After 22 years with Michael Best & Friedrich LLP, attorney James R. Troupis decided it was time to take some risks.
So the Madison litigator amicably left the firm on June 19 and opened his own law firm three days later.
But why would a partner at one of the largest firms in the state voluntarily leave after more than two decades to start his own business in this economy?
For Troupis, it was a combination of wanting more freedom in his practice and a growing demand by clients to get more for their money.
“Clients have said, wait a minute, I don’t want to pay for 400 other lawyers in a firm and I don’t want to pay to educate associates,” he said.
With only eight attorneys, Troupis said he is able to offer clients financial flexibility that is often unavailable in a large-firm setting which relies on the billable hour.
At this point, the trend of experienced lawyers leaving large firms to go solo has been most prominent on the coasts, but Troupis and others anticipate that it will eventually become more common in Wisconsin.
Troupis said in his experience, more attorneys are frustrated by the limitations of the traditional large firm model.
“You are going to see more of this because I think there is a lot of angst among very successful large firm trial lawyers who are contemplating moves,” he said.
At Michael Best, Troupis focused on complex corporate litigation, contracts and securities law. While he still practices in those areas, Troupis has also sought out more constitutional and civil rights cases, which he said larger firms are often reluctant to tackle because of the time and money involved in bringing them.
“Associates here easily make more than an associate at the biggest firms in Wisconsin,” he said. At big firms, “you can’t pay associates more than $100,000 the day they walk out of law school and structure financial arrangements with clients where you are taking on risk.”
Whereas associates at large firms draw a guaranteed salary and additional bonuses based on a formula for the work done on cases, Troupis said significantly lower overhead costs allow for compensation to directly go to the attorneys.
And while big firms have to worry about whether it makes sense to take a case that might not pay off, Troupis said his firm can take more risks.
That can be a difficult concept to embrace for experienced lawyers who have spent the majority of their careers with one firm, said Milwaukee civil litigator Gregory J. Cook.
He left midsize firm Kasdorf, Lewis & Swietlik SC in 2005 after almost 30 years to open a solo practice and since then has had several veteran lawyers approach him about a partnership.
But after explaining his business structure, which doesn’t guarantee a weekly paycheck or 401(k) plan, Cook said prospective partners reconsidered.
“It was pretty eye-opening for them,” he said. “Once I shared the reality with them, one guy went and joined a plaintiff’s firm and the other is still spinning his wheels where he was.”
Still on his own, Cook said he relishes the ability to take the cases he wants, often using what he termed the “funeral test” whereby he evaluates the merits of a case as well as whether or not he would ever attend the person’s funeral.
Another benefit is the ability to offer alternatives to the standard billable hour, especially when it comes to working with small businesses who have felt the economic crunch during the recession.
“You can tell someone what you cost per hour and they look at you with a blank expression,” Cook said. “I think you have seen where some firms have just out-priced themselves in a certain type of marketplace and business can’t justify paying what they were paying.”
But he, like Troupis, admitted that a “nest egg” is vital to help transition into the solo life after enjoying the life of a partner at an established firm.
In his first year of practice, Cook said his income was about 30 percent of what it is today. Regardless of credentials, it took time to get re-established as a sole practitioner.
Since taking a financial hit the first year, Cook said revenue has grown at least 10 percent annually through word-of-mouth and short-term collaborations with local firms on behalf of clients.
Attorney Angela T. Campion opened her own office last year, soon after leaving O’Neil, Cannon, Hollman, DeJong & Laing SC despite being on the cusp of a potential partnership.
“I don’t have the suite at Miller Park anymore, but that’s okay,” she said.
Given her background in corporate law, Campion said she realized businesses today are looking for certain qualities, such as cost flexibility and closer contact, in their legal representation.
“The trick is you need to bring in all of your own work, but you no longer have 30 other associates to collaborate with,” she said. “The numbers made sense.”
Jack Zemlicka can be reached at firstname.lastname@example.org.