October 23, 2012

Battling the Big Boys: Outsourcing Helps New York Boutique Compete in Megafirm Arena

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July/August 2008 Issue | Volume 34 Number 5| Page 50


Battling the Big Boys: Outsourcing Helps New York Boutique Compete in Megafirm Arena

SUBSTANCE VS. FLASH. Many high-profile New York firms are known to flaunt their celebrity attorneys and chichi -offices—not to mention their lucrative profit-per-partner rates, garnered through all those sky-high legal fees. But that’s distinctly not the case with New York’s Zeichner Ellman & Krause. This 36-lawyer commercial law boutique is more grit than glitz (it even sports some secondhand office furniture)—and its partner billing rates are often half those at blue-chip Wall Street firms.

So what’s the impact on business? Pretty good, it seems. Zeichner Ellman attracts big-name clients, successfully representing such corporations as Bear Stearns & Company and Citigroup Private Bank, among other well-known names.

These and other major clients are drawn to Zeichner Ellman because of its ability to offer high-quality legal service at, relatively speaking, bargain-basement rates—something made possible in part by the firm’s extensive use of outsourcing. It hires both lawyers and nonlawyers at companies here and overseas to help with document review, electronic discovery and other litigation needs.

Increasingly, clients are encouraging outsourcing. “Many of our clients have become more interested in outsourcing because of economic difficulties, the increased rates of legal services in general, and the high cost of litigation in particular,” says Yoav Griver, a partner who left the prestigious Weil, Gotshal & Manges three years ago to come to Zeichner Ellman.

By using outside attorneys, Zeichner Ellman is able to level the proverbial playing field and compete with the legal-profession heavyweights. “The big law firms have 100 associates they can throw at litigation to help handle large, complex cases,” Griver says. “We don’t have the capacity right now to hire those associates [full-time]. But what outsourcing allows us to do is have 100 associates that are available for a particular litigation. The lawyers from outsourcing companies, particularly those who are overseas, are very capable, graduated from very good law schools, speak English well and know what they’re doing.”

Griver says that, although he was happy at Weil Gotshal, he left the megafirm in part because of the empathy he felt for his clients who either had to grin and bear the top-tier firm rates—which can hit $800 an hour or more for senior partners’ time—or leave and take their business elsewhere. Many left.

“Some of the clients that I had developed relationships with were starting to leave Weil, Gotshal; these were medium-size companies, not just small clients,” Griver says. “I understood why some clients were resisting the rising rates. So when I saw an opportunity to move with them, I did. I knew that Zeichner Ellman’s philosophy was to provide sophisticated services at a reasonable price and that outsourcing would be one of the ways to do that.”

Of course, there are drawbacks inherent in outsourcing. Among them, a law firm’s members usually don’t meet the outside lawyers whom they’ve hired—let alone develop relationships with them. That can breed a sense of alienation on both ends, and it sometimes diminishes client rapport.

But Griver believes that’s not any different from what occurs within, say, a 500-lawyer firm. “If you hire a large law firm, you trust your relationship partner and the attorneys you’ve met at the law firm,” he says. “It’s the same way with the relationship with outsourcing attorneys. The client meets the partner at the law firm and the senior associates. And we know the managers of the contract attorneys. We have a consistent feedback loop so that if there’s a problem, we can identify it. It is, once you’re used to it, pretty seamless.”

Griver says initially a law firm should expect resistance from certain clients when they learn that the partnership wants to outsource some of the legal work. It’

s up to the firm to make clients comfortable, assuring them that the information that’s being shipped out will be kept confidential, and that the work will be done in a correct and timely manner.

The timeliness is a critical key. And outsourcing legal work can actually help speed delivery to the client, especially when the outsourcing company has locations on different continents and can offer around-the-clock document review or e-discovery research.

That’s the case with the lawyers who work for the Clutch Group, an outsourcing company with lawyers, paralegals and others in the United States and in India. It’s a company Zeichner Ellman often uses. That is, when American lawyers leave for the day, they turn over their files to their Indian colleagues who work the next shift.

“The 24-7 operational environment you can have between India and the United States certainly adds value,” says Clutch CEO Abhi Shah. “For particular litigation, certain sensitive projects, turn-around time is extremely important and this model cuts the time down to half. So [the growth of outsourcing] is inevitable for many reasons; cost is not the only driver.”

Clutch’s business model meets what Zeichner Ellman wants in an outsourcing company, Griver says. “You have to match the outsourcing task to the company,” he points out. “If you have a patent litigation, you may choose a patent boutique. For us, Clutch provided document review and the use of temporary personnel. Its business philosophy and approach matched ours.”

He thinks more firms should consider outsourcing and advises lawyers to shop around when looking for an outsourcing partner. “Keep an open mind,” he says, “meet with the company, and then go with the company that you are most comfortable with. It’s important to understand that, much like law firms, each outsourcing firm has different strengths and weaknesses.”

About the Author

Steven T. Taylor is an award-winning freelance journalist living in Portland, Oregon, who writes on various subjects in the legal media.