Expanding Your Practice with "Of Counsel" Relationships

In this age of change, with large law firms laying off partners and associates, I have to wonder about the future of the of counsel relationship.  As a result of technology and the internet, large corporate law firms which dominate the market based on sheer size are going to start seeing real competition from boutique and small firms.  It also seems to me that lawyers and firms will start forming looser associations as they look to service their clients in distinct, but related, practice areas.  Will these associations take on an "of counsel" flavor?

I would be interested to hear your thoughts about whether or not the of counsel relationship will grow over the next few years.  Further, I would be interested to know whether or not you see ethical limitations on the of counsel relationship which will limit the ability of law firms and lawyers to develop relationships short of partnership.

Comments

[Jason Goodwin]

I undoubtedly see this on the rise, due to a number of pressures. First, in biglaw, I suspect that most formative experiences (associate years 1-3) will be more ad hoc/contract basis. Second, what makes global biglaw work is leveraging associates and having shared infrastructure. With technology attacking both of those advantages to scale, a rigid partnership structure really might actually be a worse risk mitigation strategy than ad hoc relationships.

I'm a bit under-read on the ethical issues, but I don't suspect they'd be any different than a 200 partner firm (at least on the conflicts part). In fact, their might well be fewer conflicts, as you'd only carry your personal matters, which wouldn't be transferred to the firm. I would also suspect that ethics strictures will be loosened somewhat going forward -- look at Jamie Dimon's choice of counsel.

[Kay Van Wey]

I believe "of counsel" relationships for small practices make sense as well. Could be a way to add talent without assuming the overhead, particularly for a contingent fee practice where cash flow is variable.Ideally, multiple of counsel relationships would be great for a small practice. Having several "go to" resources, such as an appellate specialist, a trial specialist, etc. Even in a specialty practice, it is hard for most lawyers to be experts in every aspect. So, being able to utilize exceptional talent and only pay for what you use would be ideal.

[law firm; of counsel]

I agree that "of counsel" relationships are an attractive option, especially in this economy. What better way for a small firm to add expertise in a particular area in an effort to expand its practice offerings. More importantly, this can be done with little to no risk, and as importantly, little overhead.

That said, those seeking an "of counsel" arrangement may look for several things when choosing one firm over another, such as:

1. Marketing - how the firm will market the new attorney and his/her expertise in particular area(s) of practice.
2. Revenue opportunity - how much can the attorney bill.
3. Flexibility - where to work (remotely/virtually or in office); hours; etc.

Any other thoughts?

[Matthew Austin]

Everyone seems to agree that "of counsel" relationships are a great potential referral system for small firms, but I don't see many small firms formally entering into those relationships. I am in a small boutique management-side labor law firm, and we have a small network of other firms who will refer work to us, and likewise us to them. But nothing is in writing, we don't market for one another, we don't share fees, etc.

I've noticed over the past several years, though, small firms are increasingly becoming jacks of all trades, and the corporate law firm reaches outside of its comfort zone to handle real estate transactions because, after all, they're both contracts. Likewise, the commercial litigation firm does tax hearings because, after all, they're both standing up making arguments to a judge.

With this type of protectionism increasing, the needs and use of of counsel reltionships with specialty lawyers is waning. Nonetheless, I'll still go to bar functions, give speeches, and otherwise market my niche practice and offer my expertise to other small firms, just like I will continue to know the limits of my representation and refer work out to others who could handle a matter more efficiently and competently than me.

[Bill E]

Matt makes an interesting observation relative to protectionism in a more competitive marketplace for legal services and the trend away from typical of counsel relationsnhips. I'm betting with the right of counsel relationships with other small firms or individual lawyers who are adepts at marketing themselves, that of counsel relationships can be a win-win for both parties, if you choose the right ones to partner with.

[GAL]

Sure seems like the of counsel model is under utilized for small and medium-sized law firms. We have checked with our malpractice insurance carrier. As long as each of the attorneys involved has their own insurance, there is no additional malpractice insurance required. Even though there is a "of counsel" relationship, the of counsel attorney's insurance covers their potential issues.

The law firm handling the administrative aspects of the client relationship and originated the client can take a percentage of fee derived by the of counsel attorney. There are lots of advantages here including the ability to market your firm more broadly across related practice areas. There are no requirements to send or receive work between the attorneys. Office locations can be added, extending your geographic reach. We are starting to roll out "of counsel" relationships with key attorneys in other locations and we'll let you know how it goes.

[Frank Rooney]

I am a former IRS Attorney with a botique tax controversy practice who wants to associate with other firms. Since I can generate my own tax work as well as other client work, I want to get paid for my source work. My licenses to practice are in CO, DC, MD, and VA. My thinking is the technology will drive more "of counsel" relationships since part of the advantage of the big law firm was the technology advantage.

[Gary McCorvey]

I am a former Superior Court Judge who did not seek re-election in a rural circuit, frankly because of (a) boredom with presiding in cases (1)where the majority of the lawyers were unprepared (that is putting it politely) and (2) where one or more of the parties appeared pro se and (b) desire to return to the courtroom as an advocate. Rural areas are, in my opinion, particularly reluctant to change, and the "of counsel" concept lacks any widespread acceptance here. Any suggestions on how to sell an "of counsel" relationship to a small firm in a rural area?

[GW]

I'm a recent graduate and am looking at the possibility of starting my own practice. I've been taking contract work doing research until I get my license, hopefully in November. I was recently approached by an attorney who suggested that I may be able to associate myself with her firm in an "of counsel" capacity. What I'm looking for is data to help me decide if this is something I want to do.

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