Category: Business Law

Lawyer/businessman’s niche: rent-a-lawyer business

Fresh out of graduate school in 1992 with a dual degree in law and business administration, Karl Schieneman figured he could write his professional ticket.

But it didn’t work out that way, despite his master’s from Carnegie-Mellon University’s prestigious Graduate School of Industrial Administration and his Law Review credentials at the University of Pittsburgh’s School of Law.

Schieneman wanted to stay in Pittsburgh because his wife, Olga, established in a career here, but contends that he couldn’t even land an interview at a local law firm because of a saturation of lawyers in the market.

So he took a job at accounting firm Price Waterhouse for 13 months before he got his foot in the door at Marcus & Shapira, a Downtown law firm that hired him on a contract basis to work on the huge Phar-Mor financial scandal.

The firm eventually offered Schieneman a full-time position – which he accepted – but the experience of working as a temporary planted the seed for the business he would help launch in 1995: Legal Network Ltd., a placement service for temporary and contract lawyers.

Since last year, Schieneman, 34, has been running Legal Network as its managing director.

The company has about 50 attorneys placed under contract and counts a database of 2,000 lawyers and 500 paralegals it can tap for assignments.

Clients that use temporary legal professionals are generally law firms that need help on big projects or during peak business times; and corporations that want to outsource legal work or give an attorney a tryout period before making a full-time offer, Schieneman said.

Among its corporate clients are Wheeling-Pittsburgh Steel Corp., Armco, Allegheny Power and General Nutrition Companies Inc.

Legal Network charges clients between $20 and $100 per hour for its attorneys depending on the length of the project, the attorney’s expertise and other factors that vary from case to case, according to pricing information on its Web site.

For paralegals, it charges $12 to $35 per hour.

Legal Network keeps a cut of the fee clients pay, but Schieneman declined to disclose the percentage.

He expects total revenues this year to reach between $1.5 million and $2 million. Besides placement fees for legal help, future growth may come from adding placement services for professionals in health or engineering fields, Schieneman said.

It’s also considering opening satellite offices and perhaps merging with other firms.

Legal Network has already made one strategic acquisition this year. In August, it bought the Pittsburgh operations of Oxford Legal Associates, a Philadelphia placement firm, in a deal that added several hundred professionals to

Legal Network’s database.

Schieneman drafted the business plan for the company while working at Marcus & Shapira because he saw a niche for a business that would “provide a way for lawyers to break into a tough market,” Schieneman said.
The other founders, who also hold a stake in the business, are Pittsburgh attorney Brad Franc, and Lawrence

Kolarik, a computer specialist who works for Automatic Data Processing.

Originally based on Babcock Boulevard in Ross, Legal Network in April relocated to the Regional Enterprise

Tower, Downtown, (the former Alcoa Building) “to be close to the legal community,” Schieneman said. It employs three full-timers

Schieneman considers his job to be an ideal mix of his business and legal backgrounds and contends that he doesn’t miss practicing law because he’s exposed to so many legal trends and issues through placement assignments.

Although he grew up in Englewood, NJ – where he attend his high school prom with future Academy Award winner Mira Sorvino – Schieneman has made Pittsburgh his adopted home.

The Hampton resident and father of two coaches his daughters’ soccer team and recently joined Pittsburgh Urban Magnet Project (PUMP), an organization of young Pittsburgh professionals that he sees as a critical force in growing the city’s business community.

Schieneman credits Olga, his wife, a sales information manager for Kraft Foods, Inc., with extreme patience and support as he shifted from accounting to law and finally, to running his own business. “She stood by me . . . and I’ve always had macaroni and cheese to fall back on,” he quipped.

To Maximize Appeal to Clients, Lawyers Should Develop Basic Knowledge of Business and Business Practice

To Manage or Not To Manage
Legal organizations often suffer from a lack of knowledge of and focus on the business and management issues of their clients and of their own firms. That should come as no surprise. Lawyers are not taught business or management principles in law school. They are generally not encouraged to develop business knowledge or management skills until well-into their careers, if ever. Indeed, any exposure to true and effective business management most lawyers have (especially those in private firms) is most often accidental.

This lack of exposure has definite consequences. While the price paid may differ somewhat depending on whether one is considering a private firm or an in-house corporate law department, it is a cost which can mount over time and which can result in lost opportunities. In the worst cases it can lead to serious problems. These are prices that need not be paid.

