Imagine ... a law firm with:

• no minimum billable hour requirements,
• no partners,
• a 10-40 hour workweek,
• average attorney salaries in the high $100,000s and mid-$200,000s,
• the ability for attorneys to turn down an assignment, and
• virtual offices.

An emerging group of alternative law firms offer some or all of the above characteristics. 

What is an alternative law firm?

The alternative law firms, formed under varying business structures, generally offer (a) lower fees for corporate clients and (b) flexible schedules for attorneys.  They have been described by some as "high-end temp agencies" because they employ only attorneys with top tier credentials to work on-site at corporate clients' offices (or from home) for extended or indefinite periods of time.  Most of the alternative firms recruit only attorneys who previously practiced for at least 5-15 years at a major law firm or corporate legal department.  And, the attorneys perform more substantive tasks than traditional document review contract attorneys. 

Many attorneys employed by the alternative firms enjoy flexible work arrangements.  For example, Axiom  allows its attorneys to work on-site at a client's office or remotely from home.  The firm maintains office space but it is used by the accounting, marketing and IT departments.  Axiom and its clients agree on a set price for a project, and then clients pick the attorney they want from Axiom's roster, with each attorney free to turn down work that's uninteresting or too demanding.  And, Axiom associates earn salaries in the high-$100,000s and mid-$200,000s, working 40 hours per week.

The alternative firms target corporate clients - some target smaller and mid-sized companies that don't have an in-house legal department while other firms target large, publicly traded companies that generally look for high-end talent but also, especially in today's economy, seek lower legal costs.  Because most of the firms do not have the large overhead costs or partnership structures, they pass the savings on to their clients by offering lower billing rates - as much as 50% lower.   A 2007 article in the National Law Journal interviewed a senior vice president and group counsel of a Dallas-based company that engaged FSB Legal Counsel, an alternative law firm based in Atlanta.  The senior vice president commented that the highest hourly rate he paid for an FSB attorney was $195/hour. 

In addition to lower hourly billing rates, many of the alternative firms also offer flat-fee or project-based billing.  And, some firms have taken steps to give clients significant access to billing information.   Virtual Law Partners, for example, allows clients to view attorneys' time as it's entered on a weekly basis on the clients' password-protected MyVLP homepage; clients and attorneys can also share documents through this secure webpage. 

I have specifically referred to three alternative firms thus far, but there are more. 

Who are the firms and where are they located? 

Below I have outlined the firms that I discovered offer some alternative structure; there may be others.  I should also mention that I have no affiliation with these firms.

1.  Axiom - (over 200 attorneys) New York, San Francisco, London, Chicago, Los Angeles, Washington DC
2. CorpLaw Associates - (5 attorneys) Northfield, IL
3. FSB Legal Counsel - (33 attorneys) Atlanta
4. GCA Law Partners LLP - (24 attorneys) Mountain View, CA
5. The General Counsel, Ltd - (10 attorneys) Plymouth, MN
6. McDonald Law Group, LLC - (9 attorneys) Florham Park, NJ; New York, NY
7. Outside GC - (20 attorneys) New England, Colorado, New York
8. Paragon Corporate Counsel on Demand - (over 25 attorneys) San Francisco
9. Phillips & Reiter PLLC The Outsourced General Counsel - (23 attorneys) Houston, Dallas, Austin, Fort Worth
10. Rimon Law Group - (20 attorneys) San Francisco
11. The General Counsel LLC - (7 attorneys) Laguna Niguel, CA
12. Virtual Law Partners - (28 attorneys) Palo Alto, CA,
13. Vista Law - (10 attorneys) DC, London, Paris, Madrid,

Why am I sharing this information?

Consider this information competitive intelligence. 

A recent article discussing competitive intelligence in a troubled economy stated that law firms that survive -- and thrive -- will be those that not just understand who they are and what they do in the absolute but that can also exploit who they are and what they do relative to their key competitors.  Thus, it is imperative for legal professionals to know what other firms are doing and how they can differentiate themselves, their services and their firms. 

While the alternative firms do not compete with every service offered by traditional law firms, they do offer lower billing rates to corporate clients for high-end transactional services.  And, they do so by eliminating much of the high overhead costs associated with traditional law firms.  What challenges and opportunities exist for traditional law firms equipped with this knowledge?

1. Will traditional law firms alter their billing practices to compete with the alternative firms?  Lower rates for certain services?  Flat-fee or project-based billing?  
2. Is there an opportunity for traditional law firms to capitalize on the alternative business model by assembling their own teams of "high level contract attorneys"  -- perhaps the attorneys currently working reduced-hour schedules or seeking such schedule?
3. What if traditional firms' existing corporate clients inquires about the alternative firms?  Do legal professionals in traditional firms know enough about the alternative firms to provide an educated answer?  Can they distinguish the traditional firms' services from those offered by the alternative firms?
4. Will traditional law firms refer laid off attorneys to one of the alternative firms?  As more large firms lay off senior level associates and junior partners, many offer outplacement services; should the alternative firms be considered?
5. Do traditional law firms view the alternative firms as a competitor with respect to recruiting lateral associates?   Some of the alternative firms routinely recruit senior level associates directly from top law firms.    Are traditional firms responding?

Currently, the alternative firms do not match the collective knowledge of large firms - and, at least for now, are not structured to handle high-priced litigation or billion-dollar M&A deals.   But, they appear to be a viable alternative for (a) companies seeking cost-efficient legal services with respect to general transactional matters and (b) attorneys seeking flexible work schedules.  The impact of the alternative firms is sure to be a hot topic in 2009 - especially given the economic conditions.  In fact, one session at the upcoming 2009 NALP Annual Education Conference (April 1-4) covers The 21^st Century Lawyer:  New Models for Practicing Law.    Make plans to attend this particular session if you are interested in learning more about the alternative firms.