Neither the relationship nor the division of labor proved to be stable. Orrick and VLG explored a merger a few years later, but didn’t consummate; VLG later merged with Heller, Ehrman; and a while after that a number of ex-VLG attorneys left the merged firm for Orrick. Quite understandably, Orrick wasn’t content to just do the “boring stuff.”

Referrals to small firms of course do occur, but usually, as you suggest, when there’s a pre-existing personal relationship between the big firm attorney and the small one. Same thing with some companies with big in-house groups, like Cisco, who outsource to solo contractors: it’s much easier to get that business if you were an alum of that law department or had some other prior relationship. (For many tech companies, this is probably more common for patent prosecution than for actual deals, BTW.) For referrals from big law firms, the small firm has to be pretty small, so that (i) the referring attorney feels comformatable the small firm isn’t going to try to steal the client, and (ii) the small firm isn’t tempted to kill the goose that lays the golden eggs. Still, don’t count on a steady flow of such work. If a client has a stream of those small deals and isn’t already a Cisco, it will eventually hire an in-house lawyer to handle them. I’ve had this kind of solo practice at a couple of points in my career; it’s pretty much impossible to have a steady revenue flow throughout the year. Drought/monsoon is more like it.

Since the flow of small deals from any one client will be quite intermittent, at least eventually, I do think that to make the small deal practice viable you’ll usually need access to a larger and more diversified pool of clients — i.e. a mid-size to big firm deal flow. Those firms should find a way to harness that business to the advantage of developing their younger attorneys’ skills.

I kind of thought you might chime in. I agree that this one poses a major problem for transactional work training. I was fortunate in that my in-house stint allowed me to learn transaction fundamentals as part of the general work I did.

Maybe a firm could build a model where it specializes in the fundamentals. The costs of continual training might go against that model but if a smaller firm became a place that larger firms referred business, it may work. I know large litigation firms sometimes give business for small cases to smaller firms run by former associates.

Have you heard of such a thing in transactional work?

Of course my idea of a teaching law firm seems to fill this gap: offer good service for those who can pay but do not need the mega-firm service/cost. Still I wonder whether the current smaller firms have trouble getting the high volume work or whether they don’t want it from some sort of practical issue.

The “analogous position” for transactional work is: junior associate at a law firm. Very few companies hire in-house lawyers right out of school, absent some personal connection. I recall interviewing lateral associate candidates in the mid-1990s at a multinational firm; when I asked how many small deals they’d done, say even a couple million bucks, several replied that their firms never took on deals worth less than $100 million. They were useless to help our clients. Nor would outsourcing have been a good solution in that case. Many clients, especially from non-”Anglo-Saxon” countries, like talking to the lawyer who’s doing the work.

Small contracts could be kept in the States if firms weren’t so greedy for fees, and charging high hourly rates for their most junior attorneys. A better solution is to charge less for the simple stuff, but at least let the firms’ associates learn about real transactional work. The outsourcing model may be good for profit-maximizing partners and some clients in the short-term. But it results in a kind of Taylorism for associates, and drastically limits their skills and development. Sooner or later, clients are going to suffer from the gaping holes in their expensive lawyers’ skill sets and general business understanding.