The Private Law Firm – Missed Opportunities
Law firms often miss or forego opportunities to build and maintain their client base by failing to fully understand and appreciate business processes in general as well as the specific business of their clients. Too often, firms fail to invest the time and effort necessary to develop their base of business/management knowledge. As a result, they are unnecessarily limited in their ability to appreciate their clients’ business objectives and how the firm might best help in achieving those objectives. These points are echoed by James Sander, General Counsel, GNC who observed:

Firms that gain our repeat business are those who have a basic understanding of our business and our business goals and a business practical legal strategy. These are the firms we believe will be able to provide practical advice, help us quickly and most effectively, and manage to do so within an established budget.

Law firms need not learn, in great detail, the business of every single client or prospective client. But in order to maximize their appeal to clients – especially corporate and other business clients – they would do well to develop within their ranks a basic knowledge of business and business processes and a more intimate knowledge of their most important clients and those with whom they hope to develop a broader relationship. They should demonstrate an appreciation that the matter(s) assigned to them must be addressed within the context of a set of business objectives and, even if the business plan is not fully shared with the firm, those within the firm should understand the business context within which they must operate.

Private firms will also enhance their appeal to business clients by managing themselves as a business. Generally, associate turnover rates are relatively high (especially in a strong economy), morale is low, and there are often internal struggles which partners mistakenly believe are not seen by those outside the firm. These problems all affect the firm, its performance, its appeal to business clients and ultimately its bottom line. They can also be attributed, at least in part, to management issues.

Law firms may effectively manage discrete legal issues, legal projects and litigation, but overlook the opportunities presented by having a reasonably well-developed business plan, and promoting meaningful internal leadership which seeks to develop, coordinate, and carry out some discernable overall “firm” strategy. The fact is that clients — especially corporate clients – are much more likely to develop broader and longer-lasting relationships with firms that are well-managed and well-led. These firms are, most often, those that, among other things:

Develop and maintain an internal leadership and compensation structure that encourages, even demands, the development and execution of an overall plan/strategy and a culture (yes, culture matters) that facilitates the plan’s execution.

Tend to work well among themselves, using the entire pool of resources available to the firm to most effectively represent their clients’ interests. These firms will almost always have more than a single point of contact with its significant clients versus a contact point consisting of a single partner and maybe his/her secretary.

Seek to develop internal leadership (as well as legal) talent at all levels and thus have relatively low turnover rates among associates and support staff.

Understand the client’s business objectives and develop and maintain well-thought out systems to monitor client relationships and satisfaction and to react to the results.

Most business and corporate clients understand that, with few exceptions, low cost lower service legal services are widely available. In order to obtain the kind of broad and practical service they need, these clients will increasingly engage firms who understand business processes, who understand or have the demonstrated capacity to understand the client’s business and who treat their firms as business enterprises that require the same level and kind of attention as other businesses. Those firms can often provide high quality results at cost effective prices. This results in repeat business to the firm. Firms that miss this point and opportunity run the risk of losing business from existing clients (or gaining new clients referred from their existing clients), sometimes without even knowing why.

Corporate Law Depts.

In-house corporate law departments can also pay a price for a lack of business and management focus. That price often takes the form of a perception by the rest of the company that the lawyers, (collectively and individually) are detached, unapproachable and even obstructionist and arrogant. The business managers may perceive the lawyers as gate keepers to the “no sales department” who perceive their job as avoiding any and all risk to the company and who thus fail to provide practical and workable business alternatives and solutions. As a result, managers may avoid consulting the in-house lawyers, subjecting the enterprise to unacceptable risk or worse.

True, legal risks should be identified and assessed. Indeed, in-house counsel sometimes must simply draw the line between what can and cannot be done legally. But the vast majority of situations do not require an “all or nothing” approach. In most cases, in-house counsel’s job is to ensure that legal risks are properly assessed AND to work with the business manager to develop and implement a business strategy which allocates, avoids or contains that risk to the extent possible, consistent with the business objectives.

In order to fill this role, in-house counsel must be fully engaged in the business itself. This means at least that in-house counsel must be:

–Intimately knowledgeable about the business itself as well as the competitive and regulatory environment in which it operates so that issues are identified and dealt with timely and effectively. This, after all, is the core value of in-house counsel.

–Available to and approachable by the business managers. It’s not enough to simply be in the building or on the premises. In-house attorneys need to avoid being closed off or separated from their business brethren.

–Involved in the development of business strategies and tactics..

Most importantly, in-house lawyers must win and keep the trust of the business managers that he/she is committed to advancing the commercial enterprise that employs them. That does not mean that counsel escapes any obligation to prevent illegal activities or even activities which represent some acceptable level of risk. It does mean that in-house lawyers have a much more demanding job than simply approving or disapproving all or part of some business plan.

Corporate law departments that miss the opportunity to properly counsel their business managers on business practical legal alternatives risk being by-passed by the business mangers whenever possible.

