Perspective: It’s the Age of the Law Boutique

Editor’s Note: The author of this post is a former IP practice head of Bingham McCutchen who is now with an IP law boutique.

By Scott Bluni, Partner, Kacvinsky Daisak Bluni

Now more than ever, law firm boutiques are sprouting up everywhere and attorneys of every level of seniority are joining their ranks. Boutiques — generally smaller firms that focus on a defined number of related legal disciplines — have existed since the practice of law as a profession, but it seems that they are now flourishing at an unprecedented rate and competing more directly with BigLaw.

Why now?

While countless and unique factors contribute to this ongoing phenomenon, three basic underpinnings have recently established the boutique as an attractive alternative to BigLaw for many types of legal services:

(1) the financial crisis of 2008 gave rise to a paradigm shift in the way that clients engage with, perceive and use outside counsel, which then gave rise to …

(2) a change in the risk profile facing attorneys, considering the option to create or join a boutique firm, and finally …

(3) the evolution of technologies that have significantly impacted the resources required for the administration of a law practice.

We all remember 2008, embodied by the Hank Paulson-on-his-knees moment. While some might argue the progress of our economic recovery since then, it is beyond dispute that the business of law — like many other businesses — has changed in a fundamental way.

And there is no looking back anytime soon.

The crisis caused consumers of legal services, for the first time for many, to take a critical and holistic look at how they hire and engage with law firms; legal budgets were slashed; value proposition of outside counsel, once assumed, was questioned; and in-house attorneys were hired as a substitute for using more expensive outside counsel. The work dried-up, pushing more than a few established firms into extinction.

There was (and continues to be) enormous pressure on firms to adapt to new working arrangements and innovative fee structures.

For an industry with deeply rooted traditions, systems and procedures, which took centuries to develop, this was like asking a cargo-laden supertanker to make a 90-degree turn in the open ocean during a hurricane. Most big firms simply could not adapt, or at least not quickly enough to keep up with client demands. Importantly, the change to clients’ mindsets has been one of ongoing, continual progression, rather than an episodic event.

With change there is opportunity, and while attorneys are generally risk-averse by nature, they are well-trained to identify opportunity. Whereas talented attorneys have historically flocked to the warm embrace of the apparent stable and highly-developed infrastructure of BigLaw, the change in client mindset caused a ripple effect within the bar. Suddenly, larger firms seemed like a risky proposition. Attorneys started asking themselves whether they could react to rapidly-changing client needs in a nimbler and responsive manner than their BigLaw employers. Partners with the prospect of portable work were (and continue to be) emboldened by the apparent willingness of clients to send a growing amount of work to boutiques. But while these attorneys may have had a relative sense of comfort with respect to portable work, there was and still is the question of BigLaw support functions, such as marketing, training, billing, timekeeping, and other administrative systems.

That’s where technology developments come in.

Technology developments over the last several years have lowered the barriers to entry and success of the boutique law firm. Such developments have resulted in sophisticated yet affordable solutions to document management, communications, accounting, timekeeping, project management and the like. What’s more, there is an increasing number of viable outsourcing options for core functions, such as human resources, IT, attorney training, marketing and public relations. Innovative workspace developments such as shared workspace environments and “on demand” office and conference room space offer short-term, flexible solutions for young and growing firms. These, and other technology solutions have enabled entrepreneurial-minded attorneys to effectively manage overhead and risk so that they may participate in the start-up revolution.

To be clear, there will always be a place for BigLaw. Large deals that require multi-disciplinary support, bet-the-company litigation, international counseling and large matters requiring armies of attorneys are examples of matters that will continue to be serviced at the big, reputable firms, and rightfully so. But for other legal services, the pivot toward boutiques should continue to accelerate with relevant technology developments, while the model continues to gain acceptance.