A new startup is aiming to provide major law firms with an outsourced staffing alternative that would address the often high costs of paying for and training new associates.
Legal Innovators says its new outsourced service, which will also be available to companies and corporate law departments, would help with the legal industry’s persistent diversity and inclusion problems as well.
The idea behind the new venture is that firms and companies can try out promising legal talent without the hefty costs and the commitment that comes with the conventional hiring process.
Washington-based Legal Innovators was co-founded by Jonathan Greenblatt, a more than 30-year partner at Shearman & Sterling, and Bryan Parker, a former Shearman & Sterling associate and an entrepreneur. It is backed by angel investors along with family and friends.
Legal Innovators will train and pay the lawyers for two years while they work on legal matters for a firm or company.
“Firms rely on an antiquated, costly on-campus recruitment model, and hire based on limited criteria — test scores and one year’s performance in law school,” said Parker, who is the CEO of the company.
He said the traditional recruitment model excludes those who may not do as well on first year grades and attend lesser known schools, but are still talented lawyers.
The startup will employ the new lawyers for the first two years, paying them a salary and benefits, but not at the level of Big Law compensation. Law firms and companies would make a one-year commitment to a Legal Innovations lawyer, with the expectation that the relationship would extend to a second year, Parker said. Ideally, the relationship could put a lawyer on the partnership track, he said.
The new staffing model would give law firms more flexibility by allowing them to lay out less for recruitment and training for associates, and to pay less for legal work, according to Parker.
Legal Innovators’ effective rate, he said, is between $200 and $250 an hour compared to the market rate of $450 to $600 an hour.
“This means law firms still make a profit, which helps law firms with current cost struggles,” he said.
Corporate clients have increasingly balked at paying high hourly rates for fledgling lawyers, whose practical legal training traditionally has been built into firm billing costs.
Two irritants for clients are real estate costs and overpaying associates, said Greenblatt, who is now of counsel at Shearman & Sterling and serves as Legal Innovators’ chair.
“As the market evolves and clients become more demanding on price — you see firms dealing with this already through staff attorneys and other functions that didn’t exist before in law firms,” he noted.
About one-third of the Legal Innovators first class has been placed with employers, although the startup said it was not yet prepared to release the employer names.
Also, the company said Shearman & Sterling had signed a letter of intent indicating it would be prepared to use Legal Innovators attorneys in future work, and that it was in talks with other potential employers.
Legal Innovators collaborated with Georgetown University Law Center, George Washington Law School, and Howard University Law School to come up with its first cohort of new attorneys.
The first class is 50 percent women. Six of the lawyers are black, a group that comprises less than 5 percent of law firm ranks, according the most recent diversity numbers from the National Association for Law Placement.
Parker said Legal Innovators is aiming for at least 20 percent of its future classes to be comprised of black lawyers, and is looking to include women, those with physical disabilities, members of the LGBTQ community, and professionals with international backgrounds.
“Fairness in access to legal jobs is not only the morally right thing to do, it is a business imperative for many clients who employ these large law firms,” Greenblatt said.
Legal Innovators has also hired experts to train the new lawyers and will connect them with mentors.