I’ve long believed that solo and small firm practice is the best kept secret of the legal profession. For thirteen years, I’ve blogged about all of the benefits that solo and small firm practice has to offer, particularly in these transformative times.  Yet even as big law fell from grace, the legal profession continued to focus on saving big law  rather than exploring the viability of solo and small firm business models as a path to the future.

But now, after all this time, solo and small firm practice is receiving the recognition and respect that it deserves. The Legal Pioneer blog recently featured an interview with legal futurist Jordan Furlong  who had this to say about solo practice:
I actually think the future lies with niched, networked, entrepreneurial solos: lawyers who may have their own clients, but who primarily are called in to work on several overlapping projects with an always-revolving set of colleagues, like skilled trades on a building project. We still tend to interpret “solo” as “general practitioner,” which is a problem, because what we think of as general law practice is on its way to extinction: much consumer law will eventually be conquered by non-lawyers and algorithms, with lawyers on the fringe. Future solos will be specialized and agile, online and accessible, using technology to dispense basic documents and transactions and adding value through skilled counsel and strategy.

Back in May 2013, Findlaw blogger William Peacock posted about Upstart, a  crowd funding site where “backers” provide money to new graduates, who pledge to repay the funds through a percentage of future income for a term of five or ten years. Upstart and similar crowd funding platforms might potentially offer an innovative solution to debt-saddled law graduates want to start a practice — particularly in underserved communities where demand is high. Seems like a win-win situation right? So it’s not surprising then that archaic ethics rules threaten to put the kibosh on these types of arrangements.

As Peacock suggests, Model Rule 5.4’s bar against fee-splitting with non-lawyers arguably prohibits an arrangement where backers (who are non-lawyers) fund a law firm and get a cut of the firm’s income that derives from client fees. Initially, I thought that Peacock was overreacting – after all, many jurisdictions permit percentage-based arrangements in other contexts.  For example, attorneys may retain collection agents to recover unpaid client fees and take their payment as a percentage of the proceeds. Ethics boards reason that once the fee is already earned, the possibility that the lawyer’s judgment might be impaired during representation (which is the raison d’etre  for the fee-splitting bar) is eliminated.  [See NYSBA Op. 608 (summarizing state opinions on contingency-based fee collection arrangements). On the other hand, this law review comment (at 145) suggests otherwise, concluding (albeit critically) that an arrangement whereby a lawyer borrows from a wealthy friend, and agrees to repay the loan through a 10 percent share of net receipts, would run afoul of Model Rule 5.4. In addition, it’s also possible that other crowdsourcing scenarios, depending upon their structure could be construed as giving “investors” an ownership interest in a law firm which also runs afoul of Model Rule 5.4.

Ethics committees haven’t yet weighed in on crowd funding (at least so far as I could find), but should they or the ABA decide to provide guidance, they should conclude that crowd funding does not violate Model Rule 5.4.  Crowd-funding presents an entirely different scenario than investment by a rich uncle or a few wealthy friends. For starters, many crowd funding sources don’t evaluate a firm’s business plan or revenues at all so they’re less likely to interfere in a way that lawyers choose to handle their cases and serve clients. [NOTE: Some Lending clubs — another type of crowd funding service that provides loans and credit to small business may check financials – but here, the loans are repaid in the same manner as conventional bank loans rather than as a percentage of client fees].  More importantly, the beauty of crowd funding is that it spreads risks over a large pool of investors.  As a result, crowd-funding lawyers are less beholden to the demands of a single, overreaching investors and therefore, less likely to compromise their professional independent judgment to appease a financial backer. 

Last month, several media outlets reported on the growing backlash against employers who violate labor law rules for unpaid internships. Since I’d previously spoken out against use of free labor by solos and smalls from both an ethical and legal perspective, I decided to do a little sleuthing to see whether firms had changed their ways in light of heightened scrutiny of internship practices.

Simply put, I was horrified by what I found.

My research wasn’t detailed or scientific. I simply went to the site Internship.com and typed in the term “law firm.”  This produced dozens of listings  for intern positions as social media coordinators, research assistants, office administrators and case management experts – on a part-time, unpaid basis.

What’s worse from my perspective is that the vast majority of the postings for free labor came from solo and small firms. By contrast, one of the few paid positions was sought by a 70-person firm. What’s also disheartening is that if you Google some of the firms that posted at the site, you find that they have fairly healthy online presence – so clearly, they do have money to pay for some services (or perhaps “had” money and now want to cut back).  

Over at Lawyerist, Sam Glover penned a thoughtful, witty piece questioning whether the recent crop of legal technology companies promising to disrupt the practice of law, can or will actually deliver.  Sam asserts that many of these companies haven’t a clue as to how lawyers practice and consequently, they “build a “solution” to what they perceive to be a problem.” And Sam hits the nail on the head with this pithy observation:
The business of disrupting law practice is crowded field of solutions looking for problems.
Sam also wonders whether the practice of law can or should be disrupted and concludes that at best, change will occur slowly and incrementally.  And while I tend to agree with Sam’s conclusion, I also don’t view “disruption in law” as an oxymoron because our profession has experienced disruption in the past and may again see it happen in the future, even though we  don’t necessarily know what it will look like or even whether change will be driven by technology or new business models or other developments entirely. Below I list a few past developments that I view as disruptive:

Contingency Fee

According to this law review piece by scholar Stephan Landsman, the roots of the contingency fee in the United States may be traced to the early 1800s.  This is significant, for as Landsman posits:
Locating the rise of contingency fees in the early 1800s highlights their association with the strongly felt American desire to insure access to court for both rich and poor alike as signaled in the Sixth Amendment’s guarantee of the right to counsel and rejection of the “loser pays” rule. America’s early embrace of the contingency fee bespeaks a choice to allow free court access rather than accept principles of repose.

