California Labor and Employment Defense Blog

The Economics of Big Law vs. Boutique Law

Big Firms practice Big Law on behalf of Big Corporations in their own special way.  Those of us who have left these firms to start smaller boutique practices know this only too well.  But for those who haven't had the experience, the flavor is conveyed by an excellent article at by Jill Priluck, Leaving Big Law Behind: The many frustrations that cause well-paid lawyers to hang out their own shingles.     

The article accurately highlights some of the problems with the classic Big Firm business model, which generates big profits only by combining sky-high billing rates with a highly leveraged ratio of partner to associate billable hours.         

Certain clients, already spooked by the size of their legal bills, balk at being billed $1,000 an hour, especially when a partner is redoing the work of an associate who bills at half that rate (or more), but does not offer half the value.  Another reason partners want to move on is that Big Law makes big bucks—up to $1.3 million per year for a sixth-year associate who bills $650 an hour at one firm that shall remain nameless—on the inexperience of young lawyers. "Some make a point of objecting to junior associates on the bill," said Joshua Stein, a former real estate partner at Latham & Watkins who left last month to start his own practice. "In the context of [my practice], those issues won't exist and, so far, what I've seen is that it's appealing to clients."

The surprising thing is that so many institutional clients are willing to stick with the traditional model.  

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