Author’s Cut: Solo Practice – Looking Back, Looking Forward

When I sat down to write Solo by Choice, the context mattered most.  One of the my goals in starting MyShingle was to discuss solo pratice not so much as a category of law practice unto itself , but rather to view the role of, and opportunities for, solo and small firm practitioners in the broader legal profession.  The Epilogue to my book describes my view of this context, and how it’s changing but here is the much more extensive version.   I’d be interested in hearing your feedback:

When I started law school  back in 1985, most of my classmates were headed to  Biglaw, where they could look forward to a coveted partnership after seven years of hard labor.   But the Wall Street crash of 1987 changed all that. Summer associate programs were cancelled, and students who had lined up jobs suddenly found themselves out of work.   When the economy recovered, those same classmates did find positions at large firms. But by then, the seven-year partnership track had stretched to nine years … even 11. Soon after, the country suffered another economic blow … a recession … and some of the most talented or hardworking of my peers were unceremoniously downsized or informed they were “not fit” for the partnership track. Again, the economy rebounded, and again firms scrambled to hire attorneys, this time to handle a glut of IPO work, only to dump most of the new-hires in the dot.com bust of the early 2000’s. And, so it goes, as novelist Kurt Vonnegut used to say.

In less than 20 years, what had been a fairly smooth path to partnership had become rocky and uncertain. But it’s just one of the many factors responsible for the new and growing popularity of law firm start-ups. 

Biglaw Gets Bigger…But Not Necessarily Better

Another major factor driving the trend towards starting a law firm is the mega-growth of the nation’s biggest firms.  Back in 1987, when I was just a second-year law student, Baker McKenzie became the first international firm with 1,000 or more attorneys.  Today, BakerMcKenzie  has over 3500 attorneys, while nineteen other U.S. firms have surpassed the 1000 attorney mark.  [Source:  NLJ 250 (2006)].  While the “global law firm” has an advantage in its ability to offer one-stop shopping to corporate clients with diverse legal needs, that capability requires enormous overhead to sustain.

The cost-pressures to cover Biglaw’s insatiable overhead exact a tremendous toll at the highest levels.  Today, large firm partners often spend nights and weekends at the office, churning out billable hours just like everyone else. Collegiality and partnership stability have taken a hit. And, as seen in two high-profile cases (Sidley Austin and Mayer, Brown) partners are at risk of being “de-equitized” or demoted to “of counsel” status as they get close to their firm’s mandatory retirement age or no longer generate enough business to justify their draw.   As a result, at the end of long and distinguished careers, many biglaw partners aren’t treated much better than ordinary employees serving at the whim of their employer.

Drive to maximize profits impacts the collegiality that once infused large firm partnerships.  Today, partners no longer feel the same sense of loyalty to their firms and think nothing of jumping ship along with a lucrative practice group when a better offer becksons.  For example, when business slowed at the century old San Francisco firm of Brobeck, Phleger the firm’s former chairman and 16 other partners defected to a rival firm, which hastened the deminse of Brobeck    And there are other reasons large-firm practice has lost some of its luster:

–    Opportunities for associates to gain hands-on litigation experience have dried up as substantially more cost-conscious litigants (and their insurers) favor settlement rather than the expense and risk of trial. Moreover, because of the pressure for firms to generate revenue, it is no longer profitable for them to handle the types of small matters once tossed off to young attorneys to get their feet wet. Less trial work impacts young associates on a personal level. Now, they must endure more billable hours engaged in mind-numbing document review and memo writing, with little hope of ever first-chairing a jury trial for another decade.

–Moreover, even in times of economic growth, biglaw jobs are few and far between – available only to a narrow segment of graduates.  Though many associates are currently unhappy toiling at large firms, these jobs are not even available to many new graduates to begin with.

– The explosive growth of large law firms and the concomitant increase in fees is leading even large, institutional clients to think twice about retaining large firms. Mike Dillon, general counsel of Sun Microsystems, writes that the original function of law firms – as providers of one-stop shopping – has been rendered obsolete with technology. In a provocative blog post, The Way of the Mastodon, Dillon writes …

The structure of [a law firm as an aggregator of specialized legal expertise] previously made sense. If you were an individual or business with a legal program, it wasn’t efficient or effective to try to identify an individual attorney with the technical skills that you required. So, you would turn to a law firm and rely on them to direct you to the appropriate attorney within their firm to solve your issue. The problem is that this model relies on growth (the need to add additional attorneys) to maintain profitability rather than focusing on efficiency gains. The Internet is changing the business model; to find an attorney in a specialized area, I don’t need to turn to a large law firm.  Instead, I send out an email to my network of other in-house attorneys and get referrals.

