TL;DR: True “Partners” in serious law firms deliver high-impact, high-complexity legal advisory safely, because of their years of experience and having gone through deep institutional vetting processes with very high standards. Apart from Partners, firms often have a roster of non-partners who can handle more routine and “de-skilled” work efficiently without the higher rates of Partners. But inexperienced entrepreneurs run into very expensive problems when they think that, just because some of their legal needs can be done more cheaply by de-skilled legal labor, they don’t need Partners at all.
Related Reading: Startup Lawyers – Explained
First-time founders are often mystified by the organizational structure of law firms, because of how different it is from a product-oriented business. They often think they simply need “a lawyer,” without digging deeper into the important differences among lawyers.
The first thing to understand is lawyer specialization. See Why Startups Need Specialist Lawyers. While a typical “startup lawyer” is (or should be) in fact a corporate/securities lawyer with a heavy specialization in “emerging companies” work, there are many other kinds of lawyers that scaling startups eventually need: employment, tax, commercial/tech transactions, patent (sometimes), data privacy, etc.
Once you get past understanding the specialty of the particular lawyer, you start getting into differences among lawyers within a specialty. If you engage a typical law firm, either BigLaw or a decent sized boutique (like E/N), you’ll see titles like Junior Associate (in our firm juniors are called Fellows), Senior Associate, Counsel, and Partner. Those titles are very important in terms of signaling the skillset that a particular lawyer brings to the table.
Very broadly speaking, the title “Partner” refers to the most senior (in expertise) people within a law firm. In a law firm that recruits top-tier legal talent, just being hired by the firm requires being in the top 5-10% of the overall talent pool. After the initial “filter” of getting hired, a lawyer has to have at least 7-9 yrs of experience within a specialty before they’re even eligible to become a Partner. Achieving that level of experience is by no means an automatic ticket. A very small % of lawyers in the market are eligible to even be hired by a top-tier firm, and then an even smaller % of those lawyers will make Partner. On top of needing to have done the job for X number of years, serious law firms have strict criteria for vetting the work product and judgment that a lawyer has produced, from a quality, complexity, and client satisfaction standpoint, in order to determine whether they are, in a sense, worthy of the Partner title.
You can think of serious law firms as universities for specialized vetting and practical training of lawyers, and the Partner title as a PhD. That obviously means that the legitimacy of the law firm’s brand matters wildly for whether the term Partner even means anything. Just like a PhD from Harvard or Stanford, or any institution highly regarded within a particular field, says a lot more than one from a school no one has ever heard of, anyone with minimal credentials can hang out a shingle and call themselves a “Partner” of their firm; in which case the title is meaningless.
Within the legal field, you’ll often see a single lawyer get preciously close to being fired by Law Firm A because of how low quality that lawyer’s work product is (not even meeting Firm A’s minimum standards), and yet end up a “Partner” at random Law Firm B that dishes titles out like candy, because their brand lacks real value. Law firms are not created equal. Not even close.
Why is all of this vetting even necessary? Specialization, even sub-specialization, and heavy quality filtering processes are unusual for many fields and industries. The answer relates to issues I’ve discussed in Legal Technical Debt. Unlike software and other product-oriented industries, mistakes in law, particularly high-stakes law, are often extremely expensive to fix, if they are even fixable at all. Not infrequently, they’re permanent. Once a contract is signed, or an action with potential legal liability is taken, there’s no v1.2 over-the-air fix that can be issued unilaterally if bugs (errors) arise. Contracts would be pointless if you could tweak important terms without the other side’s consent.
This is why applying software industry thinking like “move fast and break things” can be spectacularly disastrous when approaching legal issues, because that thinking only works when you can take an iterative approach to low-stakes bugs. To make matters even worse and harder, legal mistakes are rarely discovered immediately after they are committed. They often sit in the background for years until the full reality comes out, with “interest” having compounded on the “debt.” The “complexity” that top-tier firms are designed to safely manage isn’t something that they themselves fabricate out of thin air. As companies grow, the number of relevant (extremely smart) parties with competing/conflicting high-stakes interests grows, as do the number of legal issues they touch; and many of those issues weave into each other by necessity such that a move on one triggers cascading, unintuitive effects on others. The complexity (and cost of errors) is inherent and unavoidable, like a highly contextualized and fragmented code base of contracts, relationships, regulations, and complex formulas, but where the cost of a “bug” is 50x.
So within top-tier law firms with reputable brands and vetting processes, Partners represent the highest level of flexible expertise, quality control, and experienced judgment that a particular firm is able to offer for managing very high-stakes, very complex and strategic issues safely without producing expensive errors whose costs are borne by clients. And ensuring you have direct access to that expertise is important for your most complex, high-stakes legal advisory. But that being said, not everything you need from a law firm requires such a high level of expertise; and that’s why law firms have lower-cost, well-trained people with other titles and levels of vetting, like associates and paralegals.