Let’s say that you aced law school or spent a couple of years at the most prestigious firm in your state or the country or worked in-house at a Fortune 500 corporation.  If you have these credentials — and even if you don’t — but you’re itching to try your hand at starting your own firm, chances are that you’ll make it happen. On the other hand, even with the most prestigious resume in the world, if you start a firm out of desperation or  view solo practice as the legal profession’s sloppy seconds (or thirds or fourths), then you’re probably doomed from the start.

Although none of us can fully control our destiny, mindset plays a role in success.  As William Barnett writes at the Harvard Business Journal, winning is a self-fulfilling prophecy.  Barnett gives the example of his brother-in-law, a photographer who, literally, missed the boat for a wedding shoot taking place on a yacht. Not surprisingly, the bride was furious – until a racing boat zipped by with her photographer strapped in, snapping photos with a telescopic lens. In minutes, the photographer went from goat to genius – because he’d capture far better photos shooting from a separate boat than in the cramped quarters of the wedding yacht.

Although the photographer pulled off the plan seamlessly – as if it was what he’d intended all along — that wasn’t the case. He’d actually missed the boat, then scrambled to find a racing boat to zip him out to the site, all while coming up with a new way to take photos on the fly. But as Barnett describes:  

Over at my weekly perch at Above the Law, I took the position in a recent column that bar associations are useless for networking and generating referrals. My column wasn’t meant to diss the bars; I noted that even if they’re not effective for networking, they a wealth of resources such as low-cost CLE, free research tools (like Fastcase  or Casemaker and quality practice management support.

Still, I argued that the nature of the bar structure plays against solos and smalls. Most committees are dominated by large firm lawyers, who pass along leadership positions to their associates. And even if a solo or small could get a foot in the door, leadership on bar committees can consume hours of time on questions like “should we have chairs or no chairs at the next event” or shepherding a panel idea through layers of bureaucracy. I typically complain enough to get myself appointed to a committee where I’ll do my share – but eventually grow impatient with immovable policies (for example, after 2 years and organizing 3 successful, 90+ person brown bag events, I left the DC Practice Management Committee after waiting for the launch of a DC Bar list serve, which to this day still hasn’t taken place).

Still, it’s possible that I extrapolated my own specific lack of success with bar events into a generalization applicable to all lawyers. Indeed, in the days since my column, a couple of colleagues have tweeted their disagreement with my premise, noting that they’ve found success and referrals through bar participation.  In short, it does happen, even though it hasn’t happened for me or the colleagues with whom I’ve commiserated.

So here’s my question.

For the third year running, my friend and co-author, Nicole Black and I are hosting a Wine & Dine Offline at ABA Techshow. Techshow is always so busy – and even though I am not presenting, I try to cover the show for readers, catch up with my blog’s sponsors and identify others. So our…

Starting a law firm is nothing if not an adventure always full of surprises. Here are some of the things that surprised me about starting a firm.

You will always be terrified. For as long as you are in practice, you’ll always fret that one day the phone will stop ringing, that business will dry up – or that you’ll lose your law license or irreparably harm your reputation by taking on a client with an unpopular cause. But even with that fear lurking, you’ll also come to love life on the wire – because as Karl Wallenda says, “everything else is waiting.

Clients will actually pay you for what you do.  When I started out, so many well-intended old colleagues patted me on the head and asked if I thought I could make any money representing small, alternative energy companies. So when my first client – a former executive devoted to promoting ocean energy education – hired me to form a non-profit and paid me a few thousand to do it (and fed me a fancy expense account lunch besides), I was a little stunned.  Sure, there are days when everything seems a struggle but when you look back at the revenue that flowed through your firm, you’ll be surprised that it’s more than you thought.

You will frequently be the most interesting person in a room full of lawyers. Okay, maybe that isn’t saying much. But while other lawyers are churning through documents or working on bar committees or filing a brief that’s gone through eight levels of review, you can talk about the crazy clients who call, the judge you persuaded, the family that you helped through a tough time, the colleagues and friends you met, serendipitously, on social media. Your experience and enthusiasm will captivate your colleagues.

You will find kinship with other solos and smalls. No matter the age or gender or practice area of your solo/small colleagues, you share a common experience. If you worked at a big firm before starting a practice, you probably looked down at the solo civil litigator who you now turn to for mentorship and advice. As a young lawyer at the bottom of the totem pole at your last job, you’ll break bread with practitioners three times your age and converse not as senior to slave, but as colleagues. And regardless of age or gender or race, you’ll grow to call some of these people friends.

Yesterday, Bob Ambrogi reported on the emergence of yet another lawyer-focused social network, this one called Foxwordy, which touts an invitation-only membership and “access to thousands of docs and clauses authored by experts” as two of its unique features. Of course, what’s also potentially unique about Foxworthy is that it may charge for membership (or at least, that’s what Bob reasonably infers from its current three-month free membership).

If precedent is any indicator, Foxwordy has a tough road ahead to succeed in the lawyer-focused social network space.  Sites like Legal OnRamp, the ABA’s now-shuttered LegallyMinded site and Martindale Connect have struggled to gain traction. And it seems like there’s another born every minute, with the launch of Libra Network, Wire Lawyer, Esquire Spot.  As Lisa Solomon commented at Ambrogi’s site:
You know how every town has at least one location that is occupied by a succession of failed restaurants? That’s how I see the “lawyer network” space: same mediocre product that not enough people want to buy, leading to a succession of failed ventures.