The Lawyer Network That Was a Lawyer Notwork: Lessons from An Unsuccessful Venture
Four and a half years ago – when Axiom Legal was just gaining traction and Virtual Law Partners and Rimon Legal and Fisher Broyles
were the only dispersed legal business models on the block, a group of
eight solo colleagues and I who practiced in four different cities came
together to form a collaborative of our own. On paper, we fit the
profile for this kind of new-age model– we each had a decade or more of
experience in our respective fields, we represented traditionally “big
firm” clients, we were familiar with each others’ work having referred
cases or teamed up in various combinations before and we were all fluent
in technology. Yet, after nearly a year of research and negotiation,
we were unable to consummate the venture. Here’s what happened and some
of the lessons that I took away that may be valuable for others
contemplating similar enterprises.By way of background, the impetus for the group came from one of my colleagues, a successful, seasoned litigator. He expressed a frustration at the challenges he faced in procuring business from major companies due to concerns that his firm might lack either back-up or the capability to scale up to handle a larger matter. My colleague believed that a more formal collaboration could address these issues.
The lawyers asked to participate saw additional benefits as well. Because we practiced in a few different cities, we saw the effort as an opportunity to expand and attract work in other jurisdictions and because we had different specialties, we anticipated opportunities to refer work to each other as well. We believed that we pool our resources for marketing which would heighten the visibility of the group as well as each of us individually.
As part of our first task, we researched possible structures – examining the Axioms and Rimons, affiliated national firms (affiliations between lawyers in similar practice areas, e.g., appeals or eminent domain – but located in different parts of the country), and even law societies like Primerus). We came across several that I viewed as a sham – either a bunch of names listed on the page with no indication that they actually engaged in ongoing relationship (which is required under ethics rules for a group of lawyers to hold themselves out as affiliates). We quickly agreed that we wanted to operate as more than just a list of names, but at the same time, we did not want to sacrifice our respective firm’s individual identities or create a situation that would give rise to conflicts. We came up with a workable approach and our group’s excellent corporate lawyer drafted an agreement to memorialize the arrangement. We also came up with a name for our enterprise.
Then, the road blocks. A few of members practiced in jurisdictions that prohibited trade names and we could not come up with a way around the problem that fully satisfied their concerns (I am barred in New York so this posed an issue for me too but since I’m not active, I wasn’t bothered). Most of the group also hoped that we could figure out an ethical way to collect referral fees especially when different state rules applied to many of us. We came up with a couple of approaches but I am not sure if we ever resolved the issue.
Ethics issues posed an added complication but weren’t the only reason for the demise. On the practical side, we all had active practices, and our respective cases often pulled us away from following up on issues or participating in the regular organizational calls. I had also tried to use one of the (now popular) law practice management portals to create an infrastructure for document sharing, but let’s just say that it wasn’t ready for prime time back in 2009.
All told, between our busy schedules, ethics hurdles and a few other disagreements, the venture disintegrated.
So now, lessons learned and my observations on why these networks are succeeding (or appearing to)
1. Ethics and risk. Current ethics rules
don’t make these collaborations easy. Part of that is simply the cost
of doing business. We lawyers operate in a regulated industry and it’s
up to us to figure out how to do what we want within the parameters of
what’s permissible. In fact, that’s what I do for my renewable energy
clients: leverage my knowledge of the rules to carve a path between
regulation and innovation. But for lawyers, the regulatory thicket is
so hopelessly convoluted, that even clever lawyers can’t develop a
solution. When some states prohibit certain activity (like trade names
or referral fees), the answer isn’t (as bars would prefer) to go with
the most stringent requirement because that forces the lawyers in other
jurisdictions to give up their rights. Ultimately, conflicting state
rules inhibit cross-state collaboration.
Compounding matters, there’s little opportunity to mitigate risk. The
bars’ hotlines don’t offer guidance and a request for a ruling on a
proposed action can take a year to issue. Nor will states grant a safe
harbor – i.e., an ability to show efforts to research the matter and
simply came up short. Regulation complicates innovation, but regulatory
uncertainty, which is what we have now, kills it dead.
But what’s truly troubling is that
somewhat perversely, the conflicts and lack of clarity in current ethics
rules wind up discouraging the very lawyers whom we’d want to innovate.
In my group’s situation, one of the lawyers who wasn’t willing to take
the trade name risk has a stellar reputation that he’s worked hard to
cultivate as well as a thriving practice. In short, he has too much at
stake to chance an ethics violation on a venture that might never work
out. By contrast, a lawyer with a minimal track record and limited
experience has less to lose. And while there are certainly other
personal reasons that a more experienced lawyer might be averse to
experimentation (already has a good thing going, huge mortgage, limited
time), ethics rules shouldn’t act the deciding factor.
2. Technology. Our group communicated by
email and never reached a point of true collaboration, so tech wasn’t a
problem. But as I mentioned, the law practice portals in place that now
serve as the backbone of some of these network models really weren’t
ready for prime time back then.
3. Desire to get it right. Our group
struggled hard to come up with a structure that was more than just a
website with faces listed to add bulk. I would not have wanted to do it
any other way. That said, there are lots of these “affiliations” that
are, indeed, nothing more than a bunch of lawyers listed on a page who
have no regular communication and simply eat what they kill.
Perhaps the greatest drawback to our model, though, was that there
were too many chiefs. You’d think that having a pool of talent would be a
benefit, but they either have their attention on other matters or have
too much to risk. I think that most of the models that succeed are
started by one or two lead lawyers who have a large client to serve or
excess capacity – and they bring in others on a contract basis to handle
the overflow. Pretty soon, they either have some kind of loosely
affiliated network or an Axiom like structure, comprised of finders and
grinders. In some ways, not so different from a law firm only on a
dispersed platform, and with participating lawyers happier because they
have more flexibility and with clients happier because they’re paying
less. Whether it’s truly a new business model or an amped-up version of
the old one, I’m not sure and it doesn’t really matter so long as it
works and increases the options available to clients.Now, as for where all of these new networked business models leave solos and smalls, I’m not sure. That’s a topic for another post – though I’d love to hear your feedback in the comments.
Social Network Idea graphic courtesy of Shutterstock
