Expensive lawyers
Expensive lawyers
The path to equity partner in Biglaw can be difficult but can also create unexpected opportunities in the market
This week I read an eye opening article providing an “inside look” into how to make equity partner at one of the world’s most profitable firms. It made me wonder about how aspiring partners ever figure out how to generate business, and what opportunities get created when a firm charges that much money to clients.
Read on for more.
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How to make equity partner
Earlier this week I read a fascinating American Lawyer article about how to make partner at Kirkland & Ellis. It’s an eye opening look into how to make equity partner at one of the world’s most profitable firms.
My biggest takeaway from the article was how much focus is placed on charging the highest hourly rates & maximizing the total number of hours billed. According to one partner, in order to make it you have to bill at least 2,500 hours per year. To be clear, “making it” means making equity partner. Not the non-equity partner title that Kirkland seems to grant virtually all of its senior associates. From the article:
Having such a vast number of lawyers with the title of partner allows them to forge their own reputation, build relationships with clients, and bill higher charge out rates compared with peers at rival firms, say rivals. It’s a structure that’s effective: the firm generated $6.042 billion in the last financial year.
It all makes sense. You don’t become a massively profitable firm without some of these practices. Not only are Kirkland partners generating huge amounts of revenue for the firm, they’re also finding new clients, cross selling, and finding new revenue opportunities. Again, from the article:
…a lawyer’s rating is decided by senior members of the firm based on a combination of a variety of factors including hours billed, revenue generated, business development activities such as cultivating relationships with and winning clients, knowledge management and pro bono work.
Reading all this, two thoughts came to mind.
First, how do associates learn how to win clients?
The firm doesn’t seem to host programs or trainings to help associates understand this part of the process. The conventional wisdom on business development has always been to tap your network and go to conferences. But what if the people you meet can’t afford the firm?
Over the years, I’ve heard lots of stories of friends with big networks who struggle to generate clients, because their hourly rate is simply too high. Even for those who are well connected in the business community, don’t have contacts with multi-million dollar legal budgets. That’s why I’ve always said that solely relying on referrals is an incomplete path to successful business development.
At some point you have to figure out who your ideal client is, and target them directly. You have to actively find them and pitch them, instead of just waiting for good things to happen.
Second, what opportunities does this create in the market?
Kirkland can probably get away with charging this much for their services because they’re working at the “high end” of the market. But I bet other law firms are doing something similar. How do clients feel about that? Are they looking for alternative providers who can deliver the same service at a lower price?
I believe the answer is yes. Anecdotally, I’m seeing a lot of growth in the “low cost provider” segment of the legal industry. It’s a combination of different providers, including legal marketplaces, outsourced providers,
small firms & solos, and in some instances, technology. Clients are much more savvy than they used to be, especially with the advent of organizations like CLOC, and are increasingly relying on a mix of service providers instead of just the big firms.Incidentally that’s why I have always admired Wilson Sonsini.
Although they’re a Biglaw firm, they’ve made some decisions that are pretty unique. Like launching SixFifty, a separate law company that essentially automates legal work so smaller companies can access WSGR’s legal expertise.Anyways, it’s all super interesting. I love reading about expensive lawyers because I believe it creates an incentive for clients to change. Which creates fertile ground for those of you trying to make a name for yourself.
The Latest:
Gavelytics, a company that provides analytics for state court cases, was acquired by Pre Dicta, a relative newcomer in the legal analytics space. The acquisition comes about six months after Gavelytics CEO Rick Merrill announced that he was shutting the company down—showing that even if a startup “dies” that’s not always the end of the story. Something similar happened to legal marketplace UpCounsel.
DoNotPay CEO Josh Browder offered to pay a million dollars to anyone with a case before the Supreme Court to put on AirPods and be guided by a robot lawyer. Browder’s tweet was ridiculed by lawyers everywhere, but given that it received over 7 million views, it was probably well worth it from a marketing perspective.
Brian Corbin, a new VP at an alternative legal services provider Quislex explained why he left a cushy job at J.P. Morgan. In his words: “[W]hat’s exciting about our space is that I think legal departments are still wrapping their heads around the unbundling of business processes of law from the delivery of legal services. And that creates really fun opportunities to create new roles, new team structures, identify new needs in legal departments and law firms alike [and] to find those business processes that need new types of resources, new skill sets [and] obviously different types of technology here and there.”
Weekly Poll
Thanks all for submitting the responses for last week’s poll! This week I decided to switch up topics. What do you think differentiates you at your job, whether you’re an employee or entrepreneur? You’ll be able to see the results of this poll, and leave comments if you’d like to share more!
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I know the quote mentions knowledge management and pro bono, but from off the record conversations, those factors are far less relevant than the others.
Also known as “alternative legal services providers” that supply quality lawyers at a lower cost.
I’ve written about WSGR’s founder, Larry Sonsini in the past. His career journey was unexpected, and he made some pretty bold moves going off the beaten path early on. you can check it out here: Taking The Path Less Traveled: The Most Important Decision in Larry Sonsini's Career
I think no matter what, in services, whether doctors, lawyers, etc, it has come down to who can generate business/clients and that has always been the case (its just now that abstraction is breaking a bit), I think now given digital is where the attention is, it forces service providers to be forced to now be online and give away privacy in order to become an authority in their area. Law still has a lot of low hanging fruit to go through as its not saturated, but being an online content creator is not easy or desirable with the privacy tradeoffs, but the future could look like attorneys producing content and having personal brands, and I think that sucks, but the positives is that it can allow someone from a minority background that doesn't have the connections to establish trust/authority with online content and build a relationship with key people without being in the "network". I'd say there are more positives, but the privacy tradeoff is big here, I think people are people, and even lawyers like to consume podcasts/books/content/video beyond just events and those areas are still fairly greenfield in my view
What makes me different is that I communicate regularly with my clients about what's going on in their case and what's important about the stage they're in. They also love that they get my cellphone number and don't have to fight any gatekeepers. Many clients have told me they've never had a lawyer who they can actually get ahold of, or who reaches out at least monthly.