Canadian Lawyer

ideas off one another. "There's a balance between independence and sharing." Sharing costs is a practical approach to operating a business while still allowing for professional independence. In fact, there are very few opportunities for efficiencies in true solo practices, says Robert Hardie, managing director of Management Counsel Group Inc. and author of A Practical Guide to Successful Law Firm Management. "In general, I view the solo practitioner as a poor economic business model with it [being] very difficult to achieve sixfigure incomes, not to mention being overwhelmed with little backup and the burden of administration. The better economic model is to leverage off the billings of associates/law clerks and gain some economies of scale. This is provided by a small-firm model, which has great potential for leverage and reasonable overheads without the challenges of becoming an unwieldy larger firm," he says. The most common model is one in which facilities are shared. That can cover a wide range from a couple of lawyers in a converted house to dozens operating independently in the same office complex. In addition to efficiencies of scale, complementary practices can result in shared business, referrals, and spillover work. The less risky financial approach is shared fees, where a lawyer receives a percentage of the fees done on each client's file upon payment from the client. "This becomes entirely a variable expense and does not require capital to fund payments prior to being paid by the client. This can be coupled with a fixed cost that is payable for overheads if the lawyer is sharing space and services," says Hardie. "This works well if there is sufficient fee volume to keep the lawyer busy enough to generate a fair income. This is closer to a 'partnership' arrangement 'without strings' and encourages everyone to be diligent and generate higher quality business." Marcy Segal decided sharing space was the right way to go. Her criminal practice didn't require the high-end office decorated with original art she had seen as a student articling on Bay Street. Having practised for the better part of two decades, her reputation was already established. What she needed was a healthy atmosphere. She found that with Edward Royle, who had been a partner in the country's largest criminal defence firm. Two years ago, Royle set up his own practice after the firm dissolved. He hired young lawyers, took on articling students, and welcomed other lawyers to work as associates in the same space. "It's proven to be a great success — it's a great, energetic office," says Segal, who set out to reorganize after she and her partner/husband divorced. What she didn't want to do was invest the time and expense of setting up a new office from scratch. With Royle she has access to a law library, office supplies, and services in addition to space, all covered in a monthly lump sum. What she treasures is the atmosphere that lends itself to sharing the experience and expertise of the others in the office. "What can't be measured in dollars is the experience and the expertise you draw from other criminal lawyers," she says. "Once you go in isolation . . . it makes the practice that much more difficult because the law is always changing." Sometimes it just makes sense to start small. Vancouver lawyers Tom Hakemi and Lisa Ridgedale met while working together at what is now McMillan LLP and eventually went their own ways. Both had done work in securities and figured their respective experience could lend itself to a decent practice in commercial disputes and regulatory proceedings. But they weren't ready to head to the altar and develop a formal partnership immediately. So they shacked up as associates for the first year. "It was a deliberate decision to not do a partnership at the very beginning," says Ridgedale. "Now it is a partnership, it is one cohesive firm," adds Hakemi. "Ultimately it comes down to some of those other models, there are some down sides. We wanted a cohesive group." Frank C. DeAngelis has taken a bit of a different approach in his Main Street Law Offices in Spruce Grove, Alta. With a chuckle, he describes the setup as a "benevolent dictatorship." He's at the helm of a practice involving several lawyers, all of whom have input in the direction of the business and take an entrepreneurial approach, but, ulti- mately, it is DeAngelis who makes the final decision. His practice in Spruce Grove, with a satellite office in nearby Edmonton, consists of 15 support staff and seven lawyers. Two of those lawyers are true associates and are paid a salary, three are contract associates working on the eat-what-you-kill approach, and one operates independently and keeps her own books. And they provide complementary services covering a gamut of disciplines. It's a successful business model, he says. There's plenty of work, the quality is good as is the pay, and the lawyers are respected and considered the institutional law firm in their community. But being just west of Edmonton, in the epicentre of a thriving economy, means growth, so now DeAngelis finds he's spending more time managing the business and less time practising law than he likes. "We've had about 500-per-cent growth over 10 years. The benevolent dictatorship model peaks and I don't think it's manageable as a 20-30 lawyer office," he says. "We all see lots of growth potential . . . it's just a matter of having to manage the growth." The time has come to develop a formal firm, so DeAngelis is in the process of working with three of his associates and a fourth lawyer outside his business to develop a partnership. As the past chairman of CBA's Northern Alberta solo and small firm section, he hosted a conference in 2010 that he says opened his eyes to how law firms work. For Birkett the evolution was to continue. After years of commuting to Edmonton, she decided it was time to work where she lived. She moved her practice, now focusing largely on family law, to nearby Sherwood Park. There she bought a business condo with another lawyer working in mediation. They share expenses and they've adopted the generic name, The Law House, to allow for easy transition in anticipation of the other lawyer's retirement. A collaborative family law practice has emerged allowing other lawyers to become part of the association with expenses to be divided equally. It's a model with which Birkett feels comfortable and allows flexibility for whatever changes may follow. www.CANADIAN L a w ye r m a g . c o m F e b r uary 2013 19

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