Using Portable Business to Start Law Firm

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PLATONiC
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Using Portable Business to Start Law Firm

Postby PLATONiC » Sat Apr 24, 2010 9:46 am

I'm interested in starting my own law firm in the future. Not sure when, because I don't know how easy it would be for me to take my clients with me; I'm trying to see it as a numbers game insofar as the more clients I have during my time at a mega law firm, the more clients I'll have as either a solo practitioner or small-firm partner. But I would like to know about the dynamics of this "portable business" thing that enable partners to hop around from firm to firm.

1. What are the reasons for clients not wanting to stay with an attorney if he/she decides to leave the firm? The client is pretty much paying for the exact same attorney, right? It might be the case that the attorney can offer better rates as a result of moving if the attorney decides to start a solo-practice.

2. Is there an article somewhere on the net that describes how portable business works?

3. How much 'business' would a typicial "mid-level partner" (not sure if this term exists, but I'm just trying to refer to partners that are neither senior nor junior) have in terms of dollar amounts AND hours that can be delegated to associates? Are there partners that actually carry 10,000 billable hours worth of business?

4. Does anyone know of any attorneys that leave their law firm as a senior partner and end up pulling off a successful law firm that isn't a solo practice? How realistic is it for an attorney (ex-partner) to start with just one associate and a paralegal during the first year, but ends up expanding to a ten-attorney law firm in three years?

Thanks so much for reading guys!

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Royal
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Re: Using Portable Business to Start Law Firm

Postby Royal » Sat Apr 24, 2010 10:04 am

There are many naysayers on this forum who feel that starting a firm is either impossible or undesirable. You're going to get a ton of negative responses from people who only want a secure, long term, high paying career and have no entrepreneurial drive to start their own firm. It's the prevailing attitude on this forum, and there's nothing WRONG with that attitude; its get annoying, however, when law students with no real world law experience deride the idea as impossible, foolish, etc. /Rant

To answer your last question first, almost every midsized and large firm out there started as a small partnership. It's certainly not impossible. It's the way it normally works, in fact. However, it's certainly not easy. The vast majority of solos stay solo.

To answer the portability question: I worked for a small company (60 employees, give or take) before law school. We had retained a mid-sized law firm as outside counsel, but specifically always dealt with the same attorney. Our company was in a very niche practice area, and that's what this attorney did.

If he left his firm today, our company, along with 90% of his other clients, would go with him to his new firm. He's cultivated a very personal relationship with his clients. We don't think of it as calling "XYZ law firm about this matter", but calling "(lawyer's name) about this matter".

270910
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Re: Using Portable Business to Start Law Firm

Postby 270910 » Sat Apr 24, 2010 10:07 am

It all depends on the firm. You'll never, ever take a client with you from most big firms if you go solo because the clients that hire big firms use them for matters completely beyond the capacity of a single attorney to handle.

On the other hand, it's fairly common for people to take clients when the lateral to other firms, or to take clients when they start a new firm with several attorneys.

Of course, there are exceptions. I know first-hand people who've 'gone solo' and took clients with them, but it was extremely specialized circumstances and the rare instance where one attorney actually could handle the work of several of the clients. So much depends on the niche you wind up in. Wal-Mart's litigation? Probably not portable without a small army of attorneys. A local defense contractor's lobbying efforts? Plausibly portable by a single attorney. But there's everything in-between, too. If you become a star at white collar defense, you may even be able to go solo without taking clients with you - you can pick them up later. There are just so many variables, it's hard to plan at this stage in your career when you'll (like all of us ITE) be fighting hard to get any legal job.

I know that much, but you won't get much a good answer from this forum as a result of the fact that we're all law students or VERY young lawyers.

Renzo
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Re: Using Portable Business to Start Law Firm

Postby Renzo » Sat Apr 24, 2010 11:36 am

I admire your ambition, but you are planning for something that can't really happen any sooner than about 12-15 years from now. Soooooo much could change/go wrong in that time, I would concentrate more on short-term/intermediate-term goals. Like getting good grades so that you can get into a firm in the first place.

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ggocat
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Re: Using Portable Business to Start Law Firm

Postby ggocat » Sat Apr 24, 2010 12:36 pm

PLATONiC wrote:1. What are the reasons for clients not wanting to stay with an attorney if he/she decides to leave the firm? The client is pretty much paying for the exact same attorney, right? It might be the case that the attorney can offer better rates as a result of moving if the attorney decides to start a solo-practice.

Some clients need large firms for the resources they can devote to a matter on short notice.

PLATONiC wrote:2. Is there an article somewhere on the net that describes how portable business works?