According to Dillon, some corporate clients no longer derive value from Biglaw’s one-stop shopping model and are looking to solos to handle the work.

Law firm mergers also create new opportunities for solos. As firms join forces to create global power houses, smaller clients often find themselves dumped by their firms because of conflicts with larger, more lucrative clients. Many of these smaller clients generate enough revenue to produce a nice payday for a solo or small firm, which don’t carry the same overhead as their larger counterparts.

Diversity Demands

And diversity, too, is playing its own role in the new popularity of solo and small firms.  Though women and minorities comprise, respectively, 50 and 20 percent of law school graduating classes, they remain woefully under-represented in the upper ranks of Biglaw. Women account for only 17 percent of partnerships at large firms (Why Do So Few Women Reach the Top of Big Law Firms? New York Times (March, 2006)), while 5.01 percent of large firm partnerships are held by minorities (NALP Bulletin, February 2007). This under-representation comes at a time when large corporate clients are demanding diversity in law firms and, in some instances, even cutting firms from bidding for legal work for lack of diversity (Wall Street Journal, December 2006; see blogs.WSJ Law Blog). This inability to meet the diversity requirements of corporate clients creates new opportunities for women and minority owned firms to service corporate clients directly. Or, they can forge alliances with larger firms to help them satisfy corporate diversity needs, as did Gray Haile, a minority-owned corporate law boutique which established a strategic alliance with a large law firm (Day Pitney Forges Alliance With Minority Owned Firm Connecticut Law Tribune, May 2007).

Good news, bad news

The good news is that more new opportunities than ever exist for solo and small firm lawyers. The bad news is that even though attitudes toward solos are shifting … there’s still a long way to go.  In my opinion, the bias starts in law school, and remains uncorrected because many lawyers – particularly those from top schools or large firms or regulatory agencies – have few opportunities to learn about solo practice first-hand. Even most law professors have never encountered successful solos, since their own work experience is often limited to a prestigious federal court clerkship, and maybe a short stint at a large law firm. For many years, my only impression of a solo practitioner came from a law school training film featuring harried solo practitioners in cramped, messy offices, describing ethical infractions. Our professor calmly assured us that we would never meet this fate because the large firms where we would be practicing would have reliable support staff and oversight that the lowly solo lacked.

Institutionally, law schools make it more difficult for students to learn about solo practice, either in the classroom or through work experience. Even today, few law schools include classes on hanging a shingle in their curriculum. And while placement offices, particularly those at top-tier law schools, brim with brochures and marketing materials from the AmLaw Top 100, they rarely carry materials on how to start your own law firm, or even list contact information for alums who’ve gone solo who could serve as mentors.

Finally, law schools don’t offer students much if any incentive to sample solo practice even though there is support for other alternatives to large firm practice. For example, many law schools regularly provide grants or course credit to students who accept low-paying summer positions with a public interest group. Unfortunately, these same programs don’t extend to students who might want to intern with a solo, even one who represents essentially the same constituency, (e.g., clients who qualify for court-appointed counsel fees, or who fall just below the cutoff for legal aid services) as a public interest group. As for volunteering to work for a solo practitioner, it’s even less likely burdened as students are with staggering levels of tuition debt.

Unfortunately, most law students’ perception of, and lack of knowledge about, solo practice, does not shift even when they leave law school.   The legal profession has grown so stratified between large law firms and solos that most students who embark on careers at large firms or government regulatory agencies rarely encounter solo practitioners. The segregation isn’t necessarily surprising or intentional: many solos specialize in practice areas like criminal law, consumer bankruptcy or family law that large firms don’t handle, which reduces chances of attorneys from either group encountering each other in court or at a continuing legal education seminar. The same separation holds true for government attorneys who work for regulatory agencies that regulate securities, energy, telecom or antitrust, practice areas that many solos don’t typically take on. As a result of this gap, large firm and government regulatory attorneys have little opportunity for to meet solos or work with them on projects to evaluate the quality of their work. It’s no wonder then that the negative stereotypes of solos persist beyond law school.

Attitudes are changing

Slowly, attitudes toward solo practice are improving.  Ever since the mid-1990’s, entrepreneurship has become a more desirable and respected goal. Bill Gates, along with the founders of Google, YouTube, MySpace, and dozens of other Internet tycoons, started businesses out of their garage, and have completely surpassed law firm partners in both income and prestige. As a result, hanging out a shingle is seen less as an act of desperation than an act of entrepreneurialism with a potential for enormous success.

