Analysis

Why It May Pay To Flee BigLaw Now And Form A Boutique

By Aebra Coe
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Law360 (May 15, 2020, 5:50 PM EDT) -- The prospect of leaving the safety of BigLaw to form a boutique in the midst of a crisis like the coronavirus pandemic may sound treacherous, but attorneys who did it a decade ago during the Great Recession say there may be big opportunities for a small startup in this environment.

As major corporate clients look for ways to cut their legal costs in a down economy, they may be more open to looking to boutique law firms made up of a small number of well-trained and talented attorneys to perform a portion of the legal work they normally hand over to large law firms. That's because there are often savings involved, according to attorneys who started their own boutiques during the last recession.

Alexandra Shapiro left Latham & Watkins LLP with her fellow founders of Shapiro Arato Bach LLP in 2009, a year when large law firms were laying off associates in droves.

The attorneys on Shapiro's team are highly qualified and experienced in white collar defense litigation, the boutique's specialty. And the firm has thrived despite, or possibly because, of its beginning in the midst of a massive economic crisis.

"I'm not sure why it wouldn't be a good opportunity [now] to start a small law firm or for people who are excellent lawyers to go out on their own as solos," Shapiro said.

At a time when clients are sensitive to their legal bills, small law firms have the ability to be flexible on rates because they usually have lower overhead than large firms, according to Nicole Gueron, who left a job in the New York attorney general's office to co-found Clarick Gueron Reisbaum in 2010.

In addition to providing flexibility around fees, reduced overhead costs also go a long way when starting up and operating a law firm in a weak economy, Gueron said.

"The thing about a small firm is it doesn't take much for the economics to work," she said.

When she and her partners formed their firm, their biggest overhead expense was rent, and they were able to keep that low by subletting office space from an ad agency.

Gueron suggested that law firms starting up now might not need a space at all since almost everyone is already working from home.

"Our space when we started out was super cheap, month to month, and the physical space was very un-law firm-like. Those starting a firm now could lean into that even more and not have a physical office for the first year and see how it goes," she said.

James Barger, who left Baker Donelson Bearman Caldwell & Berkowitz PC in 2008 alongside his co-founders to form Frohsin Barger & Walthall, says their former firm gave them space to use for an office as they were setting up their practice, which focuses on federal qui tam litigation.

The firm now has three physical offices, but Barger says many of its attorneys largely worked remotely even before the coronavirus pandemic, using cloud technology to store, organize and share the firm's files away from any one location.

That technology is another opportunity for lawyers thinking of starting up a boutique today, Barger said, because it makes setting up a law firm easier than it was even 10 years ago, with everything on the cloud and no need for massive, expensive servers.

"The infrastructure that we tend to spend a lot of money on in the legal profession can be replaced by Clio or other online cloud-based services," Barger said. "With two to three lawyers and home offices, you can access the same things and can be more competitively priced, provide a better value and a better lifestyle."

"I live down at the beach where I grew up. I couldn't have done that when I was in BigLaw," he added.

Another reason elite boutique law firms tend to thrive, even when work can be hard to come by in the industry as a whole, is because large law firms often refer work to them, rather than referring the same work to a firm they consider a competitor, according to David Leason of intellectual property boutique Leason Ellis LLP.

"If you have a conflict and you're a big law firm in New York City, it's not as attractive to send the conflicting work to another law firm in New York City. It's much more palatable to send it to guys who are experienced and not in your backyard. As it turned out, we received a lot of referral work," Leason said.

From its founding in 2008 with two attorneys who had left a since-dissolved large intellectual property firm, Leason's law firm in Westchester County, New York, has grown to 35 attorneys.

Despite the potential opportunities for lawyers looking to strike out away from BigLaw, the boutique founders said it's not right for everyone, and that those thinking of making the move should carefully evaluate their client base and the strength of those relationships before attempting it.

Shapiro suggested that anyone who's considering it should spend a good deal of time reaching out to as many contacts as possible to let them know what the plan is and what types of cases the boutique is looking to take on.

"You need to spend a fair amount of time networking, particularly at the beginning, and it can lead to new clients and matters and can get you leads on associates and staff you're looking to hire," she said.

She also found it "very valuable" to serve on her prior firm's management committees to gain insight into the business of law before starting up her own firm, Shapiro added.

Attorneys should also take a good look at their personality in deciding whether striking out away from a big law firm is right for them, she said.

"Some folks are more comfortable operating in large institutions with structures and administrative bureaucracy, and others are more comfortable charting their own path and have a bit of an independent streak," she said.

--Editing by Jill Coffey and Marygrace Murphy.

For a reprint of this article, please contact reprints@law360.com.

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