The spate of small start-up firms and continuing success of established boutiques is putting unprecedented pressure on the large law firm model.
When James Ryan was speaking to Lawyers Weekly about why he decided to leave Piper Alderman and co-found his own firm with senior Pipers partner Robert Speirs, he did not mince words.
“Like many within our industry, I was particularly disengaged with the way large law firms were operated – seemingly void of quality management, commercial responsiveness and innovation,” he said of his decision to start Speirs Ryan.
James is right.
The large law firm model, by its very nature, stymies rather than allows innovation.
Of course, large law firms are partly a victim of their own success.
It is much easier to get 10 partners to agree to something when compared to 100.
“Small firms are more nimble, able to adapt their prices better and reduce cost far more competitively than large firms,” said a key figure within a large law firm at a recent breakfast attended by Lawyers Weekly that included a selection of chief information officers and chief financial officers.
The fact that boutique firms are “nimble” and do not bog down their senior lawyers with the institutional conflicts and administrative burdens that weigh down their large-law firm colleagues is an obvious advantage that small firms naturally garner.
But this is not why boutique firms are striking such a chord with clients and lawyers at the moment.
The most striking and important advantage that boutique firms have in the current marketplace is one based around culture.
“Culture” is one of those buzz words you often hear from law firms when spruiking their wares as to why their firm is special or different.
Such claims, of course, are spurious when you continue to rigidly adhere to timesheets, oppressive billable-hour targets, expect lawyers to work excessively long hours and foster an environment where lawyers work in silos.
“If there is this cultural misfit it causes practitioners to re-evaluate where they want to practice law and how they practice law,” said Mark White, a senior lawyer who left the partnership of CBP Lawyers in October last year to start his own firm.
When Lawyers Weekly exclusively revealed that Tony O’Malley, the former head of King & Wood Mallesons in Australia, had started his firm with his former KWM colleague Tim Blue, he let the cat out of the bag.
“It is quite liberating operating in a small start-up environment,” he said of his new firm LCR Advisory.
The striking similarities between many of the boutique firms that have been launched recently is the fact that they are being started by lawyers from large law environments who are rejecting the fundamental underpinnings of the large law firm model.
Hive Legal was founded by the senior Minter Ellison partners Jacinta de Witts and Mitzi Gilligan, along with the DLA Piper duo Simon Davidson and Peter Monk, the latter of whom was the head of DLA’s Melbourne office.
What Hive Legal offers is the antithesis of the way the former firms of its founders went about their business.
High overheads and the billable-hour are out, flexible work options and alternative fee structures are in.
“[Large firms] have their reward and recognition systems very deeply embedded in the whole concept of time recording and hourly billing and it is very hard for them to break away from that infrastructure,” said Gilligan when talking to Lawyers Weekly.
A new international boutique entrant, Keypoint Law, has abolished billable-hour targets and is offering its fee earners the chance to pocket 70 per cent of the fees they generate from clients, which is significantly higher than what most large law firms offer their lawyers.
Suits you Sir and Miss
The senior large law figures that have started these boutique firms have been able to do so from a position of strength.
Their respective clients are wedded to them individually, rather than the firm they were previously at, so they have had no problems establishing their practice.
Indeed, Speirs Ryan has acted on matters to the value of half-a-billion dollars in transacted property within its first three months of operation.
These new firms are not only attracting significant clients, they are also attracting the interest of the best young lawyers looking outside the traditional prism of a large-law career.
“We have seen university medallists come across our desk who we wouldn’t have expected to be available at this stage of the year,” said Oliver Talbot, a former McCullough Robertson partner who founded his own boutique firm in March with his former McCullough Robertson colleague Tim Sayer.
Lawyers of all ages are attracted to firms that: do high-end work, offer a high degree of personal autonomy, provide flexible work options, show a commitment to move away from the billable-hour and give lawyers the sense they are not just another cog in the machine.
Large law firms that continue to obfuscate about moving to such a model will find that its best and brightest lawyers won’t be so reticent to look elsewhere.
Justin Whealing (pictured) is the editor of Lawyers Weekly