The Case for the Mid-Sized Law Firm: A Conversation with Ed Winslow

by JD Supra Perspectives
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Ed Winslow is a partner (and former managing partner) at Brooks Pierce, where he has spent his career practicing financial services and banking law. He is also a Quaker, Vietnam vet, hummus connoisseur, and advocate of liberal arts education - but, more than that, early in my career in legal marketing he was my boss and mentor from whom I learned more than I can capture in an introductory paragraph. It was therefore a real treat for me to sit down with Ed recently in a conversation about the legal industry past and present. I am glad we have his voice in law firm leadership and am happy to have the opportunity to share it:

Q: Tell me about how you came to be a lawyer, your career, and your interest specifically in MidLaw topics. 

Winslow: Well, the specific story of how I came to go to law school and therefore became a lawyer is that I was playing cards one night with a group of my gentleman friends at what was then an outpost of the United States in Southeast Asia. 

And pretty late into it, and pretty deep into our cups, somebody said they were giving the law boards the next day, and anyone who signed up to take the law boards wouldn’t have to work that day. Furthermore, the test didn’t start until the afternoon, so you could sleep in. That persuaded me. 

...they were giving the law boards the next day, and anyone who signed up to take the law boards wouldn’t have to work that day ... That persuaded me.

They were giving the test in two places - Long Binh Post and Saigon. It was just luck of the draw which one you got assigned to. I was assigned to Long Binh; a hoochmate went to Saigon. 

In Saigon, the test was administered by a senior NCO, and he was by the book. In the middle of the test, there was a sapper attack and small arms fire in the streets. I mean in the street right outside the building where they were taking the test. The NCO turned to the guys who were taking the test and said “You all keep on answering questions. We are still on the clock. I’ll let you know if we need to take a break.” 

On the other hand, for those of us in Long Binh the test was administered by a nice civilian lady, an older woman. She came in and said, “Now don’t you boys worry about a thing. We don’t need to get all concerned about time limits. Just relax and take as much time as you need.” 

As a result of that, I did well enough to go to law school and so I did. My hoochmate became a salesman.

I suppose there’s also a broader reason for why I went to law school, as well. That goes to who the lawyers were in Tarboro, North Carolina where I grew up, and the place that lawyers occupied in our community. 

Almost everybody in Tarboro at that time was a farmer. There was just a handful of lawyers in town, 10 or so. But it was what else they were. They were leaders in the churches, leaders in local government, and when community things needed to be done, they were the people we turned to. The lawyers were impressive people, people you admired. 

And you joined Brooks Pierce law firm when it was how many lawyers?

I was the 12th lawyer, and we were the 2nd largest firm in the state of North Carolina at the time.

And you’ve practiced there your whole career?

The only other job I have ever had was in Southeast Asia, and that didn’t work out so well. 

This one’s turned out better?

Oh, man. There’s never been a time when it hasn’t worked out for me. I’m not sure that anybody before or since has ever had it nearly as good as I have. What a great way to live and work and have your being.

For context, how do you define MidLaw, BigLaw, and full-service law firms?

First, not very precisely. 

The nature of what people refer to as BigLaw is lots and lots of lawyers. And, it came from this: when I started practicing law (the early 70s), the law firms in New York and D.C. and other places were larger than us but they were on the order of 40 and 50 lawyers. During the course of my career, we had this enormous growth in America. We had a rapidly developing national and world economy, and technology exploded.

Business and commerce grew to a much, much larger scale than ever in the past, than was ever possible in the past. All that technology was applied first in the business world. And so you had legal matters also at huge scale, including, to oversimplify, M&A transactions, capital markets transactions, and litigation. 

When matters at larger scale cropped up, you needed to match in law firms the needs those matters generated. And there really wasn’t anything else you could do except staff up with lawyers. At that time, it took lawyers to do the work that was needed: a great deal of which was legal processing (in retrospect). Document discovery, for example, or M&A due diligence. That was very routine work. But at the time, there was nobody but young lawyers to do it. 

And the only models that managers of law firms had at the time were 19th and early 20th century business organizations. The animating instinct of those organizations was to drive for efficiency, to dumb-down processes, and to create silos, hierarchies with one person or a few people having a broad view of the landscape and then a lot of other people, who didn’t have that view, but who just performed the separate, dumbed-down functions. 

...the only models that managers of law firms had at the time were 19th and early 20th century business organizations. The animating instinct of those organizations was to drive for efficiency, to dumb-down processes, and to create silos...

That looked like the efficient thing to do. That’s what you did when you ran a railroad, or a textile company, or an automobile manufacturing plant. 

So, something very comparable was built in the law world, except that in the law world there was this opportunity to charge by the hour for what all those people were doing. It was, and to some extent still is, irresistible – the temptation to set up organizations structured on that model, but operated on a cost-plus basis. The economics of that are just breathtaking. 

So, that’s how I think about BigLaw and full-service firms.