As my ehtics prof used to say, "check your local listings." Rules may differ by state, and you could get a bar complaint if you solicit inappropriately. See, e.g., Fla. R. Prof'l Conduct 4-5.8(c)(1), available at http://www.floridabar.org/divexe/rrtfb. ... DF006EDDE9. Your best bet is to contact your state bar ethics hotline and/or talk to attorneys in your state who have hung a shingle after leaving another firm. Sometimes taking clients will result in you getting sued.

Not really on point, but I recommend this book for someone considering going solo: --LinkRemoved--

PLATONiC wrote:4. Does anyone know of any attorneys that leave their law firm as a senior partner and end up pulling off a successful law firm that isn't a solo practice? How realistic is it for an attorney (ex-partner) to start with just one associate and a paralegal during the first year, but ends up expanding to a ten-attorney law firm in three years?

I get the impression that it's generally difficult for a partner at a large firm to take any big clients with him/her to a solo operation because of #1, above.

I've seen partners split from small firms and do exceptionally well, probably because a small firm attorney starting another small firm can bring with him/her the same clients (and type of clients) from the previous firm. One that comes to mind hired four associates and a number of paralegals and secretaries within three years.

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vanwinkle
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Re: Using Portable Business to Start Law Firm

Postby vanwinkle » Sat Apr 24, 2010 12:45 pm

Royal wrote:There are many naysayers on this forum who feel that starting a firm is either impossible or undesirable. You're going to get a ton of negative responses from people who only want a secure, long term, high paying career and have no entrepreneurial drive to start their own firm. It's the prevailing attitude on this forum, and there's nothing WRONG with that attitude; its get annoying, however, when law students with no real world law experience deride the idea as impossible, foolish, etc. /Rant

I love it when people mindlessly bash this place to try to earn themselves a little credibility.

Hitachi
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Re: Using Portable Business to Start Law Firm

Postby Hitachi » Sat Apr 24, 2010 1:13 pm

Senior partners who start a new firm can often take some junior partners and associates with them, so they can handle larger matters.

CanadianWolf
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Re: Using Portable Business to Start Law Firm

Postby CanadianWolf » Sat Apr 24, 2010 1:20 pm

Lateral transfers with a large "book of business" can be difficult due to conflicts of interest with the new firm's existing clients which may necessitate starting one's own firm.

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PLATONiC
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Re: Using Portable Business to Start Law Firm

Postby PLATONiC » Sat Apr 24, 2010 5:33 pm

Thanks for the input guys. I'm really learning a lot about the topic:D

It's true that I still have about fifteen years until any of this will ever happen, so I'm not going to get emotionally committed to fulfilling this particular entrepreneurial ambition. It's just fun to know about this stuff ahead of time. I do understand that me actually pulling this off will be very, very difficult, and that it's contingent upon a lot, and I mean ALOT, of things i.e. getting into biglaw, which is extremely difficult, surviving as an associate for about seven years, and working even harder as a partner.. who knows if I'll even be able to develop client development skills sufficient for becoming a legal entrepreneur along the way...

I've done some research on starting a solo practice, and I noticed that law firms really don't require much money to start. It's just the human capital that'll suck up most of the revenues. But given the fact that my fiance is extremely well-off (inheritence from parents), I don't think I'll be using much of the money that I earn as an associate/partner. So, if I am able to reach the mid-level partner stage, I wouldn't mind using a a couple of million dollars as start-up costs for my business.

Can somebody please give me a rough approximation of the number of billable hours that a typical mid-level biglaw partner is able to bring for business?

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PLATONiC
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Re: Using Portable Business to Start Law Firm

Postby PLATONiC » Sat Apr 24, 2010 5:49 pm

Does it also help to say that I speak an East Asian language and plan on living in Chicago for the rest of my life? I'm wondering how much this'll help me gather clients when I start the firm... I thought about running some of those cheesy commercials that they play on TV for those late-night Korean drama shows. I also thought about going to Asian churches so that I can be involved in the community... lol.

I'm interested in tax litigation/transactions, and have posted questions about them here viewtopic.php?f=23&t=115649.

imchuckbass58
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Re: Using Portable Business to Start Law Firm

Postby imchuckbass58 » Sat Apr 24, 2010 5:57 pm

PLATONiC wrote:
Can somebody please give me a rough approximation of the number of billable hours that a typical mid-level biglaw partner is able to bring for business?


This is really a completely unanswerable question. There are some mid-level partners who are "service partners" and really just bill/manage cases, and there are some mid-level partners who are relationship partners who bring in business.

If you want a ballpark, look at a firm, see what the leverage is, multiply it by billable hours and that should give you your answer.

So, a typical biglaw firm has 4-5 associates/counsel per partner (call it 5). In good times those associates average 2000 billable hours, plus partner hours. So figure the average partner brings in 10,000-12,000 hours if the firm is running at a good clip (neither over or under capacity).