As you move from Partners to lower-level professionals, the process is often referred to in some circles as de-skilling. It basically means that the law firm as an institution has put in place the appropriate quality control mechanisms to allow people with less fully-vetted and more narrow skillsets to do a limited segment of work that is appropriate for their abilities, while still producing an end-product meeting the firm’s quality standards. Highly-detailed checklists, template forms, and software-supported systems of institutional knowledge are common ways that law firms de-skill legal work (make it easier to do by introducing training wheels and boundaries) and push it down to people who charge less but are also more available than Partners.
Partners, for example, don’t need to issue your random option grants. Non-lawyers with appropriate oversight can do that. A Partner also doesn’t need to review your random NDA. But a high-stakes term sheet, M&A deal, or key hire? You don’t want a non-partner leading that, because it’s too high-impact and the right output depends too much on highly contextualized, subjective, and complex nuances (human judgment) as opposed to simplified rules that a lower-level professional can follow. The typical way a startup engages a law firm is to view one or two Partners as the quarterbacks and main contacts of the legal team, who can then delegate lower-level, de-skilled work to cheaper but still well-monitored professionals. This puts the most experienced and trusted legal advisors in charge of the highest leverage strategic issues, while integrating them with cheaper professionals who can also get more routine work done.
The spectrum of Partners for high-stakes, high-complexity work through de-skilled professionals like associates and paralegals helps explain a lot about the different kinds of legal service providers you’ll encounter in the market.
Some firms (often small niche boutiques) are all Partners. Not a single lower-level non-partner on the roster. That can make sense if the work being done is all extremely complex and bespoke, as might be the case in very cutting edge fields. But in most fields (including corporate/securities law) a Partner-only firm will just mean you’re overpaying for work that could be done safely by someone cheaper, and also probably be done faster because larger rosters of professionals with different skillsets prevent bottlenecks by allowing work to be triaged (like a hospital). See: When a Startup Lawyer Can’t Scale for a deep-dive into what happens when startups engage solo lawyers or Partners who don’t have real infrastructure for scalability and full service.
On the opposite end of the spectrum are so-called law firms that don’t have any true Partners, meaning no one whose fully led a client base into high-stakes 9 or 10-figure highly-complex transactions, and gone through the vetting process of already reputable firms and achieved the Partner title in a meaningful sense. Firms full of non-partners will heavily gravitate toward de-skilled work, which often means large amounts of standardization and therefore inflexibility. Their less-experienced lawyers and professionals aren’t capable of handling high levels of complexity safely, so they’ll necessarily attempt to standardize their offerings to make them easier and safer to deliver; with the value proposition being that they can also be cheaper, because they have no expensive Partners to pay.
This heavily de-skilled and standardized approach to legal can work for a certain kind of client needing certain kinds of lower-stakes work, but it will run into problems if they try to handle everything a growing client needs, including higher complexity, higher-stakes transactions that simply cannot be simplified or distilled into an algorithm or checklist for lower-level professionals to manage. While some non-partner firms still refer to themselves as law firms, others instead refer to themselves as “alternative legal services providers.” Ultimately what they call themselves matters less than the fact that their value proposition to clients is very different from a law firm with true Partners.
A real top-tier law firm offers a blend of high-complexity, high-stakes Partner-led flexible legal judgment with more routinized de-skilled work, while an alternative legal provider leans heavily on de-skilled, more routine low-stakes work that “tops out” on how much flexibility and complexity in can handle. Serious firms are designed like Partner-centric creative studios at the top of their hierarchy, because their core value proposition is extremely well-trained and specialized intellectual horsepower capable of addressing hundreds/thousands of unique and very high-impact circumstances effectively. Highly-vetted (and compensated) Partners are the only “full stack” experts capable of ensuring quality control of that kind of highly variable and complex service with extremely high error costs. Remove those Partners, and the whole thing collapses into a nuclear disaster of errors and poor judgment.
Alternative legal providers are, instead, structured more like factories or product-oriented companies, because their offering is by necessity limited and simplified through routinization and inflexibility. Eliminate Partners (with their unique and rare, and therefore expensive, skillset) from your cost structure, and you’ll certainly cut costs, but you’ve also set a hard ceiling on how much flexibility and complexity your operation can now handle without a blow-up. The core “service” of an alternative provider isn’t actually experienced, flexible human judgment, but rigid institutional processes with less-skilled (cheaper) people adding a light layer of variability.
It’s much riskier for a startup led by inexperienced entrepreneurs to engage a non-partner alternative legal provider (instead of a law firm) than it would be for, say, a large company with an in-house counsel. Why? Remember, true Partners serve as the highest-level quality control and strategic quarterbacks of a legal team. If you’re a large company with highly experienced in-house counsel, they (the in-house lawyer) can serve as your Partner of sorts; developing a unique strategy appropriate for the context, monitoring for errors, and coordinating different appropriately trained people to execute on the strategy. But early-stage startups don’t have highly experienced (and highly paid) in-house lawyers. They cost hundreds of thousands of dollars, and in some cases even millions, a year.