In fact, there are many examples of former Biglaw attorneys who gained celebrity after starting their own practice. Perhaps the best known is David Boies, who practiced for years at Cravath, and was known only to other large-firm lawyers. But after Boies started his own firm (which started small but has since grown to over 100 attorneys), he snagged high-profile cases like representing the Justice Department in its antitrust action against Microsoft, and representing the Vice President in Bush v. Gore, all of which made Boies a household name.   But there are dozens of other examples of less renown lawyers who strike out on their own and strike it big.

Technology has lowered the barriers to entry

Of course, some lawyers have always dreamed of going solo, but find themselves intimidated by the costs of getting started, lack of practical experience or administrative support. I certainly felt this way myself when I was contemplating my own practice over a decade ago. I attended a course sponsored by the bar where the speaker, who herself had just broken from large firm practice in the past year, described that we’d probably need to lay out $30,000 to get started for basics like high end computer equipment, a phone system, Class A office space and a secretary. The audience gasped with dismay; after all, most of us in the room, myself included, scarcely had $3000 to invest in starting a practice, let alone 10 times that amount. But today, it’s cheaper than ever to start a law firm. Technologic advancements have not just eroded, but steam-rolled most of the initial cost barriers to starting a law practice. These days, most law students and practicing attorneys already have their own personal cell phones, a laptop and combination printer/scanner/fax machine and high-speed Internet access, and those who don’t can purchase these basics for around $1,000. As legal tech guru Dennis Kennedy (himself a solo and biglaw expatriate) noted back in 2004, when he wwwpredicted an increase in large firm lawyers choosing solo practice:

Leasing, other payment plans, and the continuing drop in technology costs make it possible for big firm lawyers to equip themselves with better technology than they now have at their firms, for a very small initial outlay of capital. As a result, the financial barriers to moving to a solo or small firm practice have been greatly reduced.

Technology also gives newly solo lawyers access to sources of information that can fill gaps in substantive knowledge and practical experience. When I started my practice, the lowest quote I could find for an online research service was around $400 a month, which included only a limited number of searches. These days, $400 a month buys premium service; less inclusive services can start at as little as $10 a month. And attorneys can choose from dozens of online listservs where they can seek advice on anything from how to file a case to the proper interpretation of a specific provision in the bankruptcy code from more experienced practitioners.

Finally, technology allows even the newest solo to keep overhead low by working from a home or virtual space and to hire affordable administrative assistance.   With the prevalence of virtual offices emai and PBX phone service, clients no longer know if lawyers work from home or not, and frequently, don’t care.  And  while it used to be that new solos could choose between foregoing a salary for their first year in practice to pay for a secretary, or simply handle all the grunt work themselves. But now, lawyers can sign up for virtual administrative assistance for such tasks as answering phones, preparing mass mailings, advertise for law students who might help with short term document review, do simple research on a project basis, or bid out website design through freelancer sites like elance.com or Craigslist.com. For lawyers who don’t care for administrative work and prefer to focus on substantive legal practice, the Internet offers many solutions that weren’t available even a decade ago.

Solo Practice in the 21st Century

As I discuss in the opening of Solo by Choice, at the end of the day, solo practice offers a way for you to capture your dreams of being the lawyer you always wanted to be.  In that regard, the decision to go solo is uniquely personal, one that you’ll make after considering the benefits of solo practice and the other factors discussed in the book.

But even as you contemplate the decision to go it alone, remember that you’re not alone in your decision.  Rather, you’re part of a growing trend of lawyers who turn down or leave large firm practice because it isn’t big enough to accommodate either the dreams or the preferred lifestyle of today’s lawyers.  You’re part of a trend of lawyers who realize that you can harness the power of technology to provide affordable legal services and earn a nice living while you’re at it.  You’re part of a trend of lawyers – and young professionals generally – who are discovering that you can achieve huge success by working for yourself.

As large firms continue to grow, they are headed down a collision course with their own success.  Eventually, many law firms simply won’t be able to find or retain the talent needed to fuel these mega-firms.  Or, they’ll no longer be able to find clients willing to continue to pay large firm rates without receiving comparable value.   And at that point, large firms have no choice but implement real, institutional (rather than superficial) changes to retain talent and attract and keep clients.  And whom do you think they’ll learn from?  The entrepreneurial solos who discovered a way to blend financial success, work-life balance, intellectual and personal satisfaction into a career in the law.  In this context, the decision to solo represents more than simply a personal choice:  solo practice today serves as an example of, and a catalyst for change in the legal profession.