But, in actually the number is probably very different. There are probably quite a few partners with little business (they mostly bill, or are junior to a more senior partner who brings in the relationship). And there are probably 5-10 partners who bring in a huge amount of the business.

I worked at a consulting firm and got to peek at the statistics because I was doing some bitch work for a partner on the managing committee. The partners running the biggest cases were easily supporting 20-25 analysts/associates. If you have a mega-case (think IBM antitrust at Cravath in the 70s and 80s), I would not be surprised if the main relationship partner was credited with over 40,000 hours.

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PLATONiC
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Re: Using Portable Business to Start Law Firm

Postby PLATONiC » Sat Apr 24, 2010 6:02 pm

imchuckbass58 wrote:
PLATONiC wrote:
Can somebody please give me a rough approximation of the number of billable hours that a typical mid-level biglaw partner is able to bring for business?


This is really a completely unanswerable question. There are some mid-level partners who are "service partners" and really just bill/manage cases, and there are some mid-level partners who are relationship partners who bring in business.

If you want a ballpark, look at a firm, see what the leverage is, multiply it by billable hours and that should give you your answer.

So, a typical biglaw firm has 4-5 associates/counsel per partner (call it 5). In good times those associates average 2000 billable hours, plus partner hours. So figure the average partner brings in 10,000-12,000 hours if the firm is running at a good clip (neither over or under capacity).

But, in actually the number is probably very different. There are probably quite a few partners with little business (they mostly bill, or are junior to a more senior partner who brings in the relationship). And there are probably 5-10 partners who bring in a huge amount of the business.

I worked at a consulting firm and got to peek at the statistics because I was doing some bitch work for a partner on the managing committee. The partners running the biggest cases were easily supporting 20-25 analysts/associates. If you have a mega-case (think IBM antitrust at Cravath in the 70s and 80s), I would not be surprised if the main relationship partner was credited with over 40,000 hours.


Thanks for answering the question, despite the unanswerable nature of it:D I guess a theoretical approximation could be about 10,000 hours/year for the relationship partners. I'm not going to count on me becoming the rainmaker of a firm, nor do I expect to retain in future years the 40,000 hours that could result from some legendary case.

Do managing partners bring in clients? How much help would the managing partner experience help in gathering clients and eventually starting your own law firm?

imchuckbass58
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Re: Using Portable Business to Start Law Firm

Postby imchuckbass58 » Sat Apr 24, 2010 6:04 pm

But, to edit the above, at really big firms, you can't really take the business with you unless you are an absolute superstar (think David Boies who struck out on his own from Cravath, Bob Bennett from Skadden to Hogan and Hartson, John Quinn when he started QE). Many companies have worked with the same outside counsel for decades (i.e., S&C has been Goldman's main outside counsel since at least the early 80s) and don't really give a crap if you want to start your own firm.

It's different of course for smaller firms, as well as practice areas are more fragmentary (real estate, trusts and estates).

sumus romani
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Re: Using Portable Business to Start Law Firm

Postby sumus romani » Sat Apr 24, 2010 6:04 pm

Damn, I totally thought that thread would be about a proposal to start a law firm using a hot dog cart.

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PLATONiC
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Re: Using Portable Business to Start Law Firm

Postby PLATONiC » Sat Apr 24, 2010 6:45 pm

sumus romani wrote:Damn, I totally thought that thread would be about a proposal to start a law firm using a hot dog cart.


lol... it took me about five minutes to "get" that joke...

imchuckbass58 wrote:But, to edit the above, at really big firms, you can't really take the business with you unless you are an absolute superstar (think David Boies who struck out on his own from Cravath, Bob Bennett from Skadden to Hogan and Hartson, John Quinn when he started QE). Many companies have worked with the same outside counsel for decades (i.e., S&C has been Goldman's main outside counsel since at least the early 80s) and don't really give a crap if you want to start your own firm.

It's different of course for smaller firms, as well as practice areas are more fragmentary (real estate, trusts and estates).


I can see what you mean on it being virtually impossible to take the business with you. But what I'm expecting is, given the 15,000+ billable hours or so that a sucessful rainmaking partner would bring in, could it be reasonable to retain 10%? But what am I saying... this just can't be quantified...

Renzo
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Re: Using Portable Business to Start Law Firm

Postby Renzo » Sat Apr 24, 2010 7:18 pm

Really, boss, you are making yourself crazy for nothing. One of the things that you would be expected to learn as a partner-candidate at a firm the kind of business development you are trying to guess about now. Give it ten years and you'll be in a position to answer these questions.

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PLATONiC
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Re: Using Portable Business to Start Law Firm

Postby PLATONiC » Sat Apr 24, 2010 8:08 pm

okay... t.t




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