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Late last year, Sarah Dunn, the chief executive officer of the Summit, N.J.-based mutual fund data provider Lipper Inc., found herself in a quandary. Her company, which was acquired in 1998 by Britain’s Reuters Group, had been relying on the parent company’s in-house counsel for its legal needs. But although the day-to-day operational needs of the subsidiary had become too great a burden on the Reuters legal department, there was still not enough work at Lipper to merit the expense of hiring a full-time general counsel. So when lawyers at Reuters suggested another alternative, Dunn jumped at the chance. Their solution was the New York-based network of independent attorneys known as i path, which quickly matched Lipper with Beth Hecht, a veteran corporate and intellectual property lawyer whose experience includes stints as the general counsel of three publicly traded companies. Hecht signed a six-month contract to work three days a week for Lipper as a sort of temporary general counsel and Dunn’s pressing legal needs were met. Structurally different from a temp agency, i path in fact merges three separate constituencies. First, it is a network of attorneys, most with both law firm and in-house counsel experience, who operate independently but are supported by i path’s infrastructure — everything from laptop computers and fax machines to billing and collection services. Second, i path is an association of clients that have a need for basic day-to-day transactional work but are unwilling or unable to pay for either a law firm or a full-time in-house counsel. Last, it is an alliance of law firms interested in a two-way system of referrals. In theory, at least, the model sounds like a winning proposition for everyone involved. Attorneys get the chance to continue doing high-level work but with added flexibility and without the administrative hassles of solo practice. Clients, who do not have to pay for the physical overhead and partnership leverage of a law firm, get comparable legal work for rates that are 30 to 50 percent below what law firms charge. Firms get a noncompetitive referral destination for work that is too small for them and access to referrals on larger matters that are beyond the scope of i path’s day-to-day focus. And i path, of course, gets a cut of each transaction fee. To hear Hecht tell it, i path is the way of the future: “i path is creating a different paradigm for legal services,” she said. “It’s really kind of a 21st century law firm.” FINDING A MARKET The company is the brainchild of 31-year-old Mark Harris, a 1996 graduate of the University of Texas School of Law who spent two years as a mergers and acquisitions associate at Davis Polk & Wardwell. After leaving the firm in 1999 with the idea that became i path “loosely formed” in his head, Harris lived in Manhattan without a revenue stream for seven or eight months as he refined the concept, an experience he understatedly described as “trying.” Early last year, Harris recruited his friend Alec Guettel, a Stanford M.B.A. who had co-founded a San Francisco Bay Area technology startup, to help him put i path together. Together, they set up discussions with decision-makers at large law firms, general counsels at Fortune 100 and 200 corporations and small company executives, and became convinced that a market for i path existed. They raised initial capital from seed funds and angel investors, then went through a round of venture capital financing in May. Harris and Guettel built a management team last summer, including Catherine Donovan, a former administrative partner in the New York office of Akin, Gump, Strauss, Hauer & Feld who joined i path as vice president of operations. The company, which employs about 15 people, moved into space on Spring Street in New York’s SoHo in August and staffed its first project around Labor Day. I path’s focus is decidedly small-bore: the day-to-day transactional work and employment matters that are a part of a company’s daily operational life but tend to fall below the radar screen of a large law firm. One client, the online adventure lifestyle magazine Blue Media Ventures, which had previously hired Debevoise & Plimpton, found itself facing only some fairly simple corporate housekeeping work, like the company’s conversion from LLC to C-corporation status. Michael J. Gillespie, who co-chairs the media and technology practice at Debevoise, referred Blue Media to i path, and the company provided a lawyer who amounted to a virtual, temporary in-house counsel. For attorneys, the flexibility i path affords is much of its allure. Lawyers in the network often work from their home or existing office, outfitted with hardware and software by i path, and they are flexible enough to maintain a humane schedule. Kelly Zitzmann started her own practice in 1998 after stints as an associate at Skadden, Arps, Slate, Meagher & Flom and as the general counsel of Erie Plastics Corp. She said that she is now approaching the point where i path business will represent about 50 percent of her work. “Part of my goal in being on my own was to have a life and do interesting work,” she said. “[I path] recognize[s] that people want to have a balance and they’re bringing