Another large firm lawyer goes solo - and it's all about the [lower] rates
One of the unintended consquences of the expansion of large law firms is that this trend may drive more lawyers to start their own firms. Think about it - though large firms hope that increased size will foster economies of scale and result in savings, there's still a whole lot of overhead involved in running a big firm. So to increase profits, firms will cut non-producing partners from the ranks and raise hourly rates.
So what's a lawyer to do when his clients can no longer afford him? Most of the conventional wisdom that I see here on the web would counsel lawyers in this position to cut clients who can't pay and raise rates even more as proof of value. Fortunately, most lawyers, myself included, don't buy that logic; we realize that there's a market out there for rates that are lower than market but nonetheless substantial enough to make big profits. And that seems to have been the motivation for Simon Bloom, a former attorney at Biglaw firm Powell Goldstein, who just put up a shingle, according to this article, Powell Goldstein Lawyer Steps Out to Open His Own Firm (3/15/07).
Listen to what Goldstein had to say:
"It's always been a dream of mine to go out on my own and offer my services to a wider market," said Bloom, 35, of his decision to open his own firm. He had practiced at Powell Goldstein since 1997. He explained that big-firm rates were pricing him out of what he sees as a "huge middle market."
He said that at Powell Goldstein he billed clients $385 an hour, adding that his rate there was about to increase to $405 an hour. "Only the Fortune 1000 could afford my rates -- and there are only so many of those clients to go around that have real estate issues," he said. His new rate is $295. "If you want a Powell Goldstein-quality trial lawyer, you're not going to get a better deal," he said.
My thoughts exactly.