Big Firm Burnout and the New Virtual Lawyers

After graduating from McGill Law School in 2007, Patrick Murdoch moved to New York for a job as an associate at Shearman & Sterling, and prepared for a new chapter as a high-powered lawyer. Pretty quickly, it dawned on him he’d made a poor lifestyle choice.

An avalanche of work poured down on him in his four years at Shearman.

“At one point we got an email saying, ‘When you wake up in the morning, you don’t brush your teeth, you look at your phone,’” said Murdoch.

That was in 2009, when the firm was preparing for trial in the Galleon insider trading case. On another weekend, his girlfriend flew in from Montreal, and he spent all of Friday night and then Saturday at the office. After four years, he quit, convinced he’d never be a “well-rounded human” as long as he was in Big Law.

After cycling through a series of jobs that failed to satisfy his desire for an intellectually challenging, yet manageable workload, Murdoch’s career took a novel turn in 2014, when he started his own firm, Murdoch Legal, and found a new kind of help online.

Within the last four years, a number of online sites such as UpCounsel and InCloudCounsel have launched to help Big Law’s cast offs — associates such as Murdoch, and also partners, who couldn’t hack the lifestyle, or didn’t want to stay. The sites help build their practices by connecting them over the internet with small- and medium-sized businesses that want top notch legal services at a lower price.

[caption id="attachment_3886" align="alignleft” width="263"][Image “Patrick Murdoch” (src=https://bol.bna.com/wp-content/uploads/2015/08/DSC_5109.jpg)]Patrick Murdoch[/caption]

In the 15 months since Murdoch launched his own firm and started relying on such sites, he said he has built a practice that grosses $15,000 per month and employs one associate, while also giving him freedom to summer in the Laurentian Mountains outside Quebec and winter in Oaxaca, Mexico. He keeps expenses down by sharing a small office with a friend in Montreal, and renting a cubicle in Dumbo, Brooklyn, on an as-needed basis through the workspace sharing company Green Desk.

Sites such as UpCounsel, InCloudCounsel, and others offer a simple value proposition. In contrast to early online predecessors LegalZoom and RocketLawyer, the newest sites place tight controls on which lawyers can solicit on their site. That attracts companies looking for legal services who want some assurance that lawyers vying to represent them have adequate training beyond law school.

Still, most of the legal work offered is routine: incorporations, terms and conditions for online companies and the like, yet there are examples of larger companies seeking this kind of routine work on these sites.

The sites earn money by charging lawyers a fee to join, by charging a fee per transaction, or by selling other products and services such as technology platforms and process management systems.

The various heads of these websites declined to divulge specific financial information, yet it’s clear from the number of attorneys involved that their combined revenues represent only a small fraction of the total market for U.S. legal services. Murdoch claims he is making a six-figure salary, and there are hundreds of other attorneys on the sites.

Still, the market appears poised for growth. In July, UpCounsel announced they had received $10 million in funding led by Menlo Ventures to help the site grow.

“These sites are taking advantage of something weird about Big Law,” said Benjamin Barton, who studies the legal profession at the University of Tennessee and has written for Big Law Business.

“Big Law has always focused on the highest dollar matters for the very biggest, richest clients,” Barton explained. “It leaves this huge gaping hole for mid-sized startup businesses.”

They’re not starting out with a frontal assault: ‘Choose us, not Cravath.’ But there’s no reason why they couldn’t eventually do that.

Earlier this year, Murdoch said he landed work for financial services giant Blackstone through InCloudCounsel, which consistently gives him a high volume of non-disclosure agreements and other complicated forms that need to be negotiated. He said he currently works with six different “middle market” private equity clients on the site.

Barton argued there is no reason why the online marketplace for legal services could not evolve and mature to eventually threaten Big Law more directly. “They’re not starting out with a frontal assault: ‘Choose us, not Cravath.’ But there’s no reason why they couldn’t eventually do that. Big firms trade in reputation, but reputation is not some God-given thing.”

Other experts suggested the process for hiring legal counsel at most large public companies is still too tightly controlled to open it to a public auction online, even at a gated website, though a few companies may be experimenting with using these sites.

[caption id="attachment_3890" align="alignleft” width="376"][Image “Murdoch Family | Mexico, 2015" (src=https://bol.bna.com/wp-content/uploads/2015/08/Family-Portrait-Mexico-2015-12.jpg)]Murdoch Family | Mexico, 2015[/caption]

Beyond the fact that the these sites favor lawyers with varying amounts of Big Law training, it’s clear that the lawyers working there are trading on their former firm’s reputation. The first line in Murdoch’s online bio announces he used to work at Shearman.

And whatever else he feels about his time there, he calls it an awesome firm. “I owe much of my success to the training I received there,” he said.

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Murdoch started out in the M&A group at Shearman, but when the financial collapse hit in 2008, the M&A work dried up, and the firm moved him to litigation. Murdoch said he quickly learned to treat his phone like an appendage.

It was fine when it was just me. It was different when I got into a relationship and had responsibilities to other people.

The breaking point, when he realized he couldn’t stay in Big Law, arrived almost four years into his time at Shearman. He and his fiancé Kate-Mills Drury had Friday night reservations to eat at Frankie’s Spuntino in Brooklyn. After spending the whole dinner on his smartphone, he dashed back to the office as soon as they finished eating.