people together to make it happen.” CONVENIENCE FACTOR Alex Montagu spent four years as an associate at Sullivan & Cromwell before opening his own trademark and copyright practice in 1995. He said that i path is still only a small percentage of his work, perhaps 10 percent, but is likely to grow because of the convenience factor. When Montagu, who also serves as an arbitrator for the International Chamber of Commerce, traveled to Paris for an arbitration, i path set him up with a laptop and a local access number so that he could work through the entire trip. The company provides an online law library and catalog of forms, and it takes care of a laundry list of tasks that would otherwise be a drain on a solo practitioner’s time. “I like them because they make it easier for me to run my business. They provide me with back office support. They take care of collections and billings,” Montagu said. “The practical administrative side of running a business is huge. For me to have that off my shoulders is great.” The process of matching an attorney to a client is not unlike a normal hiring process. When a job comes in, the i path staff finds a lawyer in the network with appropriate experience and practice specialties and sends the client a link to the attorney’s online biography. (I path resides on the Web at www.ipath.com.) If the client approves the attorney after an interview, the parties agree to a billing rate, typically between $180 to $275 per hour. Harris said that even after i path’s cut is subtracted, lawyers take home more on a per unit basis than they would in a law firm setting. I path also uses flat-fee arrangements on occasion. I path has a stable of about 40 clients, many of them startups in their infancy but also established companies. What they seem to have in common is the need for a person who is able to give both legal and business advice. In the case of Lipper, Hecht, who began her legal career as an associate at Willkie Farr & Gallagher and Kirkland & Ellis in New York, also started the legal departments at the publicly traded companies Alpharma Inc., ChiRex Inc. and Warner Chilcott PLC. Dunn, the Lipper CEO, said that the key to the arrangement with Hecht is that her arrival had been “business-additive.” That combination of business and legal sense seems to be one of the i path attorney network’s greatest assets. “I think the attorneys that are in the network have a combination of in-house and outside experience and are very practical and pragmatic about getting projects done,” Hecht said. “Business is all about risk and I think those of us in i path understand that because we’ve been in business.” REFERRAL NETWORK The appeal of i path for law firms, attorneys said, is that it provides a useful referral mechanism for occasions when clients have smaller matters that may not demand a large firm’s resources. Martin H. Levenglick, a partner in the New York office of Orrick, Herrington & Sutcliffe who has referred companies to i path, said that the network is particularly useful in the startup context, as a place to send “entrepreneurs in waiting” who aren’t yet ready for a big firm. “It just strikes us as a very interesting alternative in that it bridges a bit of a gap,” Levenglick said. “One of the nice things that i path can provide theoretically is that you can put people in front of them and know that they’ll be well-tended.” In addition, given i path’s cost-effectiveness, referrals to the network are a way for law firms to create goodwill with clients who are increasingly rate-sensitive, but to do so in non-competitive setting. Big firms that worry when they refer business to small or mid-size firms that they will never see the client again do not have that problem with i path. Part of the design of the network is that firms that refer work that is too small for them will see business returning when companies are mature enough to need big-ticket work. Said Stuart R. Nayman, a partner in the New York office of Hale and Dorr, “I think it provides a great opportunity for law firms to fit into a pipeline of potential work.” In a slightly different application, the 12-lawyer entertainment boutique Epstein, Levinsohn, Hurwitz & Weinstein called on i path when it needed extra corporate capacity but preferred not to hire a full-time lawyer or to call on another law firm. Epstein Levinsohn brought on a senior associate-level lawyer from i path to act as second chair in a transaction and was able to retain a bigger piece of the fee and avoid disrupting the relationship with the client. “There’s not that tension you sometimes feel when you bring in another firm and people wonder, ‘Whose client is this?’ ” said Epstein Levinsohn partner Andrew Hurwitz. These days, i path is adding to its active attorney list of about 15 from a waiting list of 75 to 100 attorneys who have made it past an initial screening. The company is also building databases of potential lawyers and clients in four or five other areas around the country. And Harris said he expects to find a steady stream of experienced lawyers who would appreciate i path’s flexibility. “To us, there’s a seemingly unlimited amount of attorneys who would like to practice in this way,” he said.

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