Many of the entrepreneurs who started boutique law firms wanted to limit their offerings to specific markets but, being realists, also wanted to hedge their bets. So they set up shops that featured two or more complementary and non-competitive practice groups, like civil litigation plus trusts/estates, or tax plus patent filings.
I have seen these multi-headed hydras grow initially, and then at some point, split up or spin off into their component parts. Often one section of a firm will be absorbed into a bigger operation and the other section will take on more of a classic boutique structure, a kind of one-stop shopping for the single-minded client.
This kind of activity has continued without respite, leading to the question: What’s going on here?
My answer is speculative, though I like to think it’s based on information and experience. Smaller firms have learned the hard way that if they reflexively stick to Big Law metrics and methods, they will almost certainly fail. They cannot run their firms as collections of independent silos. Rather, each firm requires a customized and comprehensive business plan.
Breakups and breakouts are symptomatic of pressures brought on by the Great Recession, which is less than a decade behind us. Clients, especially those that were burned, are savvier about business and demand legal fees that make sense. Everybody’s squeezed by this attitude, especially the little guys.
Yes, I believe there’s still a place for the classic boutique, as long as its leaders are classically trained in modern law firm management. To stick with a focused practice, a firm must run a mean, lean machine. The only way to do that is to avail itself of high-tech advances and hire professionals who can help implement best-practice systems. A recent story by The Daily Business Review breaks down a Wolters Kluwer ELM Solutions’ report confirming that small law firms offering more competitive prices are obtaining over half of the work.
It’s not about having an army of professionals, but about laying out clear goals and staying focused on achieving them. In this crazy, competitive market, being afraid to fail is setting you up for failure. It’s time for entrepreneurs to buckle down and try new tactics to remain relevant. Business will always be about relationships but that no longer translates into business referrals. Law firm managers must take educated risks and look to build new relationships with legal pioneering service providers.
Successful law firms are elbowing their way through the crowd. The standouts are prudently exploring new methods, systems and alternatives to further develop the practice and are thereby meaningfully transforming the legal landscape.