Shortly thereafter, Murdoch decided to stick around for his fourth-year bonus, then look for a job somewhere else.

“It was fine when it was just me,” Murdoch said of Big Law practice. “It was different when I got into a relationship and had responsibilities to other people.”

After quitting, he and Drury married, and moved to Berlin; he worked with several European companies, which proved unsatisfying for different reasons. One required the same long hours as Big Law, and others failed to turn into full time offers.

[caption id="attachment_3948" align="alignleft” width="264"][Image “InCloudCounsel Co-Founder Ben Levi” (src=https://bol.bna.com/wp-content/uploads/2015/08/IMG_1564.jpeg)]InCloudCounsel Co-Founder Ben Levi[/caption]

In 2014, unsure what to expect, he returned to North America and found workspace in Brooklyn through Green Desk, which charges as little as $300 per month for an office. Murdoch purchased business cards, and started his own firm.

That’s when he found San Francisco-based UpCounsel, which advertised a network of attorneys with experience “at best-in-class law firms and top Fortune 500 companies,” and promises lawyers high quality clients, and more interesting work, than has ever been available online. UpCounsel charges a fee on every transaction between attorneys and clients.

“I started to get requests from all over the U.S., then from all over the world,” Murdoch said. His UpCounsel profile indicates he’s represented clients in Spain, Malaysia, and elsewhere, the work ranging from drafting consulting agreements, working on stock repurchase agreements, bank contract reviews, trademark services, drafting privacy policies, and acquisitions.

Earlier this year, after moving back to Montreal, Murdoch was approached by a second website, InCloudCounsel, another San Francisco-based start-up promising “a virtual network of attorneys in private practice with big-law training,” though InCloudCounsel is focused on private equity work.

Priori clients are making up to $100 million in revenue, the typical M&A is valued at up to $25 million, and many of Priori’s lawyers are former associates and partners at top-50 law firms.

InCloudCounsel charges for its other product offerings — a technology platform, analytics tools, and process management systems — but offers access to attorneys for free.

Priori Legal , a similar site Murdoch mentioned, though he doesn’t use it, gives clients a 25 percent discount off their lawyers’ rack billing rates, and then takes 10 percent cut of the final bill.

Priori CEO and founder Basha Rubin wouldn’t name the site’s clients, but claimed they’re making up to $100 million in revenue, and the typical value of an M&A facilitated by the site is $5 million to $25 million. Many of Priori’s lawyers, she said, are former associates and partners at top-50 law firms.

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Much of the value proposition offered by these new sites relates to lifestyle. Even if they can’t provide lawyers with the most exciting legal work, they harness the internet to help lawyers build a practice of their own design.

In a typical week, Murdoch said he works 40 to 60 hours and could take on more matters, but turns potential clients away because he doesn’t have the bandwidth, given his family obligations.

Murdoch said he typically arrives in his Montreal office — an “industrial loft” he shares with a close friend who runs a small leatherworks company — by 10:00 a.m. and departs by 5:30 p.m. He tries not to respond to email at night and makes it a point of driving his young daughter to and from daycare.

“We believe in co-parenting,” he said. “That’s been the deal from the beginning. I wouldn’t be able to do that if I were still in Big Law.”

His expenses are minimal. Murdoch said his office costs are around $500 a month, his intern is unpaid, and his one associate, who earns a modest salary, can work from anywhere.

[caption id="attachment_4158" align="alignleft” width="332"][Image “Murdoch Family | Mexico, 2015" (src=https://bol.bna.com/wp-content/uploads/2015/08/family_jump_mex_4678-1.jpg)]Murdoch Family | Mexico, 2015[/caption]

Murdoch also takes advantage of the fact that most of his expenses are in Canadian dollars, while his revenue is American. His total compensation is lower than a comparable lawyer in Big Law, but it’s all about lifestyle: earlier this year, Murdoch spent seven weeks working from Oaxaca, Mexico, and three weeks working, and surfing, from Vancouver Island and the Gulf Islands in British Columbia.

“I do have stress that my big clients will leave me,” Murdoch said, adding that his wife recently took a well-remunerated position as a psychiatrist, which alleviates those fears.

And Murdoch misses engaging with the top-tier clients who are, for now, sticking with big firms. “Sometimes I feel sort of like a bottom feeder.”

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It remains to be seen whether UpCounsel, InCloudCounsel, and others will be able to provide a way for lawyers to balance an interesting book of business with a robust life outside of law.

Could this be a different conversation ten years down the line? Sure. If I thought Big Law were the right way to practice law, I’d still be working at Kirkland.

At the moment, they can’t offer the same perks as Big Law such as high compensation, and perhaps most importantly for young lawyers hoping to build their own practice, the credibility obtained from working at a top firm with a longstanding reputation.

But if larger companies migrate some of their work to lawyers on these sites, and if the work grows more sophisticated, the legal services landscape could continue to change.

“Could this be a different conversation ten years down the line? Sure,” said Ben Levi, co-founder of InCloudCounsel and a former Kirkland & Ellis associate. “If I thought Big Law were the right way to practice law, I’d still be working at Kirkland.”

“Clearly we have a theory,” Levi added. “There’s a better way to do high quality legal work than the way a large law firm does it.”