Effective management of legal service organizations – whether a private firm or a corporate law department – is essential. Providing adequate or even good legal service is simply not enough.

By Jim Jarrell, Esq., Legal Services Consultant with Legal Network and a former General Counsel with 21 years managing sophisticated legal departments and a purchaser of a large volume of legal services from law firms.

Bill Flanagan’s Sunday Business Page

The temping of the workplace is becoming commonplace as companies emphasize core functions and contract out the rest. Now the trend is even showing up in the legal profession. A Pittsburgh company called The Legal Network is capitalizing on the opportunity by offering contract attorneys. Brad Franc is the President of Legal Network, Joe Silvaggio has worked as a contract attorney himself. Welcome, its nice to have you both.

Flanagan: So, you been around for a couple of years now?

Franc: We started actually in 1995 test marketing the idea but we went full force in 1996.

Flanagan: Well if you have a white collar job in Pittsburgh in one of the big companies you have heard about downsizing, rightsizing and not always in the happiest sense. What’s been happening in the legal profession that creates this opportunity?

Franc: Well a lot of things. I think the need to control costs- the just in time individual- and when a project is done what do you do with the particular employee when there is downsizing. What we have seen is in- house counsel as well as law firms looking to control costs, as well as on the other side many of the attorneys are looking for alternative work lifestyles. They don’t want to work the 40 or 60 hours a week and they want to look at different options.

Flanagan: We seem to have a lot of attorneys in Pittsburgh.

Franc: Actually we have more attorneys per capita anywhere in the United states except for Washington D.C.

Flanagan: How do you account for that?

Franc: I think its a result of it’s a nice place to live. I also think it’s a result that we have two law schools in the City of Pittsburgh and there is a lot of work, although some people would argue with that, there is a lot of work with the major corporations and many law firms.

Flanagan: Interesting. How did you get into working as an independent contractor.

Silvaggio: I started doing it actually to supplement my existing practice. I managed to find a law firm, which I am presently employed with now, that gave me the opportunity to do contractual work with them and from that you’re always looking to bring on a new client and to supplement your existing client base, and I was looking through, actually through the Pittsburgh Legal Journal and saw the Legal Network ad there and figured it was another good way to supplement my client base.

Flanagan: Was this something, you know, when you were going to law school, going to be a lawyer, envisioning that you would have this sort of independent relationship. I mean the typical model would be I am going to go work for a great big law firm, make a ton of money and have a steady job.

Silvaggio: That is I guess one of the common misconceptions that when one comes out of law school or goes to law school they think they are going come out and work for one of the top ten law firms in the city. When I came out of law school I wanted to gain as much experience as possible in the various fields of the law, and one way that has come to fruition has been through places like Legal Network and other firms that are willing to bring you on as a contract attorney or a part time attorney or an independent contractor. It gives the employer flexibility also because it saves them the medical benefits that they’ll have to pay a full time employee as well as the malpractice insurance, and so from a cost benefit approach it works for both the employer and gives the employee the flexibility to also do other aspects of the law that may interest him.

Flanagan: That’s a good question though. Whose employee is this? and whose responsibility is it if they screw up a case and wind up with a malpractice?

Franc: Many contract attorney organizations will treat the employee as an independent contractor but at Legal Network we treat them as our employees. That is a benefit to the hiring lawyer because they don’t have to worry about the FICA, the FUTA tax, the workers comp issues. We take that responsibility as well as that cost so that’s a savings there. With respect to malpractice, a lot of the attorneys will have malpractice insurance themselves. At many law firms, malpractice insurance carriers will allow the attorney on a contract basis to be added to their coverage. For in- house counsel it becomes really somewhat of a non- issue because they aren’t providing services to the general public- they are providing it to the corporation.

Flanagan: You must have to screen like crazy though to make sure that you can deliver the quality of person that your clients expect.

Franc: When we were developing our business process we developed something which we think is a relatively unique- which is a 3 tier process. We get the resume in, we go through a screening process, make sure their license is in good standing- whether there has been any disciplinary actions. We talk to them over the phone- we interview them. We touch these people three times before the candidate is placed in front of the clients, so that’s one of the benefits that we provide. We screen them, we set the pricing parameters and then within three to five business days of a request we will have candidates in front of people.

Flanagan: So if you are a potential client out there for legal services or a lawyer who is looking for some extra work, how do they get in touch with you.

Franc: Well we are certainly in the phone book and we advertise in the Pittsburgh Legal Journal so they can call us or look in the Pittsburgh Legal Journal.

Flanagan: The Legal Network, right

Franc: That’s right.

Flanagan: Brad Franc, President of the Legal Network, Joe Silvaggio Thank you both, Appreciate it. Thanks for coming by this morning.