June 20, 2011

From Specialization to Succession Plans: What's Cooking for Solos and Small Firms

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By Robert W. Denney

Recently I had the pleasure of addressing a conference presented by the Illinois State Bar Association. The subject of my talk was "Significant Trends for Solos and Small

Firm Practitioners." Since many readers of this publication are solos or with small firms, I thought I would share some of these trends with you.

Among the trends now affecting solos and small firms, there are two that seem to contradict each other. Let's start by considering those.


Where the Country Lawyer Stands

One trend is the continuing movement toward specialization, based on the premise that "you can't be all things to all people." As is the case with doctors and other professionals, many people today want a specialist when they are choosing a lawyer. Furthermore, because there are continuing changes in many areas of the law, they require a lawyer to concentrate on the legal issues affecting them so they can serve their own clients properly—and also to avoid malpractice claims! Therefore, a number of solos and small firms are focusing their practices on a single area much more than they formerly did.

On the other hand, the old-fashioned "country lawyer" who can handle a variety of legal matters continues to be in demand. Obviously, this is common in rural areas, but it is true in large cities and suburban areas as well. Price is one reason, given that general practitioners in law, as in medicine, tend to charge less than specialists. Another reason is that many people prefer "one-stop legal shopping" rather than going from lawyer to lawyer for their various legal needs.

At the same time, there is also a trend for lawyers who focus their practices in a single area to be a "one-stop legal shopping" resource as well. They are able to do this because they have established relationships with lawyers who focus in other practice areas. However, instead of referring a client out to those other lawyers, these practitioners have the other lawyers perform the work but they bill their clients themselves, much like the responsible or billing partner in a large firm does.


What's In and Out in Practice Areas

There have always been certain areas of the law that fit well with solo and small firm practices, and some of them are hotter than ever. Estate planning and administration is one. Divorce and family law is another. Also, elder law has become a significant practice area, particularly for small firms. In addition, immigration law is still an area that many small firms are concentrating on to the point of becoming "boutiques."

And this alert: Small litigation firms are enjoying unexpected growth. Because they are less expensive than the big firms, and also more flexible in how they work with clients, these firms are receiving more cases from the legal departments of large companies.

Certain other areas provide steady and continued work for solos and small firms, including criminal law. As one practitioner said, "Whether you like the practice or not, criminal matters will never go away. In fact, they just seem to multiply." Another steady area is real estate closings and title insurance services. Yes, there may be a cooling off in these areas for a while, but there will always be people buying and selling homes.

On the other hand, consumer bankruptcy has cooled considerably. The same is true for medical malpractice, where filings are down in most states because of tort reform. Some med mal practitioners are shifting to different areas, while others are merely being more selective in the cases they accept.


Business-Building Tactics

There are several interesting trends in marketing. For one, while Yellow Pages advertising is still the marketing mainstay for most solos and small firms, some have cut back on their YP ads, partly because of the cost, but also because of the decline in consumers who use the Yellow Pages.

On the upswing, blogs continue to increase like ants at a picnic. Post-matter marketing surveys—by interview, mail or electronically—are increasing as well. So, too, are sponsorships of local events and awards. Both of the latter trends, while typically important marketing activities for large firms, are now being used by small firms as well.


Some Other Interesting Trends

Because of Sarbanes-Oxley and other potential conflicts, the lawyers in large firms no longer serve on the boards of publicly held companies. Recently, however, there seems to be an increase in solos and small firm lawyers sitting on the boards of privately held companies. And not only are these lawyers serving, in effect, as "in-house" legal counsel, they are also serving as trusted business advisors.

While succession planning, for client responsibility as well as firm management, has become a major issue in midsize and large firms, it is now emerging as a trend in small firms as well. And when you think about it, the reason is obvious. These firms are often dependent on a small number of major clients—clients they cannot afford to lose when the founding partner or another senior lawyer retires or is no longer able to practice.

Lastly, there's an interesting trend toward improving the design and decor of small firm offices. The managing partner of one such firm, which recently refinished its office to convey the feel of a gracious "bed-and-breakfast," explained the reason: "Since most of our clients dread coming to a lawyer, it makes them more relaxed and comfortable. And the pleasant office environment also helps us in our recruiting."

Feeling relaxed and pleasant within a law firm's walls is probably a trend that everyone would like to see on the upswing!