When Washington lawyers Marc Zwillinger and Christian Genetski left Sonnenschein Nath & Rosenthal in 2010 to open a four-lawyer firm, they took with them 24 corporate clients, including some big names such as Yahoo, MySpace, Blizzard Entertainment and Cricket Communications. By the end of 2011, the Internet law boutique, ZwillGen, had more than quadrupled its client billings to 100.
ZwillGen, which now has eight attorneys, espouses a flexible billing philosophy based on efficiency, not hours. In a lengthy section of the firm’s Web site, they call individual hourly rates “the old-boring-way.” The firm prides itself on its Silicon Valley start-up culture: there are no partner or associate titles, lawyers wear jeans to work, and one of the firm’s co-owners, Elizabeth Banker, took the job partly because it gave her the scheduling freedom to carve out a part-time wine consulting business (she also leaves early on some Fridays to work at the tasting room at Sunset Hills Vineyard in Virginia).
(Jeffrey MacMillan/Capital Business) - ZwillGen administrative assistant Sheila Marie, at left, with attorneys Elizabeth Banker, Melissa Troiano Maalouf, Leota Bates and Lisa Branco during Banker’s wine tasting.
(Jeffrey MacMillan/Capital Business) - Marc Zwillinger, left, who co-founded ZwillGen in 2010. Randy Sabett, center, joined the Internet law boutique in 2011 from SNR Denton, where he was a partner.
Much of what’s driving the success of ZwillGen and other boutiques is the growing demand from in-house legal departments — law firms’ most coveted clients — to negotiate alternative billing arrangements that include flat fees, retainers, blended rates and bonuses based on success.
“We put a lot of emphasis on the alternative billing approach when we left,” said co-founder Zwillinger, a former federal prosecutor in the Justice Department’s computer crime section. “We try to do a flat fee or monthly retainer or something that better aligns our incentive so we make more money the more efficient we are, and we make less money the less efficient we are.”
Those are magic words to chief legal officers who are under unrelenting pressure to contain outside spending.
“We have limited resources, and the legal advice we receive cannot suffer,” said Stephen Dwyer, general counsel of the American Staffing Association and president of the Washington Metro Area Corporate Counsel Association, which represents 2,000 in-house lawyers at companies and nonprofits in the District, Maryland and Virginia. “That’s forced inside counsel to look at different billing arrangements.”
Looking for alternatives
For some, that means turning to smaller firms that offer specialized services, minus the big-firm rates. Karen Litsinger, senior vice president and general counsel for Mirixa Corp., the Reston-based health care services provider, started looking to regional firms to handle routine matters that don’t need the staffing of an 800-lawyer firm.
“There are some employment law matters or run-of-the mill litigation where I don’t need a national or international firm,” said Litsinger, whose company runs Web-based programs that help pharmacists counsel patients on their medication. “I can get an hourly rate that starts with a ‘3,’ not a ‘6.’ You have to find the right people ... but for us, that’s been a way to contain costs and get very good quality work.”
Others are pressing traditional top-tier firms for alternative billing arrangements — and they say they’re getting them.