Editor’s note: This is the second in a two-part series.
While there has recently been a trend of lawyers leaving the midsized- and large-firm setting to start their own practices with alternative business models, not everyone finds being out on their own to be the answer for their practice.
But while some may view a solo lawyer or small boutique forgoing their independence to join a larger firm as an indication of struggle or weakness in their practice, the truth is often quite the opposite.
In reality, many small firm and solo attorneys join bigger shops because their practices are too busy and they find themselves hampered by either administrative duties or the inability to handle the breadth and volume of the work coming in on their own.
“Generally, if they were unsuccessful [in their small or solo practices], they’d be foolish to be out looking because no one would be interested,” said Chester R. “Chip” Babst III, managing shareholder of Pittsburgh-based Babst Calland.
Babst explained that firms are typically looking for a “one plus one equals three” scenario, where a small firm or solo attorney brings in more business than they can handle on their own and their practice fits nicely into a larger firm’s overall scheme.
Kathryn R. Doyle, who joined Saul Ewing as a partner in August a little less than three years after leaving Drinker Biddle & Reath to start her own flat-fee-only intellectual property boutique, had a similar take, noting that larger firms require, in nearly all cases, that attorneys have a client book worth a certain amount before they’ll hire them as partners.
“They’ve got cutoffs, all large firms do,” Doyle said. “If you don’t have this amount of portable business, they won’t look at you.”
Doyle said that when she first left Drinker Biddle in 2010 to start Riverside Law Firm in Conshohocken, Pa.—which at the time consisted of her, another lawyer and two patent prosecutors—she was enamored with the idea of running her own firm.
“I thought I’d have a lot more control over my own environment and I didn’t have to get permission to [charge] fixed fees,” Doyle said.
While all that turned out to be true, Doyle said, her mounting administrative duties eventually began to encroach on her practice, which was growing rapidly.
“I was getting very frustrated because I was managing the firm and, after the first year or two, my legal practice was really exploding in a lot of different directions,” Doyle said.
By the time the firm grew to include nine attorneys and four patent agents, Doyle decided she needed to go somewhere where she could focus solely on being a lawyer.
But there were aspects of running her own firm that were non-negotiable for Doyle, such as the fixed-fee agreements she had established with her clients.
Doyle said Saul Ewing assured her that it would grandfather those agreements in if she joined the firm, making her decision to return to large-firm life “very easy.”
Now, Doyle said, she can focus on her clients.
“Somebody else does the marketing, somebody else worries about making sure all the accounting is done, someone else worries about all the HR issues,” Doyle said, adding, “I thought my practice was best served at a boutique, but I was very wrong.”
Howard K. Kurman, a principal of Maryland-based Offit Kurman, which has grown largely through acquiring small firms and solo attorneys, said feeling bogged down by managerial duties is a common experience among those lawyers.
“Many of the small firm and solo lawyers really don’t have the infrastructure to manage or be involved in administration and don’t have any interest in doing that either,” Kurman said, adding, “That’s particularly true for solo practitioners where you’re a one-man band—you’re the interior decorator, the accounts receivable guy, the marketing director and you handle personnel or whatever. They don’t have succession plans or the ability to assign work to anybody else.”
But escaping administrative tasks is just one reason small firms and solo lawyers often seek out larger organizations.
Financial security is often another driver of such a decision.
“They see an opportunity there for probably more overall economic protection in a larger firm, where if a particular practice area cycles in a given year, they’re not subject to that particular cycle. They get the benefits of a more diversified practice,” Babst said.
Kurman added that many small firm and solo practitioners find they’re losing money on work they’re forced to refer out that they would otherwise see a cut of if they were in a larger firm setting.
For example, Kurman said, a solo lawyer who has to refer out a $250,000 matter because it doesn’t fall within his practice expertise and never sees a dime of that money would be able to keep a percentage of that revenue at a firm like Offit Kurman, whose compensation system places an emphasis on origination.
That ability to cross-sell and be rewarded for it is an attractive proposition for many attorneys, Kurman said.
“It’s happened historically,” Kurman said. Solo and small-firm “lawyers come here and their total annual compensation increases.”
The ability to cross-sell rather than refer out work was a major reason why, after decades of practicing together at their four-lawyer medical professional liability boutique Galli and Reilly, Richard Galli and Mary Ellen Reilly decided to merge their firm into Philadelphia-based Post & Schell at the beginning of last year.
Galli said their clients had needs in a number of areas ancillary to professional liability and, while the firm would occasionally handle those matters, it became difficult as health care law “mushroomed” into a more complex practice over the years.
The firm found itself having to refer out much of the work that didn’t fit squarely within medical professional liability.
Now, Galli said, he and Reilly are able to keep much of that work within Post & Schell.
But despite the benefits larger firms offer for some small and solo practices, there can be a stigma attached to making such a move.
Peter R. Spirgel, managing shareholder and chief operating officer of Flaster Greenberg in Cherry Hill, N.J., said his firm rarely receives inquiries from small firms and solo lawyers, which he suspects is due in part to fears of losing independence, encountering rate pressure or realizing their clients are incompatible.
But Spirgel said he thinks those trepidations are often “overblown” and that many of those attorneys overlook the positives, such as cross-selling, of joining a larger firm.
“The fear is worse than the reality but that stops a lot of them from even exploring,” Spirgel said.