Law Vibe » Law Firms

Bona Fide Office Rule in New Jersey: No Virtual Law Firms

C. C. — Tue, 13 Apr 2010 14:00:20 +0000

New Jersey is one of the few states that has what is known as a “bona fide office” rule. A NJ Bar Committee recently endorsed the role and this has created a lively debate within the legal blogosphere. [ See ABA Journal Article ].

“Virtual law offices” violate the state requirement for a bona fide office, according to a joint opinion by the New Jersey Advisory Committee on Professional Ethics and the Committee on Attorney Advertising. See Opinion ACPE 718/CAA 41.

Rule 1:21-1(a) requires that a New Jersey attorney maintain a bona fide office for the practice of law.

For the purpose of this section, a bona fide office is a place where clients are met, files are kept, the telephone is answered, mail is received and the attorney or a responsible person acting on the attorney’s behalf can be reached in person and by telephone during normal business hours to answer questions posed by the courts, clients or adversaries and to ensure that competent advice from the attorney can be obtained within a reasonable period of time.

The purpose, according to the opinion, is to make sure lawyers are available and can be found by clients.

The Committee quotes on a 1994 Opinion:See Committee on Attorney Advertising Opinion 19, 138 N.J.L.J. 286, 3 N.J.L. 1821 (September 19, 1994):

“A so-called “virtual office” does not qualify as a bona fide office. A “virtual office” refers to a type of time-share arrangement whereby one leases the right to reserve space in an office building on an hourly or daily basis. Accordingly, an attorney’s use of a “virtual office” is by appointment only. The office building ordinarily has a receptionist with a list of all lessees who directs visitors to the appropriate room at the appointed time. Depending on the terms of the lease, the receptionist may also receive and forward mail addressed to lessees or receive and forward telephone calls to lessees.”

“As noted above, a bona fide office is, in part, a place where “the attorney or a responsible person acting on the attorney’s behalf can be reached in person and by telephone during normal business hours to answer questions posed by the courts, clients or adversaries . . . .” R. 1:21-1 (a). A “virtual office” cannot be a bona fide office since the attorney generally is not present during normal business hours but will only be present when he or she has reserved the space. Moreover, the receptionist at a “virtual office” does not qualify as a “responsible person acting on the attorney’s behalf” who can “answer questions posed by the courts, clients or adversaries.” Presumably, the receptionist can redirect a telephone call to the attorney lessee of the “virtual office” much like an answering service, but would not be privy to legal matters being handled by the attorney and so would be unable to “act[] on the attorney’s behalf” in any matter.”

Note that this is a “1994″ Opinion that was published before the Internet affected every aspect of American society. Stephanie Kimbro in her post of this topic correctly points out that the Committee is solely focused on “physical office sharing” arrangements and not the concept of the “Web-based virtual office” that is designed to serve clients exclusively over the Internet. A pure “virtual law firm” that operates solely on the Internet, has the capacity of offering legal services at much lower fees, because of less “friction” in the transaction, resulting in increased access to the legal system for clients who can’t afford the the high fees of a traditional legal practice.

Carolyn Elefant in her blog, MyShingle thinks the rule is moronic because it is out of touch with modern Internet technology, increases the cost of running a solo practice, which therefore increases the costs to consumers who are looking for lower priced legal services. She argues that the ruling discriminates against work at home parents with child care responsibilities, Although “home offices” are permitted, provided the address of the home office is published.

Brian Tannenbaum, who writes the blog My Law License, agrees with the opinion because he states that he is a “traditionalist”, consumers should not be telling the legal profession how to practice law, and cites the Florida bona fide office rules where he practices, as another good example of a state that is seeks to maintain high standards of legal practice.

Josh King, AVVO General Counsel and Vice President for Business Development, agrees with Carolyn Elefant, that the impact of this ruling is to increase the overhead of solo practitioners and the cost of legal services to consumers.

