Solos and Smalls Snagging More Big Clients: Here’s Why
Crains reports that increasingly, tiny law firms are winning work from Fortune 500 companies that previously went to big firm competitors. The reasons are what you’d expect – first and foremost, companies get better value by hiring a $325/hour experienced small law partner to handle routine work rather than a similarly priced big law associate (certainly, raising associate salaries didn’t help biglaw’s case either). Presumably, that’s why A Mercedes-Benz was willing to stick with attorney Bryan Duplechain when he left a mid-sized firm to hang a shingle. Duplechain charges $200 an hour or flat fees based on volume —an enormous savings for companies accustomed to paying $12,000 in fees to answer a boilerplate lawsuit.
Diversity concerns also drive companies to solos and smalls. While women are languishing at biglaw , many companies still want diversity in outside counsel, which solo and small firms are more likely to deliver. In fact, of the four firms mention in the Crains’ article, two are women-lead.
In addition, many of the obstacles that once kept solos and smalls from winning business – such as impressive Class A digs – just don’t matter anymore. According to Corporate Counsel, “as working from home becomes common, GCs are slowly warming up to the idea of letting their in-house lawyers telecommute.” Moreover, because solos and smalls are more likely to have mobile practices than their big firm colleagues, they’re also more likely to be savvier in addressing concerns such as confidentiality and IT security that matter to large corporate clients.
Finally, even if a solo or small firm isn’t able to win business directly from a corporate client, there are other back door ways to get the work. When biglaw firm, Sidley Austin was working on an affordable housing deal, the client couldn’t afford the firm partners’ $975+/hour billing rates for four legal opinions related to the project. So with the client’s approval, Sidley brought the Morgan Legal Group, a four attorney firm on board, which did the work at a rate of $450/hr, allowing Sidley to retain the client.
More than ever, there are big opportunities for solo and small firms to reel in big clients. Whether it’s through women and minority certification, low rates or connections with big firms or using a virtual business model to your advantage, solos and smalls need only a small opening to compete for and win big clients.
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This is also true in family law. If a business exec or owner files for divorce (or is service by his/her spouse), they definitely don’t want their big law corporate firm handling the divorce, nor should the big law firm want to handle the case. Most of the top family law attorneys in any community are in solo or small firm boutique practices.
There are some exceptions where big law firms do divorces, but the risk is that no one is ever truly happy with the result in a divorce case. Client walks in owning everything and walks out owning half. Not a recipe for good feelings.
I’ve seen many big law firms lose corporate business because they were not able to make the exec or owner happy with the results of the divorce case. So the client takes his corporate/tax/whatever business to a different firm.
I thought about doing this a few years ago. The big issue is still getting the damn clients or everyone would do it. Plus, big corporate clients are more willing to screw the small guy over on billings than big law, since that’s what they do with all small vendors. I’ve heard tales of large multinationals holding up $100k in approved, legitimate, billings owed a small firm for a year over a few hundred dollar disputed line item. Oh, you don’t like it? Have fun not eating!