The Value Proposition of the Energy Transactions Boutique Law Firm [Gaille Energy Blog Issue 81]
- Posted by scottgaille
- On January 20, 2020
- 0 Comments
The recipe for starting a boutique law firm is well known. Boutique law firms are typically founded by one or more Big Law alums with industry-leading expertise who then recruit top associates, essentially creating a talent pool of comparable quality to that of large law firms. Lacking the name brand of the big firm, though, boutiques have to offer prospective clients something more. This plus factor typically manifests itself in various efficiencies, including lower hourly rates, alternative billing arrangements, and leaner staffing of matters.
The approach of a boutique is therefore quite simple:
Comparable quality to Big Law but at lower cost and/or better value.
My energy transactions boutique—GAILLE PLLC—is in its fifth year now. Our business plan seeks to execute the boutique lower cost/better value leg as follows:
- Leaner office overhead = lower rates
- Associates are not overworked = more productivity and higher quality per hour billed
- More efficient staffing of matters = fewer hours billed on matters
- Flat fees = more cost certainty for clients’ project teams than hourly billing
- Transactional contingency fees for energy start-ups = better aligns incentives
- Fewer clients = faster turn-around times
One question I sometimes get is:
Why are there more litigation boutiques than transactional boutiques?
The answer is primarily found in the first half of the formula. It’s harder for a transactional boutique to replicate the quality of Big Law because it’s harder to recruit comparable quality transactional associates. Law school graduates seeking transactional opportunities flock to Big Law not only for the prospect of being a partner there, but also for the opportunity to access in-house transactional jobs through the law firm’s client network. Transactional boutiques are a harder sell to prospective associates because if things don’t work out, the exiting associate will (likely) have fewer in-house opportunities upon leaving a transactional boutique (than a large law firm)—if only because the large law firm has so many more client relationships. In contrast, litigators are more likely to want to continue practicing in a law firm setting and often do not need this placement assistance.
I recognized this hurdle when I started GAILLE PLLC but hoped that my being a Lecturer in Law at The University of Chicago Law School would help me overcome the hesitancy of new lawyers to join a transactional boutique. My students there got to know me in the classroom, seeing first-hand my working style and commitment to mentorship. I now have four associates, all of whom are recent graduates of The University of Chicago Law School—and all of whom could easily be working at any of the large law firms. This talent pipeline has enabled my firm to satisfy the first half of the value proposition.
Moreover, I believe that my associates perform higher quality work than they would be performing at a large law firm—because I better manage (and limit) their workloads. Even if hourly rates were equal, would a client rather pay for an hour of work from someone who works 40 hours per week or an hour of work from someone who works 60+ hours per week? It’s very likely that the lawyer working 40 hours per week has both accomplished more in that one hour and done so at a somewhat higher quality. Of course, our associates earn less per year than those at the large firms, but almost as much on an hourly equivalent basis. The plus side for them is that they have the opportunity to work on complex matters for top clients while enjoying their nights and weekends.
We strive to be a mini-Vinson & Elkins (where I started). What I learned there was that V&E was itself an institution comprised of many practice groups of industry-leading partners and top associate talent. Each of these “boutiques” within V&E worked with different clients and met their needs by delivering valuable legal work product. At GAILLE PLLC, we do essentially the same work that we would be doing at a V&E, but at a lower price point—creating elevated value for our clients.
About the Gaille Energy Blog. The Gaille Energy Blog (view counter = 120,514) discusses issuesin the field of energy law, with periodic posts at www.gaillelaw.com. Scott Gaille is a Lecturer in Law at the University of Chicago Law School, an Adjunct Professor in Management at Rice University’s Graduate School of Business, and the author of three books on energy law (Construction Energy Development, Shale Energy Development,and International Energy Development), and the co-author of Strange Tales of World Travel.
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