This issue has been debated or a long period of time. In a 2002 article in the New York Times it was reported that the real reason for the rule is to keep lawyers who are a member of the New Jersey bar, but who practice elsewhere, such as Philadelphia, from encroaching on the territory of “traditional” law firms in New Jersey.

One Philadelphia lawyer commenting on the rule stated:

“In this age of Internet, e-mail, overnight delivery, and faxes, we’re dealing with people all over the world, and this clearly is a protectionist stance,” said Leonard Bernstein of Reed Smith, a Philadelphia-based law firm. “The New Jersey lawyer is an anachronism that is out of step with the times, and the rule should be changed.”

What was true in 2002, is even more true today. The Internet is changing the way legal services are delivered and for solos and small law firms to remain competitive with non-lawyer online legal service providers like LegalZoom, who continue to take market share from solos and small law firms. This is a blow to innovation in the delivery of legal services. I wish the Committee would have examined more closely developments in Internet and information technology generally as these developments are providing the platform for a new way of delivering legal services.

The Opinion reinforces the market position of established law firms who already have made an investment in physical offices and continue to offer legal services based on a high cost, bill by the hour economic model. The “traditional” model works best for certain kinds of cases and certain kinds of clients, but our market research shows that millions of consumers are turning their backs on the legal profession and searching for lower cost alternatives, often on the Internet. It is interesting that none of these considerations enter into the analysis of the NJ Bar committee. It is as if the Committee is stuck in 1994 and is unaware of the changing patterns of legal service delivery that are being driven by the Internet.

In fact, the ruling is not in the consumer interest. The ruling will raise law firm costs and restrict competition in the legal profession in New Jersey, and raises costs to consumers. The United Kingdom recently reorganized the legal profession by taking the subject of law firm regulation away from the legal profession and putting it in the hands of an official who would be more sensitive to consumer needs and interests. Perhaps it is time to do the same in the United States. If state bar associations make regulatory decisions which in fact are designed to maintain the status quo of established law firms within their states, at the expense of consumer interests and innovation in the delivery of legal services, perhaps it is time for more fundamental change in the way the legal profession is regulated.

[thanks to kaseido and richard granat via cc]

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Beetenson & Gibbon Acquires Martin & Haigh of Scunthorpe

Michael — Fri, 26 Feb 2010 15:00:19 +0000

Grimsby legal force Beetenson & Gibbon has now acquired Martin & Haigh of Scunthorpe.

This is the second solicitors merger in as many months, as this move follows Wilkin Chapman and Grange Wintringham’s announcement three weeks ago.

This move comes as a result of the ambitious expansion plans of Grimsby-based Beetenson & Gibbon following their acquisition of Louth’s Scammell & Braithwaite in 2007.

What this means on a short-term basis is that we’ll be seeing the number of employees in B&G increase to 79, a headcount increase of nearly 60%.

As part of the acquisition, Martin & Haigh of Scunthorpe will now be known as Martin & Haigh with Beetenson & Gibbon.

The New Martin & Haigh

“I am looking forward to working within the new firm in the new venture. It makes us a force to be reckoned with, we are now one of the largest firms in the town, as well as the surrounding area. Both of the firms are very similar from what I have seen, and services are being brought together that will complement each other. It is a great fit.”, says Jo Moorhouse, practice manager at the firm.

Beetenson & Gibbon is a founding member of the Quality Solicitors network (found at QualitySolicitors.com), which is a legal brand located in the United Kingdom that chooses lawyers based on positive ratings from their clients as well as their accreditations and then matches them up to new potential clients.

I went to the Martin & Haigh website (martinandhaigh.co.uk), but it appears to be down with this message: “We’re Sorry! This website is down for maintenance, please check back later.” I checked Google Cache and found this description: “Martin & Haigh is a long-established solicitors practice in Scunthorpe, North Lincolnshire. Our clients are as varied as the range of services we provide.” Perhaps B&G is working on a website revamp to reflect the new branding.