Some BigLaw firms now grow through acquisition of MidLaw firms, attempting to continue to grow revenues simply by adding more timekeepers. Is that because there’s not as much growth in legal work?

I actually think that what’s happening now is that you have these very large law firms with very large clients, but they are starting to segment. There is huge differentiation now between law firms that did not exist before. And in-house legal departments are far more capable and sophisticated than they ever were before. 

The traditional model has been so good for law firms that it’s hard to stop doing it, hard to go to a  different model. But I’m not so sure that many firms any longer are driven just to add timekeepers.

...it will never be the case that large scale matters will not require large law firms and entail large legal fees. It’s just a question of how many law firms are going to get that kind of work.

As time passes, there continue to be larger and larger transactions and larger litigation. Scale keeps growing. There’s always going to be a need for firms that have the experience and capabilities to handle very large scale engagements. And so, there will always be large firms. 

In the future though, they will operate in different ways than they have in the past, and fee arrangements will be different. But it will never be the case that large scale matters will not require large law firms and entail large legal fees. It’s just a question of how many law firms are going to get that kind of work. The firms though must match the work.

At a mid-sized firm like yours - 100 lawyers, three offices, one state – what is your proposition? Where is your sweet spot, and how are you going to sustain it?

Well first, I believe there is no better way to train and season legal professionals than the opportunity we have in mid-sized firms. And, there is no better opportunity for talented lawyers to have a career and a life, and a lifestyle, that can’t be matched. 

The ideal configuration – for training and professional development, for lifestyle, and for a rewarding setting in which to practice a profession – is a mid-sized firm. Senior lawyers don’t manage, they practice law. And new lawyers pair with the older ones and learn. I think they call that the “apprenticeship” model. Well, that model is still economical in mid-sized firms – in a way that it can’t be for large firms. 

A mid-sized firm is the best place on the planet to be a lawyer. The key is direct engagement with clients and colleagues.

A mid-sized firm is the best place on the planet to be a lawyer. The key is direct engagement with clients and colleagues. The great satisfaction of being a lawyer is to be professionally competent in a challenging field, to control your own work, and to serve and meet the needs of clients that you have a personal relationship with. That’s the sweet spot. And who can deliver that as well as a mid-sized firm? 

Does MidLaw attract a different kind of lawyer than BigLaw?

There is an opportunity for a different lifestyle, and increasingly we’re told that appeals to Millennials. Mid-sized firms are going to reflect their marketplaces, and there’s a real talent opportunity there. You can attract really able lawyers who have all the potential in the world and who want to work with you if you are a certain kind of a law firm in the kind of a market where new lawyers want to be.

We are able to appeal to extraordinary talent because not every good potential lawyer goes to law school in the Northeast, and not every good potential lawyer wants to live in a big city. 

What you’ve talked about so far is the benefit of mid-sized firms to the practicing lawyer, as opposed to the client. Are clients still willing to pay for apprenticeships, or do they think it should be treated as overhead for you to train your next group of lawyers?

The economics of practicing law are shifting, and we don’t know all the answers yet. There must be changes in the business model.

There has never been a rule that says you must charge premium rates for beginning lawyers.

But let me say this. When I started practicing law, I practiced with Thornton Brooks. We would work on lawsuits or corporate transactions or whatever else, and you know what? He didn’t always bill for my time. 

There has never been a rule that says you must charge premium rates for beginning lawyers. From the start, Ted Leonard at Brooks Pierce told me expressly, “You put as much time into your work as you need to in order to get it right, and I’ll decide what to charge for it.” 

I’ve heard you say one of the virtues of MidLaw is its ability to train up the next generation of lawyers with a broad legal knowledge base, allowing for a more nuanced and thorough understanding of legal issues and thus better problem solving ability, than a lawyer trained in a specific area of the law in a BigLaw setting. Tell me more about that. 

Yes. The opportunity that exists in the MidLaw model is that from the beginning of a new lawyer’s career, that lawyer’s engagements encompass entire projects. They’re not handed separate pieces of very large projects; they are involved in an entire project. 

They get to handle multiple witnesses in a larger case or try a smaller case or negotiate or conduct client meetings at an earlier stage. They get to develop experience that, in time, turns into judgment. 

Critically, in order to become the best professional you can be, you must make mistakes and learn from mistakes. That can happen much more readily in a mid-sized or smaller firm than it can in a huge firm. 

That helps a professional to develop as a professional but also as a person. The things that you do as a lawyer contribute to your maturing and seasoning as a human being. You learn how to deal with people, you learn how to make decisions, you learn how to manage risks, you learn how to communicate, you learn how to negotiate. And, you learn how to listen. Not every lawyer learns that last skill, but the best ones do. 

...the best lawyers ... become these rounded, admirable people – the kind of people you want to be like. There’s that opportunity in spades in a mid-sized firm.

