New model touts affiliated boutique firms

Javad Heydary has a theory: the future of law belongs to large international and small boutique firms. So when he sought to expand his law firm a couple of years ago, he decided he didn’t want to go with something between those two extremes.

That’s when he came up with a model called “affiliated boutique firms.” Today, the Heydary law firms, besides Heydary Hamilton Professional Corp., include intellectual property practitioners at Heydary Hayes Professional Corp., family lawyers at Heydary Green Professional Corp., a litigation practice at Heydary Elliott Professional Corp., and real estate lawyers at Heydary Samuel Professional Corp.

Each firm is legally a separate entity as a professional corporation. Heydary is a shareholder in each of them. To his knowledge, no one else in the legal industry is using this business formula.

“The future of law, in my humble opinion, will be those large international law firms and boutique firms,” says Heydary. “I don’t see a future for smaller full-service firms. The market is shrinking. There’s too much competition.”

To add to the efficiency boutique firms already enjoy, Heydary brought another unique aspect to the model. At each of the Heydary boutique firms, business functions are “fully and completely” outsourced, leaving lawyers to do what he says they do best: practising law.

“We have followed closely what has happened in the U.K. and Australia,” says Heydary about his research into doing law differently.

“The final model we came up with two years ago is the model of affiliated boutique law firms which source out their business functions.”

The Octagon Law Group Inc., which provides back-office services, takes care of the firms’ business functions. Its services include accounting, information technology solutions, marketing, and management consulting.

“The single most important business principle that law firms have historically neglected is that specialization leads to efficiency,” Octagon declares in its executive summary.

The concept is consistent with a new trend in legal innovation that includes bringing the skills of non-lawyers to the table.

“The point is there are many functions in a law firm that are better performed by non-lawyers,” says Heydary.

Michael Cochrane, who joined the Heydary law firms to form Heydary Green in January 2012, says being able to focus on the practice of law instead of worrying about things like printing equipment or marketing has been a great relief.

“It certainly does make life easier,” he says.  “It’s just a more efficient way of doing this.”

Cochrane says he has been following the discussions around Richard Susskind’s book, The End of Lawyers? Rethinking the Nature of Legal Services. Like Heydary, he believes boutique firms are more attractive for clients than mid-size or even large law firms. This is especially true in family law, he says, where services have to come with “a personal touch.”

Mark Hayes, co-director of Heydary Hayes, worked in a big law firm setting for 25 years. In 2009, he created his own boutique law firm with four lawyers and an articling student. He says the business aspect of running the firm proved taxing over time.

“It got to a size where it was really becoming a burden to deal with the administrative matters,” he says.

“It was very attractive to have somebody take that over in a situation where you have a pretty good idea what the costs are going to be.”

The mix of his expertise and reputation with a brand that already had an online presence worked out perfectly, says Hayes.

When launching the boutique firms in the last two years, Heydary knew he wanted to build on a brand he had already invested a lot of effort in.

“We have to learn from other industries,” says Heydary.

“You’ve got 300 years of business activity in other industries. Two things we took from other industries. One was the power of having one main brand, the Heydary brand, for us. We’ve spent millions on that brand.”

There’s a benefit to having a dynamic brand, says Cochrane. When one of the other affiliated firms gets recognition for its work, Cochrane celebrates, too, because “that’s half my brand.”

Since the affiliated model cropped up, many lawyers have expressed interest in joining in, says Heydary. But when it comes to growth, he admits he’s cautious.

“You need to take measured steps,” he says. “You have to mix innovation with a bit of a conservative approach. We take a conservative approach to make sure that if we add people at this point, it’s people who can function in this model, which is really practice law. Leave the business issue to others.”

The Heydary law firms vary in size. Heydary Hayes, the smallest, has about five lawyers; Heydary Hamilton has 15. Heydary says he doesn’t spend a lot of time thinking about how big each boutique should be.

“We’re not selling size; we’re selling expertise,” he says. “We’re selling that focused approach.”

As pioneers in this business model, Heydary and his co-directors say they face unique challenges.

“We are the first. We’re really inventing everything,” says Heydary.

Their existing model may be great, say Hayes and Cochrane, but the key point is being ready to change when necessary.

“The thing that’s really important is that we recognize as the senior people in the Heydary firms that the legal profession is really changing,” says Hayes.

“The one thing we are committed to do over the next few years is to make sure we keep our eyes on that change and we react.”

Cochrane adds: “It’s a work in progress. We’re doing something new, so we’re trying to be nimble. We want the firms to be nimble. If the marketplace starts to change and we sense it, we’re going to change with the marketplace.”

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