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Knowledge Management for Law Firms: The New Frontier

C. C. — Wed, 10 Feb 2010 15:00:05 +0000

There is no doubt in my mind that Knowledge Management (“KM”) will drive law firms in the future. In the past, law firms were driven by recruiting the best and the brightest lawyers and developing a reputation for good work. Hiring talented lawyers will be important in the future, but not as important as developing the best KM systems. Why do I believe that? Because the Internet makes people and information more accessible. It’s scary to say, but the Internet makes people more of a commodity (not that I believe that personally). With regard to professional services, talent will no longer be the differentiator. The biggest challenge for law firms will be to harness that talent and their reservoirs of knowledge in ways that improve product quality and efficiency. In other words, “Knowledge Management”.

Defining Knowledge Management

Ok, but what is KM? Here are some definitions:

According to Wikipedia, “There is a broad range of thought on Knowledge Management with no unanimous definition current or likely.” Wikipedia itself defines Knowledge Management as a “range of practices used by organisations to identify, create, represent, and distribute knowledge for reuse, awareness, and learning across the organisations.” The fact that wikipedia spells the word “organization” differently than I do does not give me much comfort in their definition.

The definition of Knowledge Management that I prefer is “Capturing, organizing, and storing knowledge and experiences of individual workers and groups within an organization and making this information available to others in the organization.” (Ironically, I found this definition on Google from a link that is no longer working.) It is the collaborative element of this definition that I find compelling. Lawyers sharing information will make all of us better lawyers and more efficient. KM will facilitate the process.

The Truth of What Knowledge Management Means

More practically, I think that KM encompasses all of the systems, tools, and infrastructure needed to practice law effectively. In an upcoming blog, I will attempt to break down the concept of Knowledge Management into practical terms and identify how law firms can start to lay the ground work now for developing the systems, tools, and infrastructure that I (and most lawyers) will need to access in the future.

What do you think will drive law firms in the future? Will it be KM or something else?

[thanks to blmurch and roger glovsky via cc]

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Value Billing vs Hourly Billing: Which Way is Best For You?

C. C. — Wed, 13 Jan 2010 22:32:26 +0000

I promised David at EthicalEsq that I would respond to this post of his today. In a response to my previous post on value billing, David argues:

There are a lot of problems with the billable hours system, but most of them are the result of abuses rather than of the inherent nature of using hourly billing. In determining the reasonableness of a fee, therefore, the legal profession has attempted to avoid the worse distortions from hourly billing by not fully charging for hours spent “getting up to speed” in an unfamiliar area of law. The client rightfully expects expertise and needs to be informed by the ethical lawyer when he or she is not yet fully competent in a particular legal subject.

The client also rightfully expects to pay a fee that corresponds — at least roughly — to the amount of time spent by the lawyer. And, the honest fiduciary should let the client know approximately how much work is involved. Some sophisticated clients might want to experiment with or negotiate for some kind of value-related fee. But no sophisticate would say “I know you’ll only spend a few minutes on this, but it’s worth millions to me, so here’s a seven-figure check.” Instead, the savvy client would negotiate for, or shop around for, a more competitive fee, no matter the “value” of the result.

David and I both agree on quite a few things, the primary one being that a lawyer should educate his or her client up front about the basis for the fee and give them an estimate of the range of costs and outcomes. However, I feel (unlike David) that the billable hour system is the problem, for both lawyers and clients. The best indictment of the billable hour that I’ve found on the web is in this article where the author writes:

The billable hour, a practice used only since the early 1960s, has become an artificial device that ill serves both professionals and clients. It divides the time of the accountant and lawyer and consultant into parts, turns each professional into a bookkeeper, and creates such profound guilt for every working hour that’s not billable that important non-billable firm needs are inadequately addressed. It affords the opportunity for the worst kinds of excess, such as padding hours, thereby increasing revenue without supplying value – a short-sighted practice bound to backfire. It makes no distinction between the hour spent on trivial activities and the hour spent on substantive matters. Moreover, if the client perceives that there is no added value in the hourly bill, the general practice is to renegotiate the fee, which is becoming a common practice in today’s competitive environment – and makes a mockery of hourly billing. It’s such an anachronism, and so entrenched, that it precludes such rational billing approaches as value added and enhanced worth or contribution to a client’s business, neither of which is best calculated by the hour. As one sage put it, it’s a virtual cartel in which every firm seems to arrive at the same billing rate, even though quality of service is not consistent from one firm to another. Or even from one partner to another in the same firm.

