In the pilot episode of Suits, a team of at least a dozen lawyers is seen arguing (collaborating?) with each other in a crowded office of the law firm Gordon Schmidt Van Dyke. They are presumably handling the finer points of a large deal, which is set to close smoothly until the firm’s client becomes difficult. I won’t spoil the plot in case you have yet to binge-watch the show on Amazon Prime, but I have to say that I found the opening scene pretty unrealistic. If I were a client of that firm, the first thing I would do is tell them to get all but a couple of those lawyers off of my deal, because who wants to pay that many lawyers to argue with each other?
All Law is Small Law
A truism in American politics is that “All politics is local”. I would suggest a play on that phrase as it applies to legal services: “All law is small law.” Even at the biggest international law firms, a client will usually have their legal question answered by a very small team of lawyers; sometimes two, possibly three, and often just one. On some larger and more complex deals, other lawyers may be brought in to provide advice on specialized topics, such as environmental or tax law. But such an approach is not always necessary, and in some instances is wasteful and expensive.
A friend of mine from law school, who worked at a large international law firm, was once asked to review an agreement because the partner thought it would be a good idea to “have a New Hampshire-licensed attorney look it over”. One of the parties was based in New Hampshire, but in her view, the task didn’t require any specialized knowledge of New Hampshire law. She concluded that the partner’s reasoning was, “Well, we have a ton of lawyers available, so let’s use them.”
How do you know then, as a business owner, exactly who is working on your deal? In big law firms, it’s sometimes hard to tell. Is it the person you originally contacted for help or a friend you’ve known for a while? That would be ideal. It could be a lawyer you don’t know but were introduced to through an email, as someone who will be “helping out”. Ok, no problems there, things can get busy in the practice of law, and it isn’t unusual for big firms to assign someone to a project whom the client doesn’t know. Another, slightly less pleasant way of learning who worked on your deal is by looking at the bill. Each bill (or “pre-bill”, to be specific) should list the lawyer who worked on any particular assignment and the amount of time they spent doing said work. This matters because legal fees are expensive, and the more lawyers who work on a deal, the more costly a deal can become in real terms.
More is Not Always Better
Problems arise when four, five, six, or even more lawyers are involved on a deal. Including more lawyers does not necessarily mean the client will receive a better product. It does mean that inefficiencies in the firm’s practice are laid bare – multiple people charging several hundred dollars per hour, internal disagreements, and layers of hierarchy ultimately turn into more billable hours for the lawyers involved, and this creates higher fees for the client.
We’ve all heard the boast from big law firms: “We’re a global firm with over one thousand lawyers”. Well, is it going to take a thousand lawyers to handle your deal? What if you only need one? Or two, at the most? Are you paying for a corporate structure which is unnecessary for most kinds of businesses? Maybe it’s best to keep law small. In the information age, small doesn’t mean disconnected or ill-informed. Small means agile, efficient, and, above all, accountable for not only the quality of service but the price tag that goes with it.
There are certain kinds of clients who appreciate the big law firm approach: private equity firms often don’t care about the legal costs incurred when acquiring a company. The biggest of the tech and pharmaceutical companies may think the same way. But mega-companies represent only a fraction of the legal services needed by businesses around the country in any given workday. Most of the time, law firms are catering to the needs of small to medium-sized enterprises (SMEs). These are companies which, in an increasingly competitive world, are looking for excellent legal advice which is catered specifically to their needs. Everything else is just noise. Very expensive noise, at that. My advice to the SMEs is to know who’s on your deal, and why.
Bob Baker is a founding partner of Peak Corporate Counsel. He has worked with numerous founders on a variety of issues specific to startups. When he’s not advising innovators, he can be found at networking events, playing rugby, or hiking with his kids.
This article is for informational purposes only, and may not be considered legal advice.