Starting a boutique law firm in 2019, Tomas Vail has witnessed first-hand the demand for the reduced costs and increased efficiency (amongst other benefits) that boutique firms can provide.
He’s put together several observations which he has experienced when starting his own boutique law firm, Vail Dispute Resolution.
Recent surveys show that COVID-19 has seen in-house legal departments cut spending on external lawyers. In-house teams allocate more work internally and, where external advice is needed, they successfully implement fee reductions, fixed-fee arrangements, and fee caps. More than ever, clients scrupulously examine the costs and benefits of engaging external counsel, who must, more than ever, prove their worth and added value.
While these challenges continue to mount for traditional firms, there is scope for an alternative approach. Based on collaboration and flexible structures, starting a boutique law firm could be the solution for practitioners seeking a change, and for clients in need of a more dedicated service.
Whilst diminished economic activity has a direct impact on transactional practices, disputes are often understood to be anti-cyclical and can, in many cases, arise more frequently. Alongside the pandemic, the additional cost pressures noted above have a compounding effect leading to an increased interest in boutique firms with more flexible fee arrangements and lower overheads.
In the sphere of international arbitration more specifically, while the number of boutiques set up by Magic Circle/Big Law alumni was already steadily on the rise (most visibly in continental Europe), this trend is now accelerating. Essentially, arbitration boutiques offer Big Law expertise and experience at more competitive rates and on a more flexible and collaborative basis.
Calls for more flexibility at the workplace are not new. These include well-reasoned requests by clients for tailor-made solutions, as well as by a new generation of legal talent challenging existing structures.
Boutiques already have a flexible physical work environment. Rather than occupying big, expensive buildings with many individual offices, they focus on alternative or (especially now) virtual spaces for teamwork, client meetings and presentations. This also has the advantage of allowing team members to better manage their work/life balance.
From a business perspective, boutiques are not burdened by the bureaucracy and conflicts of a full-service firm. Free to negotiate fees on their own terms, boutiques can offer alternative (one Oil Major terms these “appropriate”) fee arrangements that diverge from the hourly-fee based model.
In-house counsel are increasingly finding hourly fees harder to justify internally, both because of the high costs, but also the uncertainty. Arbitration lawyers are likely going to be more motivated to ‘go solo’ to have the freedom to choose their clients, set their own objectives, and act as arbitrators. The focus is brought back to the work, and to the client.
Disputes boutiques, in particular, encourage collaboration. The pandemic has highlighted more than ever the need for effective, efficient and creative solutions. Collaboration is one of the key tools to deliver upon this demand.
Collaboration has proven to be one of the major forces behind the most effective boutique law firms, where small and decentralised teams are able to continue working on interesting, high-profile disputes. This was especially evident in the onset of the pandemic; where Big Law scrambled to adjust to a new way of working, boutique firms were already there.
A strong network and a collaborative approach to projects can ensure a tailor-made offering for each and every case, depending on the specific expertise required.
By drawing on a network of Big Law alumni, team members with knowledge of any language, industry, geography, or legal tradition can be brought into play as necessary, without being constrained by the offering of an existing team as they would be if they were employed by a typical law firm.
Collaboration is also a key driver in reducing costs and delivering efficient solutions. Interdisciplinary projects, cooperation with legal tech start-ups and technological offerings create additional value as well. This approach enables the development of new work products as well as improving the efficiency of existing offerings. It’s also fun to work with others from a similar, and entrepreneurial, mindset.
In essence, the need to attract new clients and win work is one that will always be a focus, for firms of any size.
Like in any practice, disputes boutiques will continue to face the challenge of finding clients and staying afloat. An additional challenge for boutique firms perhaps is doing so without the financial, network and infrastructural support and branding of a larger firm.
In exchange, however, starting a boutique firm can jettison almost all costly overheads for clients and staff alike. It can also remove the pressure to cover for less thriving areas of practice (especially in times like these). In essence, starting a boutique law firm can shift a practitioner’s focus back to the needs of clients and counsel alike.
An earlier version of this article was first published on law.com