General Practice, Solo & Small Firm DivisionBest of ABA Sections
General Practice, Solo & Small Firm
Alfred L. Scanlan, Jr., and Marc Seldin Rosen
The shift of growth patterns in large firms across the country has created smaller, more easily manageable firms, many of them boutique practices. Lawyers who have spent entire careers at the safe havens of larger firms no longer hesitate 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.
Lawyers in boutique firms can find greater fulfillment in their careers and actually enjoy work. Does it make sense for everyone to run out and hang up a shingle with the word "boutique" attached? Probably not. It’s an option lawyers looking for change should consider.
An Idea Whose Time Has Come. During the 1970s and early 1980s, it seemed advantageous to have as many lawyers as possible under one roof. Lawyers were afraid that no sizable client would pick a smaller firm over a large one. Lawyers may have had the fervently held belief that the pyramidal structure of law firms had no height restrictions. These beliefs have since been revealed as myth.
Clients often choose to work with a boutique instead of a larger firm because of the boutique’s size and focus. Clients understand that the lawyer’s skills are far more important than the length of office hallways.
Starting a Boutique. Starting a boutique firm is not easy, but a boutique practice can compete with big firms.
Successful boutiques evolve over time. Flourishing boutique firms were formed by lawyers with a history of practicing in a certain area. Most of these lawyers earned significant reputations.
The first step in forming a boutique is to acquire a reputation for competence and professionalism within that specific area. It helps build a client base. No boutique, however exclusive or fancy the credentials of the lawyers, will survive without clientele.
Success is built one case at a time, one client at a time, and one day at a time. Repeated competence becomes a reputation. Consistent competency and a wide reputation result in a steadfast and reliable clientele.
If you have been able to support yourself at a larger firm, you should be able to support yourself by opening your own boutique. Decreasing overhead costs and shedding co-workers who don’t carry their own weight will probably enable you to support yourself in far better fashion.
What Is a Boutique Practice? A boutique firm is a sole practitioner or a group of lawyers who have established themselves in a particular area or areas of practice and who have chosen to work together in this specialized area.
A boutique is not a general practice—it does not try to do all things for all clients. Lawyers cannot make "exceptions." Rather, boutiques should call in specialists if necessary to address specific issues in a given case.
Developing referral relationships is absolutely crucial to the success of a boutique practice.
The primary rule for the success of a boutique is to stay focused and never stray. 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 simple wills would be harmless, perhaps even fun. If that notion creeps into your head, reject it immediately. Refer that matter to a colleague who practices in that area.
Referring cases, you will save years on the life of your malpractice carrier, prevent many sleepless nights, and 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.
Making the Decision. What considerations should be taken into account when deciding to start a boutique practice? Ask yourself:
• Do you enjoy what you are doing?
• 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?
• What does your economic future look like?
• Do you feel that you are being compensated fairly?
• Are you willing to risk failure by attempting something new?
The answers may encourage you to consider boutique practice. This is no time to dream. 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. Try to identify those clients you can personally represent within your boutique’s identity. 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. Multiply that figure by 75 percent.
Your list of referral sources should have two categories: referrals by practicing lawyers and referrals by laypersons. Analyze your projected income from these sources. Consider how much business you will refer to other lawyers. If outgoing referrals are equal to or greater than incoming referrals, you should be able to depend upon your revenue estimates from incoming referrals. If outgoing referrals are projected to be low, assume incoming revenue from referrals will also be low.
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?
Beware of market forces as well. The market may not be big enough to support the very thing that you and your boutique firm might choose to do. Research the size and competition in your market.
General Practice versus the Boutique. There is a place for the general practitioner. 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.
To compete against general practitioners and large firms, a boutique firm must offer extremely capable legal services in a clearly defined field. Clients who might ordinarily go to a large firm or seek a generalist will recognize that their needs are best served in a particular case by a firm that truly specializes.
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 often find a renewed sense of satisfaction and pride in the profession. Boutique lawyers have returned to an earlier time when lawyers liked what they did and liked each other.
Beware 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.
Alfred L. Scanlan, Jr., and Marc Seldin Rosen are partners in the firm of Scanlan & Rosen, in Baltimore, Maryland .
This article is an abridged and edited version of one that originally appeared in The Compleat Lawyer, Fall 1996 (13:4).