Editor’s note: This article has been corrected from the original.
Here’s a formula for success in a brutal economy: Figure out a way to save general counsel money on their outside legal spending. The attorneys who have done that are growing their revenue while others are not.
Whether they’re contract attorneys, virtual law firms or freelance sole practitioners, the lawyers who’ve figured out how to provide less expensive service to corporations are the ones flourishing now.
“We are keeping costs down by using in-house attorneys as much as possible and using sole practitioners or nontraditional law firms with big firm experience,” said Kristen K. McGuffey, executive vice president and general counsel of Simmons Bedding Co.
One of the non-traditional firms McGuffey uses is FSB Legal Counsel, founded seven years ago by two of her former colleagues at Morris, Manning & Martin, James M. Fisher II and Kevin E. Broyles. It’s a “virtual” firm of former big law attorneys working remotely to offer clients the same services as before at half the rate — or less.
“We didn’t plan this economic situation. We’re just benefiting from it,” said Fisher. “In a time of lawyers being laid off, we’re increasing our size.”
Fisher said FSB is growing as fast as they can find attorneys who meet their standards — which include seven years or more of big law experience. Some have decades with big law firms, and some are former corporate GCs.
Fisher worked for Holland & Knight and Baker & McKenzie before joining Morris, Manning & Martin, where he met Broyles. They started FSB in 2002 with six lawyers in Atlanta. Last fall they had 27 lawyers, and now have 41. They expect to have 50 by the end of the quarter and 75 to 100 by the end of the year.
In addition to Atlanta, they have attorneys in Dallas and Chicago and are adding them in Washington and New York. They work in their home offices or other quarters of their own choosing. They do their own typing and answer their own phones. Their only firm office is an executive suite at an office park that is rented for specific occasions only — like a hotel meeting room. They stay in touch through e-mail, cell phones and the Internet.
“There are a lot of inefficiencies in the law firm model,” said Fisher, who noted that law firms respond to economic pressures by increasing rates paid by clients or — when that won’t fly, as in the current climate — laying off associates and increasing the workload for those left. “They never thought of cutting expenses,” Fisher said, adding that he and Broyles exploited that traditional resistance to change and overhead cost cutting.
“What we’ve done is taken a big law firm and taken away the ivory tower, the mahogany desks, the expensive artwork, the young associates being trained on the clients’ dime and the redundant support staff,” said Fisher. “The clients are really only paying for what’s between our ears.”
Firms that supply contract attorneys operate on a different model than FSB, but they also save on overhead from working remotely and staying connected through technology. And at the moment, those who provide contract lawyers are also growing in a down economic cycle.
“The pressures that our in-house clients face are unlike anything we’ve seen in the past,” said Jane Hanner Allen, who founded Counsel On Call 10 years ago to provide contract attorneys to law firms on hourly rates for full- or part-time work as needed. Now, her business has grown from her solo shop in a Nashville, Tenn., suburb to six offices — including one in Atlanta — and hundreds of attorneys around the country. They now split their business evenly between law firms and corporate legal departments, and they are growing.
Allen said the sight of so many qualified attorneys leaving law firms for personal reasons drove her to start a contract law firm as an alternative way to build a practice around a life — and to pass the cost savings on to clients.
Now that the attorneys are in place, the economy has focused the need to cut costs. Allen said she’s been hearing GCs say they have to cut outside counsel costs or lose their bonuses. Next, they’ll have to cut costs or lose their jobs. The financial pressure is creating a boiling point for change.
“Quite frankly, it’s what we’ve been working toward for years,” said Allen. “The economy is really forcing people to look at costs.”
Even firms that do other types of legal consulting — such as recruiting — are seeing an increased demand for contract lawyers. Some are adding contract supply to their business.
“There is an increase in our business,” said Bonnie Klein, director of contract legal services of Cambridge Professional Group in Atlanta, who reported a jump in calls from GCs interested in contract attorneys. “After years of complaining and saying they are going to do it, they are going to do it.”
Staff Reporter Katheryn Hayes Tucker can be reached at Katheryn.Tucker@IncisiveMedia.com