General Practice, Solo & Small Firm DivisionTechnology & Practice GuideAmerican Bar Association
General Practice, Solo, and Small Firm Division
The Compleat Lawyer, Fall 1996, Vol. 13, No. 4
BY ALFRED L. SCANLAN, JR., AND MARC SELDIN ROSEN
Alfred L. Scanlan, Jr., and Marc Seldin Rosen are partners in the Law Offices of Scanlan & Rosen, P.A., of Baltimore, Maryland. Established in 1993, the firm's practice is limited to complex civil litigation.
The shift of growth patterns in many large firms across the country has created many smaller, more easily manageable firms, many of them boutique practices. Lawyers who have spent entire careers at the safe havens of larger firms are no longer hesitating to make a fresh start.
When starting a boutique, lawyers often narrow their focus, perceiving that they can service their clients more personally in their own specific practice area, and refer clients to different lawyers for other services.
With reduced overhead and large firm politics out of the way, lawyers in boutique firms can find greater fulfillment in their careers and actually enjoy their work. Does it make sense for everyone to run out and hang up a shingle with the word "boutique" attached? Probably not. But it's definitely an option that lawyers who are looking for change should consider.
An Idea Whose Time Has Come
The astounding fact is not the current explosion of boutique practices, but rather that the trend took so long to develop. During the 1970s and early 1980s, it seemed advantageous to have as many lawyers as possible under one managerial roof. Perhaps lawyers were afraid that no sizable client would pick a smaller firm over a large one. Also, lawyers may have had the unrealistic yet fervently held belief that the pyramidal structure of law firms had no height restrictions. Both of these beliefs have since been revealed as mere myth.
Experiences of lawyers everywhere have shown that clients of all sizes will retain smaller firms. Clients often choose to work with a boutique instead of a larger firm because of the boutique's size and focus. Clients understand that only a limited number of lawyers can represent them in a trial or transaction, and that the lawyer's skills are far more important than the length of the office hallways.
Starting a Boutique Practice
There is no question that starting a boutique firm is not easy, but with a solid business plan, preparation, and the support of both colleagues and clients, a boutique practice can compete with the big firms.
Successful boutiques evolve over time. Looking at the evolution of boutiques in Baltimore, Washington, and various other states, it seems that flourishing boutique firms were formed by lawyers with a relatively extensive history of practicing in a certain area. Most of these lawyers established themselves in a particular area over a period of time, and have earned significant local, regional, or even national reputations.
The best first step in forming a boutique is to spend some years practicing in the area or areas of law that particularly interest you; and to acquire a reputation for competence, integrity, and professionalism within that specific area. It also helps to build a client base. No boutique, however exclusive or fancy the credentials of the lawyers, will survive without clientele.
Success at the bar is built one case at a time, one client at a time, and one day at a time over many years. Success involves a degree of competence that is displayed over and over again. Repeated competence becomes a reputation. The combination of both consistent competency and a wide reputation results in a steadfast and reliable clientele who can pay the fees and keep the lights burning.
If you have been able to support yourself relatively well at a larger firm, you should be able to support yourself by opening your own boutique. In fact, decreasing overhead costs and shedding co-workers who don't carry their own weight will probably enable you to support yourself in a far better fashion than before.
What Is a Boutique Practice?
A boutique firm is a sole practitioner or a group of lawyerswho have established themselves in a particular area or areas of practice, and who have chosen to work together in this relatively specialized area.
Beyond that, an accurate description of a boutique firm is likely to vary from person to person. About the only thing that almost everyone agrees upon is that a boutique is not a general practice--it does not try to be or do all things for all clients. When the boutique's work is of a complex and specific nature, lawyers cannot make "exceptions." Rather, boutiques should call in specialists if necessary to address specific issues in a given case.
Successful boutiques also refer clients to other firms whose defined practices compliment their own in some way to address specific needs. (See "Building Referral Relationships with Other Boutiques.") Developing referral relationships is absolutely crucial to the success of a boutique practice.