Because inexperienced entrepreneurs have no idea how to appropriately vet and triage high-stakes legal work, or how to develop a contextualized and flexible legal strategy, having them engage legal service providers full of nothing but non-partners capable of only managing a limited scope of “standardized” work starts off a very long-term game of legal russian roulette. Sure, your option grants will probably be done right, as will an NDA review. But eventually (pretty quickly, usually) a higher-stakes, higher-complexity situation arises, and cookie-cutter de-skilled offerings just won’t work. No serious company follows a fully “standard” (whatever that means) growth trajectory.
Real Partners are expensive, and you often need them only for your highest-stakes issues where a wrong decision can have million or even billion-dollar implications, but when you need them, you really need them. These kinds of situations arise often and unpredictably in the early days of a fragile, chaotic startup where the overall trajectory of the entire business is still being sorted out, founders are negotiating with market players 100x as experienced as they are, and a single decision can produce permanent consequences that you’ll have to live with for years.
So when entrepreneurs are diligencing firms to work with, they need to be thinking about a number of variables:
- Does the firm have the right specialty of work I’m looking for, and access to other specialties I might need?
- Does this firm have true Partners (with credible expertise and vetted backgrounds) that I can trust to handle non-routine and very high-stakes, high-complexity matters safely?
- But do they also have the appropriate institutional infrastructure of lower-level professionals to get less high-stakes but still important work done on time and correctly (de-skilled work)?
Partners are necessary for high-stakes, high-complexity work that can’t fit within a template framework. Non-partners (and infrastructure) are necessary for speed and efficiency on day-to-day needs that are more predictable. When the “buyer” of legal services is an experienced in-house general counsel, they can often do without Partners. That’s why a lot of the most successful alternative legal service providers (who don’t have Partners) entering the market are targeting large companies with in-house counsel who can safely bypass Partners for specific segments of more routine, lower-stakes work, while correctly identifying higher-impact issues and applying Partner-level expertise to them.
But startups led by entrepreneurs engaging directly with a firm should understand that because no one on their internal roster has the expertise to credibly handle and triage the most high-impact, high-complexity legal issues that they’ll inevitably run into as they scale, Partners are essential, including for interacting with highly experienced and misaligned players on the other side of the negotiation table (like investors) who have their own Partners advising them. Focusing too much on routine, low-stakes things like how quickly or cheaply a firm can check off some boxes or fill in a template misses the much bigger picture of why the number of law firms taken seriously by the top players in the industry is much smaller than the total number of firms in the market.
People building a coffee shop or other small business (with very limited legal needs) might engage LegalZoom, or a productized de-skilled legal offering that looks like LegalZoom with paralegals and moderately-skilled attorneys added on top to add a narrow band of customization. And large companies with experienced in-house counsel will regularly engage alternative providers for narrow segments of lower-stakes work that doesn’t require Partner attention. But early-stage executives building highly complex enterprises facing extremely high-impact strategic legal decisions know that the issues they’re touching are much higher-stakes, and focus on the Partners of the firms they engage for that reason.
Some alternative legal providers are very open about their narrow capabilities, and how they’re very different from an actual law firm. They are serving a legitimate, unmet need by heavily productizing a narrow segment of high-volume, lower-margin work. Clerky is a great example of a reliable, productized startup legal offering that doesn’t pretend to replace law firms, and is open in its marketing about what it is and what it’s not; a tool for handling a very limited scope of work for very early-stage startups who can’t yet afford quality counsel, or have counsel but need extremely simple, standardized tasks done cheaply but safely (with software automation) because of their small budget.
But sometimes alternative providers like to mask their limitations, and market themselves as “full service” firms; and Partners at actual law firms then grab some popcorn and wait for the fireworks. While scaled enterprises with experienced in-house counsel are the most appropriate market for de-skilled legal “products,” those “buyers” are also far more scrutinizing of legal services because they have the experience and judgment to separate fact from fiction. Inexperienced entrepreneurs don’t know what they don’t know about legal, which makes them easier targets for bad actors peddling X or Y legal product as a comprehensive solution, when they actually carry enormous gaps and limitations that will only become obvious when it’s too late to fix them. First-time founders are also prime targets for misaligned but clever market players (investors, commercial partners, acquirers) across the table who might want a young, inexperienced startup to be disarmed with less capable advisors; allowing that player to then take advantage of the uneven playing field.
De-skilled legal labor enabled by technology and well-designed processes absolutely has its place in the market – and well-run firms take advantage of it; but it’s as a supplement to the high-stakes, high-complexity work that the smartest industry players trust top-tier firms and Partners to do, not as a replacement. Anyone suggesting otherwise is marketing a highly-polished time bomb as a solution.
Ask a law firm the right questions about the scalability and credibility of their expertise, including their Partners, or the reality check delivered to you when the legal “technical debt” comes due will be ice cold.