How many other products are bought this way? My wife and I are going to be building a new home this year. We were given a choice by our contractor to pay a set price or be charged on a “time and materials” basis. We chose the former. I don’t care how much my contractor profits on the job so long as I get a quality home for a price I’m willing to pay. To use another example, should I agree to buy a car at $200.00 per hour multiplied by the time taken to build it? If I get a lazy shift the day my car rolls down the line, should I expect pay more than my neighbor who bought the same car built by a more efficient crew for thousands less?

The Illinois Supreme Court requires lawyers to adhere to the code of ethics. Rules of Professional Conduct, Rule 1.5 (which David quotes in part in his post) states:

Factors to be considered as guides in determining the reasonableness of a fee include the following:

The time and labor required, the novelty and difficulty of the questions involved and the skill requisite to perform the legal services properly.

The likelihood that the acceptance of the particular employment would preclude other employment by the lawyer.

The fee customarily charged in the locality for similar legal services.

The amount involved and results obtained.

The time limitations imposed by the client or by circumstances.

The nature and length of the professional relationship with the client.

The experience, reputation and ability of the lawyer or lawyers performing the services.

Whether the fee is fixed or contingent.

Only one of the thirteen underlined factors speak to the time spent on the task. I argue that many of the other factors speak to the value received by the client. In the end, I think David and I both agree that a lawyer should charge a fair fee. In value billing, what is “fair” is in the eyes of the client. In hourly billing, what is “fair” is in the eyes of the lawyer. Which is a better way to serve your clients?

I do know this, I will not be offering my clients the option to choose between hourly and value billing. I refuse to perpetuate a system that allows me to charge more to a given client the less efficient I am. My prospective customers will have the choice to use me and my value billing system – or they can go to a “traditional” lawyer who bills by the hour. As my site says: “No more stinkin’ timesheets.”

[thanks to aaron geller and matthew homan via cc]

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How the Slumping Economy Has Hurt Law Firms

C. C. — Tue, 15 Dec 2009 21:46:29 +0000

A careful analysis of the recently released National Law Journal 250 reveals some surprising trends. The NLJ reports that the nation’s largest 250 firms (by lawyer headcount) shrank by 4%. Yet, when broken down by geography (see figure below), nearly half of the losses (2,096) were concentrated in the 45 firms headquarters in New York City. And another 20% (883) fell on the 17 NLJ 250 firms headquartered in Chicago.

To put those figures in perspective, for 2008 (the baseline year), NYC- and Chicago-based firms only accounted for 24.7% and 14.7% respectively of the NLJ 250 total lawyer headcount. In contrast, DC-based firms accounted for 9.7% of the NLJ 250 universe in 2008 but only 3.8% (161) of the total contraction. The disparate geographic impact suggests that the reductions-in-force are probably due disproportionately (or overwhelmingly) to the decline in the volume of corporate transactions and woes in the banking and insurance sectors. Among major markets, San Francisco-based firms shrank the least, though this glass-half-full news is probably the result of the dissolutions of Thelen Reid and Heller Ehrman in late 2007, which were both headquartered in the Bay Area.

