Mid-tier firms ‘horrible businesses’

Peter Godfrey
by |
An outspoken law firm consultant has told Australasian Lawyer mid-tier firms can’t thrive unless they give their employees a greater stake in their business’s fortunes.

“If you want to be incredibly frustrated and make no money, go into a mid-tier firm,” consultant Colin Ritchie said.    

“Ten partner firms are horrible businesses.  If you want to make money out being a lawyer you need to start a small firm like a boutique or you become a partner in a big firm.”

Ritchie argued that while small and boutique firms were driven by an entrepreneurial spirit and had the ability to quickly adopt new innovations, and that top-tier firms had well-established and well-run systems in place, mid-tier firms did not have either.
“Small firms are nimble and can take up opportunities very quickly.  Like any other small business they may suffer from a lack of resources and a lack of time, but as the person in charge, you’re ‘it’,” Ritchie said.

“You’re the CEO, you’re the marketer and you’re in charge of building client relationships.”

Ritchie also believes that in addition to having a much higher personal interest in the firm small firms benefit from the absence of company politics making decision-making easier and plans easier to execute.
Although Ritchie readily concedes there are in fact some very high quality mid-tier law firms, he nevertheless believes they generally all suffer from a lack of personal investment.

“Everything just boils down to having skin in the game.  Without it, nothing matters – provided I get my wage, what else matters?  If cash-flow is down, what does it matter to me?”

Ritchie welcomed a recent initiative that occurred in the UK where staff at the multi-disciplinary insurance provider Triton Group were given a £500 share package in order to boost their initiative.
However, Ritchie argued that this measure still did not go far enough – the employees should have been made to purchase the shares out of their own pocket just like real outside investors.  

Is Colin Ritchie right?  Do mid-tier firms suffer because their employees don't have enough at stake?  Tell us your thoughts below.  
  • anon (again) on 15/04/2014 5:54:29 AM

    Lots of lawyerly responses here. I think the article said boutique - not sole practitioner. I was in a wannabe mid tier (about 9 partners) and have made the transition to a boutique (3 partners), and life has never been sweeter. Far less partnership BS, no more fighting over limited resources, a core focus and just generally a far easier life. Golf at least once a week is also a happy by product of less administrative burden.

  • Bob on 9/04/2014 3:16:12 PM

    10 partners is a mid tier firm?

    Does that mean 11 partners is top tier?

    That is a revelation in itself.

  • Anonymous on 8/04/2014 2:06:28 PM

    in my long experience, most lawyers havent the faintest idea about how to market and get in work.
    They think work magically comes by referrals from existing clients.
    The question is this. If you want to run your professional life (read "life") by way of a begging bowl based upon fate/luck instead of going out there and killing your dinner continue to do so but dont blame anyone else.

    But successful lawyers advertise big time.

    Have you ever asked why the same lawyers are out there advertising expensively?
    Do you think they do it because they are people with inflated egos who like spending money for no return?

    NO, they continue to do it simply because it works, just like it works in the community generally.

  • Anonymous on 8/04/2014 1:40:25 PM

    Spending money on fixed overhead is simply ridiculous.Since when did a desk or a chair in an expensive 24/7 leasehold or a view or a secretary EVER get you money?
    What brings in money is MARKETING.Getting the public to ring you up.If the phone doesnt ring you dont make money, its as simple as that.Spend overhead money on what makes money.
    Work at home. Have a "fake" virtual office thats extremely plush.Have girls at a reception desk taking all of your calls as a call answering service who also greet your clients on arrival> If you want their secretarial assistance you pay for it piece meal.Dont pay rent. Dont pay salaries.See your clients in plush offices only top tier law firms have but via a virtual office ie only used when wanted.Have a GREAT website, professionally done.
    Then MOST importantly, enter into a contract with a Google provider like Reach Local and pay around $4,500 per month to be at the very top of the page of the relevant Google search for your area of the law..........=.....SIGNIFICANT INCOME.
    Instant practice. No weirdo partners, no politics, no non performing partners,take the day off if you wish...lie on the beach for a day or go saliing if you wish. The downside is that your mobile phone rings all day with prospective new clients.
    THEY think you are in a glass tower overlooking the harbour when in fact you are at home still in your pajamas (unless your dog barks at home an the whole picture crumples in seconds)....But if you want an after overhead taxable income of between $200,000 to $350,000 depending on your area of work.....it sure beats putting up with the stress of being in a law firm.

  • Anon78 on 8/04/2014 1:22:31 PM

    To Anonymous,

    tell me more about, "spend your overhead money on highly profitable Google advertising".

  • Anon on 8/04/2014 12:45:45 PM

    A ten partner firm is not a mid tier firm in my view and from experience it is entirely possible to make decent money from a 10 partner firm, you just need to focus on what your'e good at and not try and be all things to all people. There are good and bad businesses at all levels of the legal industry

  • Realistic Anon on 8/04/2014 12:35:49 PM

    Anon 67 - it is all about what perspective you look at this from. Billable hours targets up, wages frozen, Partners still raking it in and not caring because there is a swathe of graduates who would walk over hot coals to get a job.....Welcome to an Australian mid tier!

  • Anon67 on 8/04/2014 12:12:13 PM

    The article is not specific as to what is a mid tier firm (a 10 partner firm?). It throws around the words "top tier" or "mid tier" without defining what is meant by these words. Also, the article fails to recognise the difficulties of a sole practitioner firm. Try taking a holiday as a sole practitioner.

    Coming from a sole practitoner to a 10 partner/director firm, I have found a better work/life balance and cherish the ability to take a holiday knowing senior lawyers are supporting me. The firm retains its characteristics of being personal and boutique yet is able to manage matters beyond what I could do as a sole practitioner.

