Boutique Firms Find Recession Resilience in Being a Master of One
Unlike their jack-of-all-trades, multipractice counterparts, boutique law firms lack the ability to rely on a variety of practice groups to bolster profits when billables decline in a specific area, i.e. structured finance or real estate. Yet, some boutiques are surpassing general-practice firms when it comes to riding out the economic downturn, the National Law Journal reports.
Leaders at boutiques and law firm observers say lower overhead costs, little to no major debt, more flexibility to accommodate clients looking to cut their legal costs and lower billing rates overall have helped boutiques avoid attorney layoffs and scoop up more legal work, according to the National Law Journal.
While there are risks when a firm puts all of its eggs in one legal basket—tax and finance boutique McKee Nelson cut 17 associates in November because of the credit crisis—the ability to implement swift management adjustments to economic conditions is an advantage for many boutique firms, the publication reports.
Jose Astigarraga, chairman of the 18-attorney litigation firm Astigarraga Davis in Miami, said in an interview with the NLJ that running a boutique firm is like driving a precision sports car such as a Ferrari. Whereas general practice firms resemble luxury sedans like the Lincoln Towncar.
“When you’re in the Lincoln Towncar and you go over a bump in the road, you don’t really feel it that much,” he told the publication. “In turn, boutiques are the Ferrari. When you hit a bump, you really feel it, but you can also turn on a dime, which you can’t do in the Towncar.”
While the recession is a giant bump in the road for law firms, boutiques still retain the maneuverability to avoid economic disaster as much as possible, Astigarraga says.