On comparative basis, the middle-market firms appear to be thriving. Collectively, there was a 0.6% increase in the number of lawyers in the 91 NLJ 250 firms based outside the Top 10 markets. In contrast, firms headquartered in Top 10 markets did uniformly worst. Below is a ranking based on percentage contraction:

New York City (45 firms) -7.0%
Dallas (7 firms) -5.9%
Houston (4 firms) -5.4%
Philadelphia (15 firms) -5.4%
Atlanta (9 firms) -5.3%
Chicago (17 firms) -4.7%
Los Angeles (11 firms) -2.7%
Boston (10 firms) -2.1%
Washington DC (18 firms) -1.6%
San Francisco (9 firms) -0.1%

Firm size appears to be a major explanatory variable, particularly for associates. Here is the breakdown of changes in lawyer headcounts by size of firm:

So what is the bottomline analysis? I think the slowdown in the economy has made the largest firms the most vulnerable to price pressure from large corporate clients. The largest firms have the highest cost structure (rents and associate pay), and there is some doubt whether there is a corresponding value-add for their higher fees. At the high end, the market is pretty crowded. An international footprint is not necessarily a competitive advantage when 20+ of firms have the same high fixed costs and similar lawyer credentials. Not surprisingly, a lot of desirable legal work that does not require a multi-office international platform is migrating to firms further down the AmLaw/NLJ 250 food chain. (These observations, by the way, track Larry Ribstein’s The Death of BigLaw analysis.) Indeed, anecdotal evidence from my informal network suggests that boutiques are booming holding their own [NOTE: after the original post, three additional members of my informal network suggested that boutiques were not booming but, instead, hurt less badly].

Folks, we are in uncharted waters. The structure of the corporate bar is changing rapidly. The giants are vulnerable.

[thanks to bill henderson via cc]

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10 Rules for Law Firm Retreats: How to Maximize Productivity, Usefulness, and Fun

C. C. — Wed, 11 Nov 2009 20:57:17 +0000

Whether your next law firm retreat takes place at a tropical location or in the firm’s conference room, there are several things to keep in mind to make it productive, useful and fun. Here are my Ten “Rules” for law firm retreats. Feel free to add your own in the comments. Enjoy!

1. When planning a retreat, the most important voice at the table should belong to your best clients. Ask them what you need to improve upon in the coming year, and invite them if you dare.

2. At a good retreat, firm management spends as much time listening to the lawyers as they do talking to them. At a great retreat, that ratio is closer to 3:1.

3. It is far more important for attorneys to think together at your next firm retreat than it is for them to golf together.

4. If you don’t make time for lawyers to improve your firm during the retreat, they’re less likely to take time to improve your firm when the retreat is done.

5. In big firms, the first thing you should teach lawyers is one another’s names. Familiarity builds collegiality. Lawyers won’t care what their colleagues do until they know who they are.

6. “Networking” cocktail parties don’t encourage firm-wide collaboration as much as they encourage firm-wide inebriation.

7. If the firm retreat is the only time lawyers talk about marketing, it will be the only time they think about marketing. Same goes for client service.

8. Your staff knows more about how to serve your clients well than your associates do. Bring them along, value their opinions and act on their suggestions. You’ll find that the cost of their attendance is far lower than the cost of their absence.

9. The three questions every lawyer should be able to answer after a retreat are: “What can I do better?” “Who should I know better?” and “Why should I be better?”

10. The two costliest items at any firm retreat are the the time and attention of the attendees. Use them wisely.

[thanks to wrote and matthew homann via cc]

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Movement Towards Limited Legal Services: Good Solution or Bad Service?

C. C. — Sat, 12 Sep 2009 00:01:35 +0000

There has been some recent blog comments [See: Carolyn Elefant 's Blog [about the meaning of Robert Capps article in this month's WIRED Magazine, (September 2009) about the concept of "Good Enough", "Good Enough" solutions, (when cheap and simple is just fine) and my quote about how this concept applies to the legal profession.

When I was interviewed for the Wired Article, I didn't know the focus of the article, and I was simply reporting my experience in offering limited legal services to consumers for a fee they can afford. I wasn't saying at all that lawyer's should do less competent or less excellent work. Rather I was thinking about how legal transactional events between consumer and lawyer can be restructured to get to the "good enough result" that many consumers seem to want.

