identify biglaw alternatives when those jobs fall through, NALP encourages them to sit around a dead-end public interest job while waiting for a call to start work that might never come.

In looking at whether to eliminate NALP, we should be talking about students and young lawyers, not biglaw. Biglaw’s already hung young associates out to dry once, with mass layoffs that probably could have been avoided with firm-wide salary caps, termination of unproductive partners and of course, basic planning (did firms REALLY think they could keep charging $950/hr in a recession?) Now biglaw wants the freedom to issue and rescind offers at will without any repercussion.

Ultimately, in the smack down between NALP and biglaw, it’s law students and young lawyers who wind up on the sidelines. They say you don’t learn anything in law school, but this recent incident teaches one important lesson: if law students and young lawyers don’t look out for their own best interests, no one else will.

Boutique Practice: Leaving the Land of Loss Leaders

Carolyn Elefant — Thu, 04 Feb 2010 09:22:55 +0000

The twenty-first century version of loss leaders, big-law style, is nothing more than old fashioned price cutting wars, observes Toby Brown at Three Geeks and a Law Blog. A loss leader refers to a pricing strategy whereby a product is advertised below cost to lure customers in the hopes of selling them more profitable, big ticket items. As Brown points out, biglaw’s so called loss leaders – deeply discounted M&A deals and large dollar, complex litigation cases — are in fact, nothing more than big-ticket items being passed off at bargain basement prices. Rather than stimulate clients to spend more money as is the case with a true loss leader, discounting big ticket items only gives client a continued expectation of lower prices. As Brown puts it:

This is akin to the car dealer selling Escalades at a loss, hoping you’ll buy … maybe some nicer wheels? Law firms using this technique are expecting the customer to be so happy they come back next year and buy another Escalade – at full price. The likelihood of this: Zero.

Of course, some big firm lawyers are abandoning the loss leader. How so? By leaving the land of the loss leader entirely and starting their own boutique practices, as described at Law.com’s Small Firm Business. Many of these lawyers want to provide better value to clients – not just in the form of superior service, but also at lower, more flexible rates. And they aren’t able to do so in the confines of biglaw. From the article:

If the lawyers who started their own firms had different personal reasons for leaving their old firms, their business rationales are nearly identical: It’s all about value. The recession has increased clients’ price sensitivity, creating an opening for smaller firms with lower, more flexible costs. Boutiques cater to cost-conscious clients by lowering overhead expenses, slashing rates and offering alternative fee arrangements, while providing the same legal services that their founders offered at their old firms.

Once free of biglaw’s overhead, bureaucracy and love affair with the billable hour, these lawyers are free to come up with pricing mechanisms that are at once more creative and lucrative than the loss leader. In fact, matters like litigation, which many lawyers believe are toughest to “flat fee” - are actually the easiest to price, according to former Shearman partner, Steven Molo, now principal at Molo Lamken had this to say:

“Trials are the easiest things to budget for,” Molo says. “If it’s an eight-week trial, you can charge a client a flat fee per week.” Clients then make bonus payments depending on the trial result or the amount of settlement. “From the client’s perspective, it makes all the sense in the world, because they know going into something what it’s going to cost,” says Molo. He used alternative fee arrangements occasionally at his former firms, Molo says, although it was more difficult because the larger firms were more dependent upon the billable hour.

Not all boutique lawyers save costs through flat fees. Some of the lawyers mentioned in the article have cut their billable rates by as much as 40 percent, moved to cheaper office space in the suburbs and rely on contract lawyers instead of full time, high cost associates. Other lawyers have changed the way they practice; for example, culling arguments to streamline litigation instead of adopting a scorched earth, no holds bar approach for every matter.

As these new boutiques thrive, many other large firm lawyers may decide to take the same approach. After all, why work for a loss at someone else’s firm, when you can win big on your own?

One cautionary note: biglaw attorneys considering this approach may want to act sooner rather than later. After all, you never know when the bar might change the rules of the game.

Biglaw to Yourlaw: A Recipe for Success

Carolyn Elefant — Mon, 04 Jan 2010 22:38:05 +0000

Peter Chaffetz and David Lindsey, founders and partners at newly formed boutique Chaffetz Lindsey could have simply hopped into another big firm life boat after their former firm, Clifford Chance hit stormy weather last year. Instead, they took another course: they launched a boutique that is thriving even as the economy struggles to recover. This article in the New York Law Journal reports on the firm’s beginnings and subsequent growth.

The New York Law Journal article offers a good description of sources of work that are typical for big firm lawyers turned solo. These include:

1. Conflicts work. Chaffetz and Lindsey explain that most of their cases arrive through referrals generated by conflicts. These days, other large firms that the pair viewed as competitors while at biglaw are now regarded as rich referral sources.

2. Lower billing rates. No matter how much the experts try to tell you that price doesn’t matter, a smaller firm’s ability to charge less than biglaw is an enormous selling point. As one Chaffetz Lindsey client told the New York Law Journal: “Given that I was getting the same lawyer [from the large firm] for a lower billing rate, it was attractive to me.” In fact, many biglaw turned solos find that clients accustomed to their biglaw billing rates generally send more work to them as solos because it simply doesn’t cost as much.

3. Lower labor costs and no leverage. In this market, Chaffetz and Lindsey are able to pay their three associates less than the prevailing starting strategies. For larger matters, rather than gear up with new hires, the firm has made arrangements for added support from a Buffalo, New York based firm, where rates are lower.

4. Less overhead. Chaffetz & Lindsey aren’t a virtual practice. Still, they’ve managed to locate below market rents because of the glut of office space.

Recipe for Success: Perhaps, Chaffetz & Lindsey are experiencing uncommonly positive growth because of longstanding industry connections. But their recipe for success is common: low labor costs, reduced overhead, mining conflicts and lower billing rates. Biglaw lawyers considering going solo would do well to take a page out of Chaffetz & Lindsey’s cook book.

Bonus: More resources on biglaw to solo.