So the best lawyers, and the ones I saw in Tarboro when I was growing up, become these rounded, admirable people – the kind of people you want to be like. There’s that opportunity in spades in a mid-sized firm. It can be more difficult to get the same thing in a larger firm. 

You have written about Robert Coase and 'The Nature of the Firm.' He said firms are needed only where performing functions within an enterprise costs less than outsourcing. When are firms needed? And does that answer change depending on size?

Understand that Coase is talking about all kinds of organizations, not just law firms. He says that when you make decisions about the economic activities of organizations, you should include among the organization’s functions only those activities that you can do more efficiently in-house than by outsourcing. 

For example, in law firms, principals share office space. They do that because sharing space is more efficient for everybody – or used to be. With today’s communications and information technologies, you can think about that differently than in the past. Everybody may not need to be in the same space to get the job done.

Coase was an economist. He wasn’t thinking about culture or any of that. He was asking, economically, why would a firm bring functions in-house, when the same work can get done cheaper in a different way? 

In the early and mid-20th century, given the technology we had, firms brought all sorts of functions in-house, including different lines of legal services. A firm that was expanding might have a whole department that did real estate work because it was more efficient for clients and the firms to provide one-stop shopping. Now, you can segment and outsource lines of work that are not your core competency much more efficiently, much more cheaply, than in the past. 

..."scale has been commoditized."

Now, with new technologies and other developments, as Nilofer Merchant says, “scale has been commoditized.”

So, lawyers started paying attention to Coase and what he was saying at about the time when the notion of a full-service law firm started to break down. Lawyers started out by asking what practices do we need to have and which ones do we not? 

On that note, Steve Jobs said, “Deciding what not to do is as important as deciding what to do.” That should be applied to businesses more than it is. I see this lack of focus in law firms all the time; they just keep doing stuff because they’ve always done it, or they need some new revenue so they add a practice group. 

To Steve Jobs’ point, it is very hard for traditional law firms that have been around for a long time to terminate a practice because it’s people. And even though one particular practice may not fit or may not any longer have the same economics that it once did, the people are still there. 

Another challenge to law firms is the availability of technology that facilitates outsourcing and technology that facilitates networking. Do I really need a tax department if I can readily engage an outside tax advisor? Many people traditionally have thought either: 1) I’ve already got tax lawyers so I can’t not do tax, or 2) If I bring that in-house, I can make more money on it by collecting all the fees. But as the friction and cost of outsourcing goes down to zero, why do I need to have that function in-house? Maybe I should pay more attention to culture than functionality?

Are firms starting to have those hard conversations about terminating practices?

Yes. That’s actually been going on for a long time. The pace is picking up. The euphemism today is “agility.”

We have rapidly advancing technology and we have these Millennials, for whom institutional loyalty is not so great a value as in the past...

As we go forward there is a premium on agility. We have rapidly advancing technology and we have these Millennials, for whom institutional loyalty is not so great a value as in the past. And we have very sophisticated legal departments who can navigate these waters very efficiently. The forces are out there, and different law firms are addressing them in different ways. For traditional, older firms, this is all a great challenge because it’s not just an economic discussion. It’s about people and personal relationships. 

Some firms have collapsed. What are the lessons law firm leaders can learn from those firms? 

There’s huge value in culture, cohesiveness, and shared values. Law firms have never known exactly how to value or manage that. But, to be a successful and enduring firm, you have to be bound together by shared professional values, and those values have got to be continuously sustained. 

You have to do things to affirm those values, to inculcate them in new professionals, to reinforce them in old ones, and you’ve got to do things to bind people together on a personal level. 

Part of it is shared values. More important is trust. How do you create it? How do you sustain it? People are going to stick to organizations much longer where there is mutual trust and where there are personal ties between members of the firm that go beyond money. 

What happens when law firms go down is they’ll encounter some sort of stress and, very quickly, an every-man-or-woman for him-or-her-self mentality develops. Law firms are a collection of separate practices. Many firms are essentially confederations. Pieces of them, sometimes grisly pieces, can split off and go in different directions. 

You have to build a culture around professional standards and around service and purpose and meaning...

What kinds of things do you do to build trust and instill shared values? 

Have lots of parties. 

You have to be explicit. You have to build a culture around professional standards and around service and purpose and meaning. The kinds of things you do to build the culture you want might be professional development and training; it might be social events. It’s about people. 

And the most senior people have to understand that they are models. They have to model right behavior, and it has to be genuine. And at the end of the day, and this is the hardest part of all, they can’t be selfish; they have to affirm the team.

*

[Ed Winslow is a partner and former managing partner at Brooks Pierce. He blogs at Midlaw and Divers Items and can be found on Twitter @ed_winslow

Kathryn Whitaker is Director of Marketing & Business Development at McNair Law Firm. She’s a proud South Carolinian, working mom, political junkie, and avid fan of Clemson University. She can be found on Twitter @KBWhit.]

 

 

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  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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