    The author seems to believe money is the sole purpose of what we do as lawyers. Any lawyer who works for money alone will find themselves lonely (but their beneficiaries will possibly be wealthy). The focus on financial return is a narrow minded view on why lawyers do what we do.

  • Anon on 8/04/2014 12:02:20 PM

    Currently working in a national mid tier firm, enduring a pay freeze last year, and a potential minute CPI increase this only, i 100% agree with this article. The partners dont seem to have the ability, drive, skill or independence to build something new, change the established ways and eventually fall far behind the rest of the industry which are innovating and upskilling, whilst ensiring their staff are feeling valued and learning in their roles. I doubt my firm will offer a payrise substantial enough to keep most of its hard working staff come July. It will be interesting to see what this firm does when the partners are left scratching tehir heads as to why they lost the work hourses.

  • Anon on 8/04/2014 11:45:37 AM

    I don't necessarily agree with the article, given that the "consultant" appears to suggest that a 10 partner firm is a mid tier firm. Clearly, the consultant needs to think clearly about what defines a mid tier firm. There is also reference to "big firms" as opposed to top tiers, so I presume the comparison is not of mid tier firms versus the rest; rather, the comparison is of small firms versus sole pracs vs mid size and beyond

  • anon on 8/04/2014 11:37:29 AM

    Mid tiers - where partners line their pockets at the expense of the staff.

  • Anonymous142 on 8/04/2014 11:09:59 AM

    I very much agree. There is no initiative, no bonuses, or overtime offered for support staff, admin staff, young lawyers and graduate lawyers to do any more than they have too. There is no initiative to boost the firm, simply come in to what is required and take home your salary.

  • Also Anonymous on 8/04/2014 11:08:46 AM

    if this is common knowledge in the industry, then why do businesses like this still exist?

  • Anonymous on 8/04/2014 11:08:04 AM

    I couldn't agree more.I was once (for only a few years ) a partner in a very long established mid tier law firm many years ago. The firm almost sent me (and all of the partners) bankrupt.A huge slice of its WIP was old and defunct and my WIP which was very healthy was a huge percentage of it.I left....obviously with bad blood but thankfully I managed to lick my wounds , take my share of the debt and get away.
    I then ran my own boutique law firm as the sole equity partner with about 9 lawyers for many years and now run a sole practitioner law firm. In both latter reincarnations I thrived both financially and emotionally.Mid tier law firms are where dead wood partners congregate. Not bright enough or enterpreneurial enough to be in a top tier law firm or operate as a sole practitioner, they dwell in the unprofitable netherworld of the mediocre....mid tier law firms where they for the most part rely on a few hard working partners who never see the fruits of their labours and slowly slide into debt.They see it as troubles shared troubles halved when in reality it is ,troubles shared troubles magnified.

    Why anyone would wish to remain in a mid tier law firm is quite beyond me. They are for the most part the repository of the drones in the legal profession.

  • Anonymous on 8/04/2014 10:46:29 AM

    This is very much common knowledge in the industry

  • GB on 8/04/2014 1:10:02 PM

    If a 10 partner firm is mid-tier, what is a boutique?

    There is currently a lot of hardship in the profession, and more to come, but going solo is an overly simplistic solution, unless you are a consultant beating the drum.

  • Anonymous on 8/04/2014 12:57:53 PM

    Most mid tier firms do not make money.
    Their mediocre partners huddle together like anchovies in a bait ball....hoping against hope that fate in the form of a big shark...(read BANK).....is not going to suddenly sweep in and sell all their homes because of their ever spiraling overdraft upon which they all live beyond their means.The phone rarely rings.

    Prospective partners to such firms....one word of advice....Just..."DON'T".

    You can run your own firm out of a laptop in a virtual office you rarely use(with wood paneled walls and harbour views no less) with Servcorp , essentially working at home and employ not 1 staff member....and spend your overhead money on highly profitable Google advertising ...........and make HEAPS....

  • Anonymous on 8/04/2014 4:51:02 PM

    Lawed out on 8/04/2014 4:25:43 PM
    I work in a mid tier firm, an old established firm where each partner is referred to as "Sir" (no women partners). The phone stays quiet all day, there is an atmosphere of fear and loathing throughout the office. Depression, no work and mediocre pay are the selling points in this place.
    My colleagues in other mid tier firms are all singing the same sad song as I am.....

    THEN "GO WEST" (not actually) young man and find your fortune .Read my various posts under "Anonymous" (yes they are mostly all mine) and advertise, advertise, advertise. One months advertising is but one small client fee.

    Break free from the shackles of the pinstripe, the old boys ties, the twisted lemon faces and the Killara Golf Club fossils for whom you work!!!!! Men who carry brief cases containing an apple and a copy of the telegraph as they shuffle depressingly everyday into the cold vault of a law practice overhung with crippling bank debt and depression.

    Embrace the market and ARISE...SIR!!!!!

    In the name of God ...as Cromwell said to the parliament ..."Leave this place"!!!

    Google my man....Google i say !!!!....Grasp your future..!!

  • Lawed out on 8/04/2014 4:25:43 PM

    I work in a mid tier firm, an old established firm where each partner is referred to as "Sir" (no women partners). The phone stays quiet all day, there is an atmosphere of fear and loathing throughout the office. Depression, no work and mediocre pay are the selling points in this place.
    My collegues in other mid tier firms are all singing the same sad song as I am.....

  • Megan on 15/04/2014 3:21:49 PM

    The happiest thing about this depiction of life in a mid-tier firm, mostly provided by Anonymous, but no doubt true (I happily left mid-tier for sloe practice some years ago) is the fabulous phrase 'unprofitable netherworld of the mediocre'. Very transferable ...

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