If there is one primary rule for the success of a boutique, it is to stay focused and never stray from what you do. The pressure to pay the overhead in the early stages of forming a boutique practice can be enormous. You may be tempted to pay some bills by practicing in other areas.
For example, you might convince yourself that leaving your normal area of practice in personal injury litigation in order to do a few simple wills would be harmless, perhaps even fun. If that notion creeps into your head, reject it immediately. Run, do not walk, to your nearest phone and refer that matter to a colleague whose firm, large or small, practices in that area.
In referring such cases, you will save years on the life of your malpractice carrier, prevent many sleepless nights, and make or cement a relationship with the lawyer to whom you referred the work. If that lawyer follows the same rules, the next referral will be back to you. To safeguard its identity and health, the boutique lawyer must learn to send work out the door, and that doing so is good for business.
Making the Decision
What considerations, both personal and financial, should be taken into account when making the initial decision to start a boutique practice? Ask yourself these important questions:
- Do you enjoy what you are doing where you are doing it?
- Do you expect your job satisfaction to improve, remain the same, or decrease in the future?
- Will you be able to control your own destiny by staying at your current practice?
- Are you satisfied with the current management structure?
- Are you earning enough to support your family?
- What does your economic future look like?
- Do you feel that you are being compensated fairly?
- Do you have the freedom to represent the people and entities you wish to represent without encountering conflicts?
- Are you willing to risk failure by attempting something new?
At some point, the answers to these questions may encourage you to seriously consider opening a boutique practice. Warning: This is no time to dream. It's time to get down to business. Remember, part of the satisfaction that comes with starting your own boutique is the added authority and responsibility. Greater freedom comes with the package, but so does greater risk. It is not a decision to be taken lightly.
Calculate the Potential for Revenue--and for Risk
One way to figure out what your potential revenue might be is to make lists. The first two lists should be of all your clients and referral sources. Try to identify those clients that you can personally represent within the confines of your boutique's identity. Next to every client, jot down the likelihood that the client will follow you to your new practice. It is likely that you will underestimate your retention rate in this category. For each client identified, project your annual fees. To be on the safe side, multiply that figure by 75 percent.
Your list of referral sources should have two categories: referrals by practicing lawyers and referrals by laypersons. First, analyze your projected income from these sources. Then, consider how much business you will be able to refer to other lawyers. If your outgoing referrals are equal to or greater than your incoming referrals, you should be able to depend upon your revenue estimates from incoming referrals. If your outgoing referrals are projected to be low, you should assume that your incoming revenue from referrals will also be low.
A third list should itemize all of the terrible things that can distort the figures you just calculated. Will your decision to leave your current practice result in a struggle with your current firm? How much will leaving cost? Is a struggle likely to cause your prospective clients turmoil?
Beware of market forces as well. The market may not be big enough to support the very singular thing that you and your boutique firm might choose to do. Thus, research into the size of and competition in your market is crucial.
General Practice versus the Boutique
There is clearly a place for the general practitioner or the firm of generalists. In the right environment and the right market, solo and small firm general practitioners can provide competent, broad-based legal services to enough clients to make a good living and service a real need.
If it is to compete against general practitioners and large firms, a boutique firm must offer extremely capable legal services in a clearly defined field of expertise. Clients who might ordinarily go to a large firm or seek the aid of a generalist will recognize that their needs are best served in a particular case or on a particular issue by a firm that truly specializes in that area.
Improved Quality of Life
The legal profession has become a tough and competitive business, which has resulted in a marked decline in civility, professionalism, and job satisfaction. In opening or joining a boutique practice, lawyers--working together and with lawyers from other boutique firms--often find a renewed sense of satisfaction and pride in the profession. Beyond the confines of the large firm, boutique lawyers have returned to an earlier time when lawyers liked what they did, and liked each other.
Of course, boutique lawyers are in business to make a profit, so beware of the tendency to overidealize the noneconomic benefits of a boutique practice. The stresses, strains, and fears are still there whether you are part of a large firm or on your own.
Copyright (c) 1996 American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.