Richmond Firm Develops New Model of Firm Administration

Law practice, not politics

A specialist in labor and employment law, J.B. Burtch originally started practicing law at Hunton & Williams in the early 1970s. After a stint as a partner in another firm and a brief sabbatical in 2000, Burtch decided that although “I liked practicing law, I didn’t like being a partner because I spent too much time talking to people about solving firm problems that I couldn’t help.”
The management challenge of a small to medium sized firm, Burtch explained, is that lawyers “want to be collegial and that requires consensus which requires time.”
Burtch decided to go in with old friend, Macaulay (then with Virginia Law & Government Affairs, P.C.), and leave the managerial, cost-effectiveness work up to him.
“I can’t tell you how much happier I’ve been working in this kind of environment,” Burtch said, smiling upon his return from a cruise vacation. “Many lawyers I talk to can’t believe I practice law without a secretary but I gotta tell you, it’s the greatest.”
Although his work is generally “not paper-heavy,” Burtch said he can work at home or in the office using a decent computer package that might cost the equivalent to one year’s health insurance coverage for a personal secretary.
While larger firms rely on central management to evaluate and allocate costs, small firms like M&B are able to customize and tailor-make the practice of law to individual attorneys through the implementation of software that strictly tracks the money.
Lawyers at M&B are solely responsible for their own costs.
For example, a small firm has too much work and hires a part-time associate to help out lawyers A, B, and C. In many traditional firms, the billing costs for the part-timer would be collected from all attorneys (though it should be noted, financial practices vary). With more recent software such as Quickbooks Pro, M&B has been better able to avoid unnecessary conflicts and wasted time, “passing on the savings to clients”—as a recent press release read.
The firm also saves money by operating a tiny support staff, including a part-time office manager who telecommutes from Raleigh.
“Basically we reduce politics to economics and the result produces more free time,” said Burtch. “It’s customized to where the lawyer chooses with total flexibility how much he wants to work.”
Generally speaking, the traditional model of attorney compensation involves evaluating a lawyer’s collections, non-billable contributions to the firm, seniority, and other factors and then determining the “points” or percentage of the firm’s profit he or she will receive as compensation.
“There’s what we do, ‘eat what you kill,’ and there’s everything else,” said Burtch. “A lot of times when a third party is involved in evaluating how much an attorney should be paid—those systems get out of whack.”
“Ours is pretty simple,” Macaulay explained. “When someone starts here, we negotiate a fixed amount, called a management fee, which, along with the particular attorney’s overhead is subtracted from his total collections to determine his compensation … We find attorneys really like that certainty.”

The old college try

Macaulay and Burtch are both undergraduate alumni of Wesleyan University in Connecticut, a school Macaulay jokingly referred to as the “Berkeley of the East” due to its liberal values and non-traditional approach. They began discussing plans for a firm at an open house alumni function in Richmond several years ago.
“I think we both had to swim against the tide a bit when we were at Wesleyan—considering we are both more conservative or traditional,” Macaulay explained. “So we could relate to one another right away.”
“It’s been a wonderful combination,” said Burtch. “Alexander has brought me to reality on the costs of law practice. Obviously, if you pay attention to your costs and your growth—that’s going to affect your income.”
“Some might say our system here would cap growth but I really think that our model would work at a 100-person law firm,” Macaulay suggested. “I think we found a way that works very well.”

Flat fee: worth the risk?

In terms of billing, both Macaulay and Burtch have found that flat fees are the best way to go for making clients happy.
Because lobbying is traditionally done on a flat fee basis, Macaulay knows a lot about the practice. Although each attorney in the M&B firm has complete autonomy, Macaulay himself hardly ever uses hourly fees.
“[With flat fees] there’s always risk involved—especially for the lawyer. But the key to making a flat fee work is to adjust it in the client’s favor when warranted,” he said.
Macaulay added that whenever he has made the first move to adjust a flat fee in favor of a client, he has never had a client refuse when he had to raise the fee during tougher, busier months.
“The other great thing about flat fees is that your clients aren’t worried about hourly fees and they call you up more,” Macaulay said. “I think that’s always a good thing … What all of us are looking for is long-term client relationships—and for some clients, hourly billing flies in the face of how they typically do business.”
For now, both partners simply like the entrepreneurial way they are doing business and wouldn’t have it any other way.
“What most lawyers at the firm of Big, Bigger, and Biggest don’t realize right away is that they’re only there for as long as they’re making money,” Burtch said. “Here, you decide. It’s simply your gross receipts minus your costs and the management fee.”
Although one needs a certain independent attitude and confidence to make it work at a new model firm like M&B, Burtch noted, the freedom and ability to better allocate your time make it all worth it.
“That’s the way it is in today’s legal world … you work for yourself whether you know it or not,” he said.