In an article titled “Stay-at-Home-Rainmakers: A Growing Threat to Big Law,” The American Lawyer explores the growing trend of low-overhead law firms such as Culhane Meadows who are attracting former Big Law attorneys and large institutional clients by eschewing expensive offices and other trappings of traditional firms in exchange for home offices, more billing flexibility, and greater percentages of take-home pay. Here are some excerpts from the article:
Work from your house. Set your own billable rate. And keep 80 percent of the money from every matter you originate and handle.
That’s the sales pitch Culhane Meadows, a firm with no office space that opened in 2013, has used to attract a horde of Big Law refugees. In less than four years, the cloud-based firm has grown from four lawyers in Texas to just under 60, working from their home offices in Atlanta, Austin, Chicago, Dallas, Houston, New York and Washington, D.C.
Culhane Meadows’ fastpaced growth is one indication that it and a number of its cloudbased contemporaries are increasingly competing with Big Law for both rainmakers and work from Fortune 100 clients.
“What you’re seeing is some of the more forward-thinking, younger-generation lawyers who do have some business saying that the incumbent model may be working for me today, but it’s nothing that I particularly want to plan my future around,” said Mark Cohen, who consults for law departments and law firms. “This is all coming, ultimately, at the expense of the traditional law firm model.”
Culhane Meadows has a transparent, eat-what-you-kill model. All compensation is formula-based, and partners keep 80 percent of every hour that is billed. Lawyers who originate and handle matters keep the entirety of that 80 percent. Lawyers who handle work for their partners receive about two-thirds of that takehome pay, while the rainmaker keeps the rest as an origination credit.
Lawyers are allowed to set their own billable rate at Culhane Meadows, which Grant Walsh, a co-founder of the firm, said is often equivalent to a third or fourth-year [Big Law] associate in the city where the partner lives.
“If you were at Weil Gotshal or Kirkland, and your rate was $800 an hour and the client really loved you, then the client is going to really love you at $450 an hour,” Walsh said.
Steven Shapiro joined Culhane Meadows in Chicago in March as a 59-year-old with more than 30 years of experience in the law. He began his career as an associate at Mayer Brown and then became a senior in-house lawyer at a string of companies, including suburban, Chicago-based First Midwest Bancorp., where Shapiro served as executive vice president and corporate secretary.
Shapiro returned to private practice in 2011 at Chicago’s Krasnow Saunders Kaplan & Beninati. He heard of Culhane Meadows through a general counsel of a large company in the southeastern U.S. who told him that she uses the firm.
“I don’t know if I would have entertained the idea, but if an established business is using them and thinks highly of them, it breaks the mold that it’s just for small companies,” Shapiro said. “And it breaks the mold that it’s just for young attorneys.”