My best example is one that I participate in daily, and which I mentioned in a previous blog post. Divorcing couples opt for a quick settlement, even if they don't get "every right" they are entitled to in the interest of reducing their legal fees and getting on with their lives.

Divorce lawyers can charge from $5,000 - $10,000 (low-end of fee schedule) for even a relatively simple divorce case. The lawyers will say there are no simple divorce cases. But that is from the the viewpoint of the lawyer. From the consumer point of view, they have a choice to spend $5,000 for each counsel who is representing either party- or to take the money and use it to get on with their lives. The question is-- what is the ROI from the consumer's point of view? Sometimes the investment of $5,000.00 in legal fees is worth it. ($5,000.00 is really a low end estimate). Consumers don't think so, or there would not be thousands of pro se litigants representing themselves in family court. Pro Se Representation is a good example of a restructuring of the lawyer/client relationship to get a "good enough result." The success of LegalZoom - admittedly a service which is a very small step above a bare legal forms service is more evidence of consumer preferences.

So is the movement towards "limited legal services." Lawyers, mostly solos and small law firms, that think that otherwise and think that full service representation is the only way to go are not facing consumer reality. These lawyers are living in a dream world.

Consumers want solutions to their legal problems. If they can get legal solutions in a different form than a traditional legal service from an attorney that is "good enough" at much less cost, they will turn away from the legal profession and seek those alternatives if they get a result that satisfies their expectations.

[thanks to pink moose and richard granat via cc]

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Exploring the Decision to Become Equity Partner in a Law Firm

C. C. — Mon, 09 Feb 2009 17:32:34 +0000

Legal practice consultant Ed Poll has a great new article up on JD Supra titled Do you still want to be a partner?

The question Ed poses, considering our uncertain economy, should we assume that becoming an equity partner in a law firm is still a wise decision? He then follows up with some interesting factors one would need to consider, quoted here:

“When your voice may be so small in a large firm as to have no influence over the direction of the firm?
When the “buy-in” to the partnership is at a value asserted by that partnership rather than by an independent study?
When the sale of your interest could be only under very restricted terms and at a value determined by a formula different than the formula used for the “buyin” and only back to the partnership, not to a third party (even if a lawyer)?
When your income percentage will be determined by a “compensation committee” in which you have little or no voice?“

We often read about the market pressures on legal partnerships, and how the current economic fallout should influence the decision to admit Associates into partnership. But as Ed points out, this is a negotiation between two parties, and the answer might not be an automatic ‘yes’ on the other side.

With regard to pricing, if the legal industry’s PPP numbers don’t drop this coming year, I’ll be very surprised (and suspicious they are indeed being gamed). However, if and when they do drop, you’d have to think buyin price would drop also. Yes? And also wonder… Are partnerships, big and small, being overvalued? … all very interesting, to say the least.

The use of non-equity partners is another trend that’s been on the upswing for a while now. But again, has largely been written about (and dictated) by the Firm perspective. For example, this post which cites Bruce MacEwan on Non-Equity partners effect on profitablity.

So the question on my mind, is how plausible it is, that this trend might become reversed? Will our poor economy produce a bit of a standstill on raising Associates into Partnership? (even non-equity partnership) And especially for those Associates with a solid book of business, will they be able to cut a better deal on the way in?

Even in a down economy, there will be firms who are intent on locking up their best assets. Or better yet, watching the firm across the road and wondering who’s available. If quality Associates were stocks in the stock market, the buy-low sell-high adage would certainly seem to apply. How many fortunes were made via well hedged bets placed during the depression?

My point being, the move up to equity partner status is a business opportunity, for both sides. For Associates & Non-Equity Partners, you may not need that third mortgage, and could have a number of potential suitors. And for law firms, aquisition targets could also be plentiful. Especially if your competitors decide to cover their heads and wait out the storm.

