Large or Small Law Firm: Which do you Hire?

Let’s frame the discussion with a question: What is a “large firm” vs. a “small firm?”

Generally, there are three classes of firms from large firms to mid-level to small. Often the mid-level and smaller firms may also be called “boutique” law firms. The size of these firms vary in every city. In Indianapolis, a large firm might have 200 to 500 attorneys, a mid-level firm 75 to 150, and a small firm from 15 to 50. But in New York, Chicago or Los Angeles, a large firm could have 500 to 1,000 or more, mid-level 200 to 400, and small from 50 to 150.

Regardless of location or size, several attributes where large, mid-level and small firms differ will be relatively consistent. Let’s explore some commonly held myths and misinformation.

Myth: Large Firms Better Meet Client Expectations  A survey published in January 2018, found the rate of client dissatisfaction was three times higher for larger law firms than smaller firms. Why? At a small firm, a client that generates $250,000 in fees is incredibly valuable. That same client might be “small potatoes” to a large firm and perhaps, treated accordingly.
Big or small, every legal matter directly affects the client and the client’s company in a significant way. The relationships developed between a smaller firm and its clients take time and effort to nurture. Where smaller firms fight hard for each specific case, larger firms are frequently forced to initiate tried-and-true strategies that fail to take advantage of case nuances that can only come from a deeper knowledge of the client and the client’s business.

Though many big firms tout their “team” of lawyers as an advantage, it can also be a disadvantage. The more people there are working on a case, the more opportunity for misunderstandings and duplication of effort. That can lead to errors and increased costs. One element of service that’s often overlooked is strategic flexibility. Being nimble and shifting gears when unforeseen events unfold can be the difference between winning and losing in many cases. Part of this is because it’s easier to turn a rowboat than an oil tanker.

Myth: Large Firms Have Better Outcomes  Having more lawyers than the smaller competitors would seem to give “biglaw” a leg up. However, a firm with 100 attorneys doesn’t have them all engaged in every practice area. The business attorneys concentrate on business law, the defense attorneys on defense and so on. If the big firm engages in business law, business litigation, patent, environmental, probate, family, tax, personal injury, government and sports… then that’s 10 areas of concentration right there. The result? Only a few lawyers at the large firm will be fully engaged in any area of concentration. A much smaller firm – that doesn’t spread itself out in too many areas – will have just as many attorneys working in its specialty areas.

Myth: Large Firms Hire the Best Lawyers Because They Pay More  Particularly in today’s world, the “best of the best” don’t all want to be stuck at a large firm, ghosting work for partners and working long hours at the expense of family and friends.

Actually, some of the best lawyer’s at large firms often leave and go out on their own to open their own offices, taking a handful of highly-capable peers and support staff with them. Many of today’s leading law school graduates who are looking to make a difference rather than make a fortune, are narrowing their focus on one practice area. They are joining boutique firms instead of large firms where they risk being assigned to an area they don’t have interest.

Also, technology has helped level the playing field, allowing smaller firms to compete for large and complex cases that historically only large law firms – with armies of lawyers and full service support – provided. In times past, cases with thousands of documents required many hours of paralegals and lawyers looking for the needles in the haystacks. Now, with AI-based software and searchable, imaged documents, dozens of boxes and file cabinets worth of materials can be culled with timing and accuracy levels far exceeding what large groups of reviewers could hope to achieve.

Other great lawyers simply want to get away from biglaw to go somewhere that doesn’t require them to put in 60 hours+ every week. Top-rated boutique firms (mid-level or small) seeking the best of the best offer comparable pay but will negotiate reduced hours with commensurate comp adjustments.

If you look at the academic and practice achievements on websites of mid-size boutique and well-regarded small firms, you’ll be amazed by the caliber of the attorneys. Biglaw isn’t for everyone, particularly today.

(Not a Myth): Large Firms Cost More  It’s just a fact large law firms charge more. As a friend at a biglaw firm once said, “My firm is living proof there are no economies of scale in the practice of law.” In Indianapolis most large firms charge on average at least $100 an hour more (often much more) than comparable attorneys at smaller firms. In an extended engagement, those costs add up quickly. Larger firms may have the benefit of additional resources, but are they worth an extra $100 per hour to solve your specific legal issue?

As one writer put it, “Many large firms have priced themselves out of the market with high salaries, debt from commitments to expensive lateral hires and large overhead costs from other offices located in pricey markets. This leaves opportunities for smaller, more financially nimble firms to step in.” And they have. A report from the highly regarded legal advisory firm Altman Weil showed 31% of corporate legal officers shifted legal work from higher-priced firms to lower-priced firms.

Myth: Large Firms Are More Efficient  Many large firms are saddled with excessive overhead. That manifests in their hierarchy often requiring each case to be reviewed by attorneys at multiple levels to ensure consistency within the firm. This overlap is all but eliminated at smaller firms whose greatest concern is getting the client’s matter resolved quickly, efficiently and most beneficially.

Another example of efficiency in smaller firms is because many lawyers handling cases are also involved in running their firms, they have a more practical understanding of their firm’s profitability and financial management. This impacts the way they handle clients because they’re dealing with the same business realities as their clients.

Smaller firms run lean as a matter of survival and that carries over to a more conscientious approach to customer service, thus minimizing the number of hours they bill. Big law firms tend to pressure associates to bill many hours, thus minimizing their incentive to be efficient.

When you combine cost and efficiency, smaller firms charge less per hour for fewer hours – a double win for their clients.

CONCLUSION: Here are some guidelines for considering what type of firm to hire for your legal needs.

• Is there a boutique or smaller firm that concentrates in the area of your problem? Firm websites will tell who at the firm has experience in your area and often describes their past accomplishments. Compare them. Most firms don’t charge for an initial call or meeting to merely discuss your problem.
• If it’s a big problem, meet the attorneys face-to-face and make it clear you are talking with other firms. If they want your business, they will have spent some time looking into any public filings or materials you send them.
• Does the lead attorney who will handle your case have a good “bedside manner?” If you approve of his/her manner, likely so will the adversary counsel, the judge or the jury (with litigation). Even in the law, you catch more flies with honey.
• If during the initial meeting counsel keep saying “we’ll check the law on that,” it probably means they don’t know the law in the field of your problem that well and you shouldn’t be paying them to learn it. Attorneys don’t know everything, but repeated references to doing research may point to a weakness that doesn’t exist at another firm.
• Some conflicts may be waiveable; others not at all. If the law firm has a potential conflict, look at it from the worst angle and assume they won’t fall on the sword for the new guy (new guy meaning you).
• Ask about their rates. Often rates aren’t discussed until the client asks or the firm thinks the client is “hooked.” Many types of legal problems have a limited horizon. In this instance you should be able to get an estimate or a “not to exceed cap” (even if there are ‘what if’ exclusions). For litigation, estimating costs is difficult. Large organizations demand budgets knowing that the farther out the budget projects, the less reliable are the budget estimates and often they are revised at least quarterly. Such a process should be available to you.

Although the focus of this article emphasizes choosing a law firm, most folks don’t think of the law firm as “my attorneys.” Instead, they think of an individual, i.e., John Doe at Smith & Jones as “my attorney.”  Remember, you are choosing a lawyer to represent you and the firm is important, but somewhat of a secondary consideration.

As in all professions, there are great, average and a sprinkling of not-so-good lawyers. Every firm has some of each – the good firms just have a higher percentage of the great ones.

Nowadays, there are several professional peer group organizations that recognize outstanding lawyers in every legal concentration. Most attorneys will note this type of recognition on their resumes. While there are no guarantees, such recognitions provide you a leg up in making your evaluation.