Kent Larson didn’t think of himself as a legal pioneer when he left an in-house lawyer job at Graco in 1984 to freelance out of his house.
Larson, also an engineer, envisioned a small portfolio of technology and other clients which he, and eventually a few other affiliated lawyers, could serve outside the hierarchical and more expensive confines of a traditional law firm.
“My goal was to provide an alternative for small companies who couldn’t afford an in-house counsel … and our business model was disruptive because it offered the client and the attorney something they didn’t get from the traditional model of business client and outside law firm,” Larson said.
“This can also work for larger companies who don’t want to add another full-time lawyer.
“Our firm hasn’t necessarily displaced any big firms … but the model has taken hold.”
Larson’s The General Counsel Ltd., based in his St. Paul home, has proved if nothing else that there’s room for what has become a growing group of alternative legal providers who can provide efficient business-legal service for less than the typical $300 to $600 hourly bills of most law firms.
In fact, Larson several years ago was one of the founders of a group of small legal outfits that form the General Counsel Services Alliance.
“Our standard ‘rack rate’ is $250 to $300 per hour and that could be twice as much for people with our expertise,” Larson said. “We hardly charge anybody that, except for [short-term] projects. We give volume discounts or fixed monthly fees because there is predictability for us. It shifts the client mentality from the hourly basis, where the client feels the meter is always running. Our people get paid based on what they produce … and they help cover modest overhead and a small profit … but they keep the bulk of what they bill.”
A recent report from the University of California, Hastings College of Law highlights new trends in entrepreneurship within the law business, the traditional model of which has left some clients and lawyers dissatisfied.
“Something remarkable is happening in the legal profession,” wrote Hastings College Prof. Joan Williams and co-authors last year. “Many lawyers have begun to found — and to join — businesses that organize legal practice in novel ways. The new ventures in legal entrepreneurship have been referred to as ‘New Law,’ a challenge to the behemoth ‘Big Law’ firms, which monopolized much of the legal industry for so long.”
The trend is driven partly by young lawyers who burn out working long hours to support huge overhead and the take of partners who can earn $500,000 or more, and clients, large and small, who are always complaining about their bills and pressuring law firms to provide more services for less. It’s also driven by attorneys who want a better work-life balance, including choosing when and what type of work they do, and who are willing to work for less.
There are several models of the new types of legal practice, including more use of contract lawyers by established firms, more flexibility for less pay for firm lawyers, dispatching lawyers from law firms to serve inside client companies for negotiated rates and the formation of lower-cost specialty practices, whether inside or outside existing firms, that provide specific services over the phone and computer at monthly rates.
For example, myHRcounsel opened last year in Minneapolis. Started by former business executive and attorney Mark Young, and housed at the firm of Wagner Falconer & Judd, myHRcounsel uses a call center staffed by professionals to answer day-to-day HR and employment law questions for business clients for a monthly fee.
Larson, who says he may have made more as an in-house counsel or partner at a law firm, says he’s preferred choosing and retaining long-term clients in flexible relationships. He jokes that he’s the “half lawyer” at companies such as technology-maker Digi, where he has labored for years on Digi projects and kept them from having to hire a third full-time attorney.
“We’re comfortable with Kent and we have him on a monthly retainer,” said Digi General Counsel Dave Sampsell. “If we need more we just sit down and talk about what we owe. We get strong service from an experienced attorney at a predictable price.”
Similarly, Larson is the part-time general counsel for Lifeworks Services, a big nonprofit that serves people with development disabilities that doesn’t need a full-time lawyer.
Larson said The General Counsel has boasted up to a dozen affiliated attorneys in some years. Typically only several are working much in any one time period and overall revenue is usually under $1 million. The lawyers work from their homes for the most part.
“Four or five of us are really active with clients,” Larson said. “The advantage we give clients is highly experienced in-house counsel for just the time they need. For our attorneys, who include an artist and a stand-up comedian and people raising kids … we give the flexibility to work as much as they want.
“This business model has caught on. Thirty years ago people thought I was crazy.”
Neal St. Anthony