[via steve matthews]

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Law Firm 2.0: The New Business Model of the Legal Industry

Michael — Wed, 09 Jul 2008 13:00:00 +0000

One thing the legal industry isnâ€™t known for is creating new and innovative ways of doing business, but a few newcomers to the legal arena are changing this. This new, up and coming business model is one that does away with the old ideas of how a law firm should be run, and is landing million and even billion dollar blue-chip clients. And making a killing doing it.

These newcomers are aiming to provide the most highly qualified and experienced lawyers at prices that would make a regular law firm blush. One of the key differences is that this new breed of lawyers actually work on-site, creating a more personal law firm â€“ client experience. While this new tactic has been well received, they are nowhere near the point of taking over all of the business of the more traditional law firms, as corporations still tend to turn to big name law firms for their legal work. And as an unfortunate note, most talented attorneys are not willing to give up the fruits of a large legal firm.

But for niche work, this breed of law firm does get its fare share of business that is quite welcomed over the conventional firm.

The Niche Law Firm Revolution

General counsel, Kirk Wickman, of Morgan Stanley’s global wealth-management arm, is one such client. A number of years ago when he had a rather tedious securities issue to resolve, no one law firm jumped into his head as the right firm for the job, as he worried about the large bill that such a case would warrant.

So he decided to try out the services of New York based Axiom Global Inc., which provided a very experienced lawyer who had previously been with the prestigious firm Cravath, Swaine & Moore LLP. Kirk reports that the lawyer did astounding work, and that as a result of going with Axiom Mr. Wickman estimates that he saved 40% over a traditional New York law firm.

With its approximately 220 lawyers, Axiom, like its counterparts Outside GC LLC in Boston and Phillips & Reiter PLLC in Houston, offer the blue-chip company an array of highly trained and experienced attorneys. A number of these niche law firms serve the average small business that doesnâ€™t have a multi-million dollar budget for lawyers from the regular firms. They are able to charge these clients less because they donâ€™t have to spend vast quantities of money supporting partners like other law firms have to, and their lawyers can quite often do all the required work right from home, keeping the real-estate overhead costs to a bare minimum.

38 year old Mark Harris, a veteran of the law firm business who co-founded Axiom tells us that the idea of niche firms came to him one day about a decade ago in 1998 when he was working as an associate at a New York law firm. By shear happenstance he noticed the bill for a case for one of his clients that heâ€™d been working on. “It was only February, and already we’d billed an amount equal to my salary for the year,” says Mark, and with this he realized that from that day on, for the rest of the year, every single dollar he made would be going to pay overhead, or to further pad the pockets of his firmâ€™s partners.

“The model seemed broken to me,” Mr. Harris says.

So off he went to attract lawyers trained by the big law firms to come and work for him. These lawyers do receive benefits, but no salary between jobs, and as a result his clients often end up saving over 50% compared to a regular firm.

Do Niche Law Firms Pay Lawyers Better?

Lawyers who chose to join Axiom, do so for a variety of reasons. Many want to take the spare time that they get to make films or write novels. One such lawyer, Robyn Rahbar, left New York-based Simpson Thacher & Bartlett LLP one year ago after an eight year stint there, and chose to join up with Axiom in order to spend increased amounts of time with her family. And since January, she has only worked on average 20 hours per week at Virgin Mobile.

Lawyer Joe Risico, also joined Axiom because he required a slower pace for a while. “I’d had my nose to the grindstone at Cravath for about five years, I wanted to chill out and try something different.”

Mr. Risico says it took some time to get used to the different environments between Axiom, and his old firm. “You say ‘Cravath’ and everyone immediately knows what you’re talking about,” he says. But reports he is “getting a range of great experience” at Axiom.

“The money is very good,” he added, saying that itâ€™s equal to what someone with six or seven years experience would get. Minus the $250,000 annual bonus.

In the seven years since Mr. Harris and friend Alec Guettel launched Axiom, theyâ€™ve managed to succeed in acquiring a whole slew of Fortune 500 companies as clients, including Cisco Systems, General Electric, Google, and a number of investment banks. The gross revenue last year topped $39 million, and is on pace to break the $66 million mark this year.

