San Francisco and Silicon Valley to its’ south, both sit at the nexus of innovation, entrepreneurialism, private equity and venture capital. Sitting astride the companies and visionaries who are best known to the world as the leading lights of the internet economy – are the lawyers who provide the necessary counsel to help those companies begin and thrive.
It piqued my interest, therefore, when I read yesterday in DealBook, a publication of the New York Times, of the entrepreneurial efforts being made by some lawyers in San Francisco – in particular, lawyers at Wilson Sonsini Goodrich & Rosati (Wilson Sonsini), to land new clients. Evelyn M. Rusli writes of the firms office in DealBook as “ha[ving] all the markings of a start-up: exposed lighting, long communal tables and an odd assortment of knickknacks, including a fire-engine-red British telephone booth.” Among a range of storied Silicon Valley clients, Rusli writes “Wilson Sonsini helped…Google go public”.
Competition is inspiring entrepreneurial efforts
The San Francisco/Silicon Valley startup-focused legal market is, however, becoming more competitive. And while Wilson Sonsini continues to maintain a dominant position in the market, having worked on more than half of this years startup deals – competition is inspiring an entrepreneurial approach to business development.
“In an effort to build credibility among new technology companies, Wilson Sonsini and others are employing a broad set of tools, including offering free services, cozying up to incubators and writing blogs” Rusli reports. In particular Yoichiro Taku, a Partner with the firm, blogs at Startupcompanylawyer.com
Both Fenwick & West and Wilson Sonsini, the two major firms in the market, have begun to offer free automated services to help entrepreneurs seeking early-stage venture financing, as Rusli outlines.
Law firm business model limits new business generation
As Rusli points out, however: “For big law firms, courting young companies is something of a balancing act. On the one hand, a firm wants to reach the highest number of top-shelf start-ups. But it has limited resources, so it has to be choosy.”
Mr Taku and his colleagues are certainly on the right track, however. As the American Bar Association recently reported, lawyers that blog are landing new business from those efforts. But Wilson Sonsini, Fenwick & West, or one or more of their competitors, can take what they’ve started far beyond what they may have before imagined.
Make law firms subsidiaries of sales organizations
How? By creating a dedicated business unit focused on generating new business for their firms, modeled after the most advanced proprietary deal origination efforts of private equity and investment banking firms. David Teten, a partner with ff Venture Capital, outlined the Five Best Practices In Sourcing Investments in Business Insider last year. I recently outlined how bundled legal and professional services can be sold to the US middle market, via the use of similar methods.
Expand the effort far beyond venture
And the concept need not stop there, as I would make the primary focus of today’s law firm the generation of new business, and the legal practice a subsidiary of that sales organization. Also, I would not only focus on venture capital, but also the vast US middle market, which at present, according to the Middle Market Center at Ohio State University, would rank it as the fourth-largest economy in the world were it a country — just behind Japan but ahead of Germany. This market is diffuse and under-served by sophisticated legal and financial advisors, and in need of an effective and efficient delivery system connecting it with the providers of sophisticated advisory services. Why couldn’t Wilson Sonsini or Fenwick & West be the first law firms to flip the legal services model on its’ head – and create a corporate structure placing them in a subsidiary role to a sales organization?
In time, this sales effort could be extended to include larger corporations domestically, as well as start-ups, mid-market companies and large corporations overseas. Indeed, this effort need not be reserved exclusively to the sales of legal services – but could extend to other services including all sophisticated professional services of importance to entrepreneurs, middle market corporate CEO’s, emerging market corporate management teams, and the top corporations in America and elsewhere.
Why Silicon Valley is where it might happen
As venture lawyer specialists with the ability to create the legal structure for such a business model, the best connections to the capital necessary to fund the business, and the know-how needed put together teams to develop and operate such a business - you are in the best position of anyone I can imagine to make it a reality. And given your entrepreneurial drive and demonstrated ability to use it to great effect – I believe, should you choose to embark upon this path – you will create the law firm of the future. Which won’t really be a law firm at all, but rather as I outlined, a sales organization, with a legal services subsidiary of which your law firm will be a part.
Will a legal services sales company be the next big start-up?
I believe that law firms composed of visionaries have the ability to rise to become leaders of a new industry focused on the delivery of sophisticated services to customers ranging from venture capital seeking entrepreneurs to middle market CEO’s to corporate management teams in the world’s largest corporations. As legal industry analyst and advisor Professor Richard Susskind said in July when assessing the impact of Alternative Business Structures (ABS) to the UK legal sector (as reported by Legal Futures): “[The market is] going to sweep through and drive all manner of efficiencies [over the next 6 to 10 years] that we can’t anticipate.” The changes Professor Susskind is referring to are in various ways impacting the legal sector globally, and have precipitated moves within the sector to adjust to new market conditions which threaten the existence of traditional law firms.
Turn the legal business model on its’ head
It appears that Wilson Sonsini and Fenwick & West are in the infancy stages of turning the legal business model on its’ head – as they turn more and more to becoming a generator of what is referred to in the investment banking and private equity world as “proprietary deal flow” (i.e. new business), as opposed to being strictly providers of legal services.
Should a law firm like Wilson Sonsini or Fenwick & West, already positioned better than perhaps all others – take the proprietary deal origination model and apply it to the provision of legal services (let alone the provision of additional professional services to other markets) – then the new law firm of the future will be born. Time will tell as to whether anyone will try.
Filed under: Cap Markets, DealOrigination, Funds & IBanks, Future of Law, Legal BD, VC
