If you asked a handful of lawyers what type of business model they ran at their law firm, most would say something like, “um, the ordinary kind?” The terms “boutique law firm” and “volume practice” haven’t fully become part of the legal lexicon, and using them can elicit different connotations—and ultimately, confusion.
What is a boutique law firm? How does it compare to a volume practice?
A boutique law firm is hard to define, but it is probably a small firm, with experienced principals who take on high net-worth cases and bill hourly rates. Boutique firms typically offer more specialized services, distinct from large practices offering a smorgasbord of legal services. A boutique legal practice is likely more selective when taking on clients, but also more attentive to their unique needs.
A volume practice, on the other hand, brings to mind waiting rooms packed with clientele of modest means. But we’ll get into this a bit more below.
Take this example of a friend’s practice. She’s a sort-of-young lawyer (with about five years of experience) who targets the big fish clients and bills by the hour. Recently, she noticed that a competitor (who does very well) was offering low flat fees for certain types of cases. Now, she’s asking herself whether she should keep targeting those oh-so-elusive big fish or if she should try something new: moving more clients in bulk.
Let’s look at what it’s like to run each type of practice.
Running a boutique law firm
What can you expect from running a boutique practice? When running a small shop with expertise in a narrower practice area, you can typically charge higher hourly fees. But you’re also setting an expectation for better, more attentive client service. Rather than churn through routine cases, the work you take on will tend to be more complex and nuanced. You might refer to it as a legal niche.
- Pros: Law nerdery. (I get a kick out of the “unusual” cases that require a ton of research and novel arguments.) Fewer cases/clients to manage at once. Stronger relationships with clients.
- Cons: A riskier revenue stream (one or two deadbeats can sink your month). Complex cases are more likely to invite bar complaints and malpractice claims (if you lose). Difficulty of landing the big fish, especially for new lawyers. http://kakumagame.com/cliotest/
When it comes to running a boutique law firm, flexibility is important. You need to be able to manage different case structures that may require a diverse set of documentation. You’ll also need to prioritize strong communications to ensure your clients feel their needs are being met.
Running a volume practice
Running a volume practice is about serving as many clients as possible, typically for flat fees. The rates are typically lower, but if you can close matters expediently, the model can be especially lucrative. Clients typically have less at stake, and you’ll spend less time on each case, but you’ll likely need to balance more cases at any given time.
- Pros: Distributed risk (any single malpractice claim should be for a lesser amount than a boutique client’s claim). You help more people. Less reliance on a single big payout.
- Cons: Increased risk overall (balancing lots of cases at once can increase the probability of errors and missed deadlines). Increased need for support staff to manage client calls, correspondence, and billing. Survival depends on getting lots of easy and routine cases.
Set routines and standardized task lists are important for volume firms. Since tasks can be fairly routine between a broad set of cases, the resources used for one can often be reused for many. Repeatable workflows reduce bottlenecks and reduce the chance for error. Document automations can also save time and ensure consistent, accurate information.
Which practice style is right for your firm?
Toss aside any preconceived notions of what the terms “boutique” and “volume” bring to mind. Which is the better business model for your firm? Should you target the plump, juicy, high net-worth cases, handling only a few at a time, or help as many people as possible at a lower rate and with less time spent on each case?
For many lawyers, the answer won’t be cut and dry—and there could be opportunities in balancing both.
In order to pull off the volume practice, you’ll need efficiency and lots of routine cases. Some of those will inevitably turn out to be more complex cases that go off the ordinary workflow track. (And, let’s face it: Routine can be boring.)
In a family law practice, like mine, one might set forth a schedule of flat rates and pre-planned workflows for the routine cases. For cases that get out of hand, or cases that are complex at the outset, bill by the hour and enjoy the break from monotony. And, of course, make sure that clients understand that not all cases fit into the lower flat fee structure. Consider advertising your fee schedule with the disclaimer that flat fees are decided on a case-by-case basis, after a free (or low-cost) consultation.
While a boutique law firm definition may be difficult to nail down, it might be more valuable to think about where you see your practice trending towards. If you’re just starting out, or you value having a diverse portfolio of casework, the “boutique” label might not be for you. Though, that doesn’t mean that becoming a boutique law firm not something you can test out work towards down the road.
Keep in mind that the word “boutique” might also have negative connotations for value-oriented clients—especially for certain areas of personal injury or criminal law practice.
And, if higher rates are what you’re ultimately looking for, like everything in this world, it’s the quality of your product or service that sets you apart.
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Categorized in: Business