News & Insights

Sean W. Southard, partner at Crosbie Gliner Schiffman Southard & Swanson LLP (“CGS3”), on boutique law firms.

While many of these smaller – or “breakout” – firms are enjoying tremendous success, they face significant challenges when recruiting best-in-class lateral attorneys. Both small (those with 50 or fewer lawyers) and boutique firms (those with an intentionally narrower practice targeting a specialized client base) must overcome the perception that the breadth of their practice and scalability of their platforms are limited compared to larger Biglaw firms. Small and boutique firms must also differentiate themselves in a crowded marketplace with fewer marketing dollars and convince lateral attorneys and clients alike that they are viable substitutes to Biglaw, not simply a lower-cost provider.

Despite these challenges and the sea change, breakout firms can outmaneuver their barnacle-encrusted Biglaw counterparts. With clients increasingly eschewing traditional hourly fees, smaller firms can take advantage of a less bureaucratic management structure and more quickly develop profitable alternative fee arrangements. Moreover, without being burdened by expensive legacy and overhead costs and antiquated business systems, breakout firms can effectively employ new technologies and intelligent outsourcing of back office functions to improve operational efficiencies. Similarly, they can take advantage of trends in reduced office space footprints and creative staffing solutions.

More specifically, smaller firms can effectively attract Biglaw’s top talent by adopting these forward-thinking practices:

Create a plan. A successful breakout firm will clearly define its core values and brand, then create a detailed business plan that aligns recruiting and business development with those central ideas. If properly articulated and implemented, the firm’s vision is the most effective tool in making the case to candidates about the firm’s competitive edge in growth objectives, compensation packages and business processes.

Cultivate collaboration and collegiality. By creating a congenial and flexible work environment, breakout firms offer an attractive alternative to the restrictive practices of many larger firms. Breakout firms can create a truly collaborative environment by flattening the traditional law firm hierarchy and bifurcating the professional review and compensation functions. Because of their size, breakout firm partners understand each other’s practices and the value of each attorney and, therefore, can deemphasize billable hours and origination credit. By hewing to the old maxim “a rising tide lifts all boats,” breakout firms foster greater accountability, communication and camaraderie.

Rethink compensation. Breakout firms can offer competitive compensation because of their lower overhead and rejection of the traditional lock- step grid compensation system. Instead of looking primarily at an attorney’s origination credit, realization rate and hours billed, they can create a holistic compensation structure that rewards both the traditional metrics and contributions to client development and retention, excellence in legal work and administrative contributions. By focusing on an attorney’s overall productivity and achievements that benefit the firm as a whole, smaller firms use compensation to incentivize “firm first” behavior among its attorneys to strengthen its core values and profitability.

Adapt flat firm architecture. Today’s breakout firms frequently reject formal management structures and, instead, commission each lawyer to be actively engaged in the administration of the firm – so attorneys feel vested in the firm, rather than like cogs in a billing machine. These firms also renounce arcane associate advancement practices and embrace flex-time and non-partner track lawyers as equal members of the team. As a result, attorneys in smaller firms often retain control over their own practices, fee arrangements and work-life balance, without facing negative repercussions.

Minimize conflicts. With thousands of lawyers opening new matters daily, Biglaw lawyers spend countless hours clearing conflicts. By opening fewer matters and limiting the scope of their practice, smaller firms generate fewer conflicts. When conflicts do emerge, well-managed breakout firms can quickly determine resolution based on the clients’ best interests – rather than the political clout of each partner involved. Ultimately, smaller breakout firms must make lateral recruiting a top priority to ensure profitability and long-term viability. By creating innovative business structures that sharply contrast with the more restrictive structures of traditional law firms, these firms can enjoy a competitive advantage in attracting attorneys looking for a meaningful lateral move with greater opportunities.