Lean Operation for a Client-Centric Practice

In December 2013, I moved from San Francisco back to my Cincinnati hometown and opened a solo practice, returning to the full-time practice of law after a 20-year hiatus. My firm is a boutique business and transactional law firm, focusing on entrepreneurs, startups and small businesses. That segment has always been an under-served and poorly-served niche. I realized there was an opportunity to shake things up from the traditional norm of how lawyers and law firms operate. In addition, Cincinnati has a growing startup community, while the legal community is fairly conservative and close-knit, and in need of some disruption.

Before making the move, I spent about 8 months doing research, and noted several key factors:

Dramatic Exodus of Business Law and Corporate Work from Mid-to-Large Law Firms

When I first started practice in 1986, law firm corporate departments provided a wide range of business law services to corporate clients – not just sophisticated M&A, securities work, and financings, but bread-and-butter work such as corporate governance and contract preparation, too. Only the largest companies had in-house departments, and those departments were small. Fast-forward to today, and even mid-size companies have in-house departments, while larger companies’ legal departments have hundreds of lawyers and paralegals. They have taken over the vast majority of the corporate work that used to be performed by law firms, and also tackle litigation, intellectual property, employment law, and a variety of other sophisticated and specialized areas of the law.

Unaffordable Rates and Unwillingness to Change

Small businesses that don’t have in-house counsel simply cannot afford the absurd rates being charged by mid-size and large law firms, and those firms are unwilling to adopt billing practices such as flat-fee services that small businesses have been clamoring for. These firms have expensive real estate, lavish furnishings, and a leveraged structure that requires them to bill by the hour at rates smaller businesses cannot afford. The practice of hourly billing, when combined with billable hour requirements, is borderline unethical in my opinion. It creates incentives to be inefficient, which serves the needs of the law firm and the lawyer at the expense of the client. If any aspect of the business of law needs disruption, it’s how firms charge for their services.

Leveraging Technology and News Ways of Working

The rise of new technology and ways of working enable me to provide business law services to startups and small businesses at a price they could afford. If I could leverage technology and flexible workspace, I could use a combination of flat-free pricing and lower billing rates, and still make a good profit.

That is the theory, at least.

In Practice

My typical client wears jeans and t-shirts to work, while the typical Cincinnati business lawyer dress code is suit and tie. So, my first decision was to follow a “no suits, no ties” policy. That’s the great thing about starting your own business – you can do things however you want. I wanted to project a casual, less stuffy image to my target clients.

Instead of leasing a dedicated office or shared office suites, I decided to use co-work space. I have a floating desk, wifi access, a printer/scanner/copier, conference rooms, and a fully-stocked kitchen, at a very affordable rate. In addition, I’m working in the same space as many startups, which are among my target clients. I like the sense of community that comes from working around other people, and the energy here is great. So far, privacy and confidentiality have not been a problem. When I need to meet with a client, I reserve a conference room. There are also huddle rooms and “phone booths” for calls that need to be discreet. At some point I will probably need to move to my own space, but for now, the co-work space is extremely cost-effective.

Technology has been crucial. I have a laptop computer and a VOIP phone. That’s the extent of my hardware investment. I have the cowork space, but I can work from anywhere so long as I can connect to the Internet. For software, I have word-processing, time-keeping and accounting programs, a Lexis subscription, and cloud storage. I’m trying to be paperless, so every piece of paper, even my notes, gets scanned and uploaded to my cloud storage. This relieves me of the need for file cabinets and almost all paper files. Once something is scanned, it gets shredded unless it needs to be returned to the client or maintained as an original.

At this point, with no employees, my monthly overhead is low. Low to the point that only a few hours of client work a month pays for my fixed expenses. Indeed, the projects I concluded in February and March of this year, about 20 hours of billable work, have paid my overhead for the entire year.

Web Presence

The other aspect of technology is having a web presence. I cannot begin to tell you how many solo practitioners still don’t have a website in 2014. It’s appalling, and age is no excuse. Bill Gates is 58; he’s not too old to know his way around a computer. Admittedly, my website is a DIY website because I wanted to save money, but it introduces me to prospective clients before they ever pick up the phone. Hosting is under $100 a year, and it was fairly easy to set up the website with Weebly. Business e-mail service from Gmail using my own domain name is $60 a year. I have a blog at my website, and I’ve been posting to it about twice a week, on average. I post links to my blog pieces at LinkedIn, including several alumni groups I am a member of. This has generated traffic back to my website, as well as some lively discussions. I hope it will both improve my site’s search engine ranking, and drive some potential clients to me. After years of resistance, I now have a twitter account (@paulhspitz), and I post links to my blog articles there, too. These are essential tools for building my visibility and the visibility of my practice.

Experience, Insight at Affordable Rates

Low overhead and the flexibility that comes from technology enable me to charge an hourly rate that is half what partners at large firms in the area charge. My rate is as low or lower than an associate’s rate, but I have years more experience not just practicing law, but in business as well. When I left the practice of law in 1993, I got an MBA from Indiana University, and have started and run two businesses over the past 15 years. This experience gives me greater insight into the needs of my clients, and they know that I’ve gone through the same challenges they face. Because I understand their needs, I have developed a number of services that I offer at a flat rate.

My clients are on limited budgets, and they need predictability in their legal services. My clients want to know what something is going to cost up-front, and to the extent I can tell them and stick to it, I have an advantage over other firms. I’m also experimenting with a subscription service to provide access to clients for quick questions, at a low monthly rate. The goal is to make it easier for a client to pick up the phone or email me, without worrying about what it will cost.

By setting up a lean operation, I can provide a more client-centric legal practice. It is geared towards the particular needs of what has long been an under-served part of the market. I may be disrupting how lawyers and law firms operate in this market, and I think that’s a change clients will welcome.

Featured image: “A plastic calculator showing the words How Much” from Shutterstock.

About Paul Spitz

Paul Spitz

Paul Spitz is a business lawyer in Cincinnati, OH. His solo practice focuses on transactional and business law services for startups and small businesses. Paul has a law degree from Boston University and an MBA from Indiana University. He has started and run two businesses, prior to launching his solo practice in December 2013. Paul’s website and blog are at www.spitzbusinesslaw.com, and his Twitter address is @PaulHSpitz.

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