A new way of looking at legal partnerships

  • November 23, 2017
  • James Careless

Mention to a solo/small law firm owner that they should consider partnering with a large firm, and chances are they’ll look at you with shocked incredulity. To many lawyers, such a suggestion is akin to advising a mouse to join forces with a cat.

Yet a partnership between solo/small firms and their larger counterparts can be mutually beneficial, says Noel Semple. He is an assistant professor at the University of Windsor Faculty of Law and author of the CBA e-book, “Accessibility, Quality and Proftability for Personal Plight Law Firms: Hitting the Sweet Spot.”

“In urban areas, solo and small law firms are often legal specialists; offering high-value expert support to generalist firms of all sizes,” Semple says. “Research suggests that specialists can, in some cases, deliver better results for clients compared to generalists. So partnerships between these two sides can make sense for everyone.” He points to the small practice Hassell Trial Counsel in Toronto, which provides court-seasoned trial counsel to third-party law firms, as an example of how such collaborations can work.

Here’s another: Starting in January in Ottawa, the six-person legal practice Momentum Business Law will offer outsourced corporate services to large firms. “Our reliance on legal technology and online processes streamline client work in such a way that turnaround time is much faster, more accurate and delivered at a much lower cost than conventional paper-based methods,” says Momentum Business Law founder Megan Cornell. She knows that large firms need Momentum’s help. “I’ve met lawyers at national firms who had never encountered electronic signatures.”

On the other side of the equation, solo/small firms in rural areas are usually generalists serving on “the front line” of legal access. “This is where partnerships with larger, better-equipped larger firms as well as small specialists, can be a boon for everybody,” Semple says. He cites Legal Aid Ontario’s research services as “an example of the type of relationship in which a specialist in a larger firm – in this case LAO – provides support to generalists.”

All sides are receptive to partnerships

As a small speciality practice that serves generalist law firms, Hassell Trial Counsel partner Mick Hassell is supportive of Semple’s pro-partnership position.

“I agree there is room for both small and big firms,” said Hassell. “The small firms are in a good position to test the market with innovative service offerings. The large firms are able to bring economies of scale to successful small firm offerings.”

Jeremy Hessing-Lewis is a Vancouver-based solo practitioner who belongs to the Small Law network of independent lawyers. Asked if solo/small-large law firm partnerships make sense in the current Canadian legal services market, Hessing-Lewis replies “Absolutely. I've had this discussion with the number of lawyers and we remain consistently surprised that we haven't seen more L2L (like B2B) partnerships emerge.”

Hessing-Lewis offers a third scenario in which solo/small-large partnerships make sense – a scenario that echoes how aspiring hockey players work their way up from the minors to the NHL.

“In my corporate law practice, a solo/small-large partnership seems like a particularly obvious arrangement where a low-cost, entry-level brand would offer initial services to startups and medium-sized companies with limited legal needs,” Hessing-Lewis explained. “Where the company's growth scales beyond these services, the client would be transferred to the larger firm. This already happens in practice, but a formal arrangement would be compelling for many clients concerned about both costs and the scope of services: I'm thinking of a Toyota/Lexus arrangement.”

In the same vein, solo/small and large firms could tap into each other’s strengths as needed; delivering better value to clients while using both partners to their mutual advantage. “For example, Small Law could establish a relationship with McCarthy's to meet the reciprocal needs of our respective clients,” said Hessing-Lewis. “McCarthy's is excessive for the day-to-day legal needs of your average small and medium-sized enterprises, but would be a perfect fit if a business was looking to scale up and required further securities, tax, and regulatory advice.”

Looking at it from the other side, “large firms will often partner with small firms for expertise that they may lack,” said Paul Schabas, a partner with Toronto’s Blake, Cassels & Graydon LLP, and Treasurer (President) of The Law Society of Upper Canada. “Just today I referred a client to an immigration lawyer with whom I work regularly to help get a needed witness into Canada for an upcoming trial.”

Immigration isn’t the only area where the biggest law firms may seek outside specialist assistance. “Many larger firms do not practice family or criminal law,” said Schabas. “With criminal law in particular, there are lots of opportunities to partner as corporate clients often face regulatory or corruption investigations, or demands for information and search warrants that require criminal law expertise – while still needing the large firm resources and attention to civil liability that may overlap with the criminal/regulatory investigation and prosecution.”

An opportunity waiting to be seized

The benefits to both sides in a big-small partnership are clear, as are the improved service potential and case outcomes that could accrue to clients.

Fear of losing partners to the “other side,” plus the fact that big-small partnerships fly in the face of Canadian legal tradition, likely explains why this opportunity remains unseized. As well, “I suspect that the reason we haven't seen such arrangements is that the larger firms are concerned that they may cannibalize some of their medium-sized corporate clients who are on the fence about legal costs,” said Hessing-Lewis.

Of course, the smart thing for big law firms to do is “to focus their client services on larger, more profitable clients without distraction,” he said; leaving solo/smalls to cover limited needs clients instead. After all, “there is room for both large and small firms,” Semple writes in his e-book. “The scale of unmet demand (in Canada) is such that, with the right innovations, a well-functioning market would support both models” – making solo/small-large partnerships a win-win for everyone involved.”

James Careless is a frequent contributor to PracticeLink.