Bigger Isn’t Always Better, Boutique Firm Lawyers Say

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By Gayle Cinquegrani

Partnership in a large law firm is the stereotypical pinnacle of success for attorneys, but some lawyers choose to spend their careers in smaller, more specialized law firms known as boutiques.

“We’re able to service our clients and keep our clients happier in a smaller environment,” Peter Saucier told Bloomberg BNA Jan. 9. “We’re more flexible with fees, and we’re more flexible with services.” Saucier is a shareholder at Kollman & Saucier, a 13-lawyer management-side labor and employment firm in Timonium, Md.

Most of Kollman & Saucier’s shareholders used to work at large law firms, but “we all left those big firm practices,” Saucier said. “There’s a certain amount of satisfaction in being your own boss.”

“Things just move more smoothly” in a small firm because “there’s a lot less bureaucracy,” Nelson Thomas told Bloomberg BNA Jan. 12. “I really love it.” Thomas is a founding partner of Thomas & Solomon, an eight-lawyer worker-side employment law firm in Rochester, N.Y.

Collegial Atmosphere

Whether they work on the management side or the worker side of labor and employment law, the attorneys contacted by Bloomberg BNA touted the advantages of boutiques for both lawyers and clients. They said the lawyers collaborate more and are able to offer high-quality and expert services at lower prices.

At many big law firms, labor and employment services are provided “as an adjunct” to other practice areas, Saucier said. “Businesses aren’t making money” from employment lawyers’ services in the same way they do from the transactions worked on by corporate lawyers, so employment lawyers’ “billable rate is going to be much lower,” he said. “These very large firms can’t support a management labor service” because worklaw practitioners “can’t charge as much an hour” as corporate lawyers.

“A boutique firm allows us to mark ourselves in a specific area. We can become masters at what we do,” Steve Lebau told Bloomberg BNA Jan. 9. Lebau is a partner at Lebau & Neuwirth in Towson, Md., a three-lawyer firm that represents employees in employment law and benefits cases.

Patricia Nemeth opened Nemeth Law in Detroit 25 years ago after becoming dissatisfied with the “compensation, the environment, the work” at the firm where she had been. She also found that firm’s competitive tone distasteful. “It was an ‘eat what you kill’ atmosphere,” Nemeth told Bloomberg BNA Jan. 10. “To create the atmosphere where I wanted to work, I felt like I had to create my own firm.”

At her management-side worklaw firm, Nemeth stresses “camaraderie” among the 10 lawyers. “We know each other really well, and we know what our strengths are,” she said. “Because we support each other, it works to our client’s advantage.”

Of course, the collegial atmosphere of boutiques can be maintained only if the firms stay afloat financially.

Risk Factors

In terms of finances, for an employee-side firm, “there are two huge risk factors: the risk that you don’t get paid and the certainty that it’s years off, meaning in the meantime you have to front the overhead,” Thomas said. He tries to make sure his firm has cases “in all stages of the process” of settlement and litigation. “I can get very nervous even when we’ve had a couple of settlements if I’m worried about what’s in the pipeline behind them,” he said.

Many worker-side boutiques do a large portion of their work on a contingency basis, so they get paid only if their client recovers money. Lebau said his firm represents employees in discrimination claims and noncompete disputes and also handles salary disputes for tenured professors. He estimated 25 percent of his clients are executive employees who pay him on an hourly basis.

Lebau & Neuwirth has found a niche that “can be very lucrative,” representing federal contractor employees in whistle-blower claims. The False Claims Act authorizes lawsuits from people who witness an act of fraud against the government, and a whistle-blower who wins can receive between 15 percent and 30 percent of the money recovered. Lengthy government investigations can drag whistle-blower cases out for several years, however, so “there’s a huge waiting time,” Lebau said.

Thomas said Thomas & Solomon handles some whistle-blower claims as well as many class actions. The firm avoids unemployment insurance cases because the attorney fees are too low and workers’ compensation cases because the law is too arcane.

Nemeth said Nemeth Law gets some of its clients by participating in several insurance companies’ employment practice liability insurance plans. Employers that have EPLI typically choose from a list of lawyers who have contracted with their insurance company to represent them in claims filed by employees alleging discrimination, wrongful termination and similar issues.

The income stream for management-side boutique firms is generally less precarious. “Management employment lawyers never get rich, but they never wonder if there will be work to do,” Saucier said. “If the economy is bad and there are layoffs, there will be work to do. If the economy is good and there is a lot of hiring, there will be work to do.”

Some clients seek out boutiques because they have a reputation for being more flexible in their billing than large, full-service firms. If a potential client approaches him for a service his firm doesn’t perform regularly, Saucier said, “I can easily or quickly decide” whether to take the assignment and how much to charge without going through a committee, as he probably would have to do in a large firm.

Quality at Reasonable Prices

“We offer quality but at a much more reasonable price,” Thomas Mackenzie, who heads Lindner & Marsack in Milwaukee, told Bloomberg BNA Jan. 11. “We are nimbler. We have substantially less overhead” and therefore “are significantly less from an hourly rate standpoint than the big firms.” He said his 20-lawyer management-side worklaw firm also has “creative arrangements” for billing.

Despite the fee differential, Mackenzie acknowledged that boutique firms “don’t have the cross-selling avenues” that full-service firms have. He said that a client who goes to a big firm with a corporate matter might also hire it to handle an employment matter. The niche factor also carries benefits, though. “We get referrals from other firms” that don’t do labor and employment law, Mackenzie said. “We actually have an advantage because people can refer work to us in the labor area without fear that we’ll try to take the whole client.”

Saucier said boutiques sometimes help each other acquire clients. “There’s an informal network of boutique firms” that refer work to each other, he said.

Another boon for boutiques has been the increased availability of information. Mackenzie said Lindner & Marsack has joined the Worklaw Network to gain access to research from network members across the country, and Lebau and Thomas credited technology with helping small law firms save money. In the past, “you had to buy shelves and shelves of books and update them constantly,” Thomas said. Now, however, “the playing field has been equalized,” Lebau said, and his firm “can subscribe to all the latest, most expensive products,” such as information websites, because it needs to buy for only one practice area.

The lawyers seemed optimistic about the prospects for worklaw boutiques. “There’s always work for good lawyers who are price-sensitive,” Mackenzie said. Thomas said he’s glad he started a firm, but he advised any lawyer considering a similar step to “prepare yourself for a couple of hard years” and make sure you’re “psychologically prepared to handle the stresses.”

To contact the reporter on this story: Gayle Cinquegrani in Washington at gcinquegrani@bna.com

To contact the editor responsible for this story: Tony Harris in Washington at tharris@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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