Don Liu of Xerox Corp. says “The model makes a lot of sense,” and the work that Axiom performed for them was “at least 25% cheaper” than your average law firm. A savings thatâ€™s hard to beat.

Mr. Harrisâ€™s ambitions are large for Axiom, and one day in the future would like to employ over 1,000 lawyers. But many of its goals are also modest; Axiom doesnâ€™t expect its way of doing business to replace the standard big name law firm as certain work such as a bet-the-company litigation or a major merger. “That isn’t Axiom,” says Mark Chandler, Cisco’s general counsel.

And as the years roll by Axiom will have to continue to entice the change-resistant legal world that its ideas and its lawyers are good. “I was skeptical at first,” says Xerox’s Mr. Liu. “I had to get over a fear that they weren’t going to be as committed to the job or to the work as a permanent person.”

One of the largest obstacles in Axiomâ€™s path to growth is the lack of lawyers who meet their credentials. “It’s our biggest hurdle right now,” says Mr. Harris, who also says that for every 100 people who apply for a job with Axiom, only one actually gets hired.

That being said, this isnâ€™t an issue that is causing Mr. Harris to lose sleep. “Law firms are likely to continue making lawyers unhappy for years to come,” he says.

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Donald Trump Files Lawsuit Against Law Firm Over Legal Fees

Michael — Mon, 19 May 2008 22:00:15 +0000

Donald Trump is in the news once again. This time he is suing Manhattan law firm Morrison Cohen LLP and his lawyer who represented him in a malpractice suit, saying that the law firm has treated him like a â€œcash cowâ€ by overcharging him and performing unnecessary work in order to bill more hours and therefore handing him what he feels is a huge legal bill. Mr. Trump is claiming he has enough experience in dealing with lawyers and feels that he knows when he’s been overcharged on legal fees. This time he feels that the legal fees quoted are not fair and a malpractice suit is in order. Trump, who has said that he has already paid Morrison Cohen $1 million in legal fees, is asking for $3 million in damages in his malpractice suit.

â€œI have dealt with a lot of lawyers and paid a lot of legal fees,â€ says Mr. Trump. â€œI have a Ph.D. in legal fees. I know when fees are fair and when they are not.â€

Overview of the Legal Battle

Morrison Cohenâ€™s David Scharf was hired by Trump last year to represent him in a suit against a golf course contractor, who Trump felt overcharged him for the service. They won the case and Justice Kenneth M. Rudolph who handled the case, awarded Trump almost $2 million in damages for the earth-moving contract and about $40,000 for the infrastructure. In addition, $1.3 million was also awarded for attorneyâ€™s fees. Despite the success of the malpractice suit, Trump feels that Morrison Cohen should have advised him not to pursue the infrastructure claims since it would certainly incur more cost and would outweigh any recovery. He said that most of their conversations were centered on legal fees and very little was discussed about the merit of the case.

“Ninety percent of the conversations I had with David Scharf were about legal fees, not the case,” said Trump. “We won the case because I’m a great witness.”

On the other hand, David Scharf maintains that the infrastructure issue was an integral part of the success of the case, and that it was necessary because the defendant has raised the issue. Scharf said that Trump was using his popularity as a negotiating tactic to get a discount because of the successful outcome of the case. Scharf also believes that his firm fairly billed Mr. Trump for the services rendered. They have counterclaimed for $470,000 in legal fees that they say remains unpaid.

This isn’t the first time Donald Trump has faced off against Morrison Cohen. Robert S. Cohen, the firm’s co-founder, represented Ivana Trump when she divorced from Mr. Trump in 1991.

“I beat him too,” said Mr. Trump, referring to attorney Robert S. Cohen’s attempt to bypass the Trump’s prenuptial agreement.

Donald Trump is represented in his malpractice suit by Alfred Donnellan of Delbello Donnellan Weingarten & Wiederkehr in White Plains, N.Y.

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