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Private Sector: Bigger isn't better
Small law firms can prosper even as megafirms continue to grow
Tuesday, March 25, 2008

Pittsburgh's largest law firms, mirroring a national trend, continue to grow. One recently announced the addition of 55 lawyers in New York City, while another just opened an office in Paris. Results of an annual survey by the National Law Journal show that the nation's 250 largest law firms "expanded by a robust 5.6 percent" last year compared with the previous year and added a collective 6,790 lawyers.


Roger L. Wise is owner of Roger Wise & Associates LLC, Franklin Park. He was a lawyer in U.S. Steel's law department for 10 years. Contact him at rlwise@rogerwise.com.

This may be welcome news for large multinational corporations needing sophisticated legal counsel, but it's mixed news for smaller, entrepreneurial businesses, high-net-worth individuals and even midsize corporations that cannot afford the megafirms' fees.

Smaller, boutique firms of two to 10 lawyers -- who are more flexible and accountable and do not carry the large overhead of in-house administrators, law libraries and fancy offices -- are taking market share. (A boutique law firm is a collection of attorneys specializing in one or a select few practice areas).

The American Bar Association's recently published article says: "Corporate legal clients once again seem to be developing an affinity for small law firms -- notwithstanding the merger mania of recent years and the perception that large corporations want to hire only megafirms. With increasing frequency, the chief legal officers of leading corporations are now retaining small law firms and even solo practitioners."

What has this meant to American business? In my experience, bigger is not necessarily better, especially in the litigation field.

What are the advantages that boutique firms offer to clients?

First, they offer personalized service, accountability and responsiveness -- whether the client is a small business owner, wealthy individual or the in-house general counsel of a Fortune 500 corporation.

When ordinary people select a lawyer, they look for someone with whom they connect interpersonally and are comfortable. They do not hire a firm -- they hire an attorney.

Corporate law departments are no different. They want a relationship with the person who is working hands-on with the matter. With a smaller firm there is direct and immediate access to the senior litigator, who is the one actually working up the case and knows the facts. Gone are layers of partners and associates and their associated bureaucracies and costs.

A number of corporations want to use outside firms as co-counsel with their own in-house attorneys. The in-house lawyer may want to take depositions and have a personal hand in the case preparation. Unlike larger firms, boutiques are very willing to work cooperatively with in-house counsel and permit them to share the litigation workload. This serves to foster the confidence that the corporate client has in its outside firm.

Additionally, technology has leveled the playing field. Legal research is now almost exclusively Internet-based. Gone is the requirement that a law firm have stacks of expensive books in its law library. Further, federal courts and an increasing number of state courts now mandate the filing of all court documents via the Internet. Communication is by e-mail. The fax machine and correspondence sent by "snail mail" are things of the past. As the cost of technology has dropped dramatically, small firms are becoming just as competitive as large firms.

Will megafirms become a thing of the past? Absolutely not. They play a vital role in the marketplace, provide high quality teams of specialists for transactional and merger-acquisition services and litigation, and can especially be effective in multiple jurisdictions.

And there always will be "bet the company" litigation where there is so much value at stake that the general counsel and the board of directors choose the megafirm because budget ceilings are higher, and because they do not want to be criticized if the case turns sour.

There also always will be a place for the boutique firm, which continues to prosper.

First published on March 25, 2008 at 12:00 am
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