Law Firm 2.0: The New Business Model of the Legal Industry
One thing the legal industry isn’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 – 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 doesn’t have a multi-million dollar budget for lawyers from the regular firms. They are able to charge these clients less because they don’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 he’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 firm’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 it’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, they’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 that’s hard to beat.
Mr. Harris’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 doesn’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 Axiom’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 isn’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.
-
Translate
-
RSS Feeds
