On a recent trip interstate, I had the pleasure of meeting two partners at opposite ends of their career trajectory. Both partners had started their own boutique firm and both partners had left a larger firm to do so. One was a senior partner in his 60’s who had set up his firm over 25 years ago. He was exhausted, burnt out and needed a break. He hadn’t been able to take one for most of the time he was running his firm. He had had an extremely successful practice earning more than most of his peers in larger firms, had full control of the type of work he did and thoroughly enjoyed his work and his clients. On the other hand, he also had serious health problems due to his incessant workload and attributed his divorce to his slavish devotion to the business over the years. As a result of his most recent bout of soul searching, he had decided to re-join a larger firm and work part-time.
In contrast my second meeting was with a partner about 25 years younger who had recently set up his own boutique firm. He was busy and keen to grow his firm. He was highly motivated and engaged in what he was building, but concerned about not being able take a holiday and the impact of his new workload on his personal life including his young family.
This tension between wanting to work for yourself, on the one hand, and, on the other hand joining a larger more established firm, comes up as regularly with partners. I have met hundreds of partners over decades many decades, and many have expressed a desire to go out on their own. The reasons given include:
- To be able to fix or reduce charge out rates – to more competitive levels for the niche that they like or want to operate in – usually it is a more margin sensitive area that is under fee pressure in their larger firm;
- To get away from a variety of frustrations – including a lack of promotion despite a healthy client base, or being stuck with colleagues that they don’t want or can’t work with, or lack of flexibility or hours;
- To eliminate a fatal conflict by the greater firm with a key personal client – As firms are getting larger, and especially in the situation of global firms, conflicts are increasingly becoming a problem.
I thought it was worth exploring some of the benefits and drawbacks of both models based on anecdotal feedback from partners over the last decade.
Boutique law firm benefits include:
- Flexibility – less accountability re hours etc.
- Freedom to be nimble to meet client market demands.
- The thrill of starting and being in your own firm and controlling your own destiny.
- Higher earnings when compared to larger firm – this is universally the case.
- Ability to obtain referrals from larger firms that are conflicted out of taking on certain work.
Some of the drawbacks of boutique firms include:
- Difficulty taking holidays.
- Being on demand 24/7.
- Increase in administration of the firm and less infrastructure to support you.
- Lack of holidays and breaks can lead to health issues and relationship challenges.
- Challenges with recruiting lawyers due to lack of brand or size or depth of opportunities.
Despite the above challenges the partners that I have met over the years have almost always been happy with their decision to move. However, circumstances change with the passage of time, and often a boutique firm partner or the whole firm will get to a point where they want to move back to a larger firm if they have achieved a certain level of success but the drawbacks are wearing thin, or they are missing some of the benefits of being part of a larger firm.
Large firm benefits include:
- Reduction in administration and increase in human resources and marketing support.
- Ability to cross refer to a broader skill set and not turn work away.
- The chance to capitalise on a national or global footprint.
- More security around earnings during changing economic times.
- The ability to attract larger clients and bigger matters due to having larger and deeper teams in various practice areas.
- The camaraderie of a bigger practice team which also allows for holidays and hunting in packs.
Some of the drawbacks of joining a larger firm include:
- Having to comply with external administrative requirements.
- Being accountable for your performance to the greater partnership.
- Increased risk of conflicts over clients nationally and globally.
- Letting go of control over your own destiny.
Both options can bring great satisfaction and benefits. In my experience there is no right or wrong option. However, money can be a big differentiator for some partners. If you know your earnings are only limited by your effort, then there can be a temptation to go hard and find yourself not able to slow down when you want to. Don’t be afraid to take stock every few years and reconsider your priorities and motivators in view of any changes to your life circumstances. Make sure that you weigh up the non-financial factors as well as the financial.
The lure of being master of your own destiny has the trade-off of also limiting your freedom in other ways such as not being free from your business due to lack of support and resources. Either way make sure you continue to have fun in your work and good luck with your next step!