Thoughts on the growth of the Middle Coast for legal services - its more than just our lack of rosewood conference tables

Posted by J Matthew Buchanan at May 25, 2005 10:17 AM

Look at this money quote from Doug’s excellent post on PHOSITA yesterday:

The firms in the “middle coast” are expanding to fulfill a real need: client driven legal services, alternative billing and compensation systems, sanity concerning the number of billable hours required, and service. 

Companies are no longer willing to pay sky-high rates in order to subsidize $100+ per square foot office space rates, unsustainable associate salaries and rosewood conference tables. 

Is that good stuff, or what?

Doug’s post made me think a little deeper about the “middle coast” concept.

Why is the middle coast growing as a destination for legal services work?

I can at least offer a theory as it relates to patent work.

The new expertise has landed in Toledo…and Oklahoma City, and Boise…and Anytown, USA.

Corporate counsel continue to get hammered on legal expenses.  For patent work, India is an option but most corporate counsel that are in a position to consider it are worried about the quality of the craftsmanship.  They’ve been through a patent litigation or two (or twenty) and understand the importance of quality craftsmanship.

The hammering continues, so they slowly look for other options.

And there we are, right in the middle….offering the best of both worlds:

lower expenses (ask — you’ll be amazed!) with the same level of expertise.

I’m willing to guess that the difference in expenses has probably always existed.  But, I think the expertise issue has changed dramatically over the last decade or so.  I’m not referring to expertise in substantive patent law and practice — small firms in the middle coast have always had a high level of legal expertise.  No, I’m talking about technical expertise.

In the past, technical expertise meant engineers.  Lots of engineers.  And physicists.  Middle coasters had access to these people and therefore had the technical expertise that allowed them to compete.  But, in the last 30 to 40 years, the requirements for technical expertise have changed.  Now, patent firms must offer skills in biology, chemistry, computer science, and other developing fields — the new expertise.

Over the last several decades, big firms seemingly had a lock on this new expertise.  They gobbled up newly minted lawyer-PhD's in all of these new fields.  They took their push for the new expertise even further by hiring squads of non-lawyer PhD’s and resurrecting patent agent practice in the process.  For awhile, the middle coasters couldn’t compete…geography, money, culture and many more criteria heavily favored the big city.

But that’s changing.

All of a sudden, experts in these new fields are staying in the middle coast.  For some, the middle coast is home, making it an easy decision.  For all, its a different way of life — the sanity Doug mentioned in his post.  Have you heard?  We’ve got PhD microbiologists in Toledo now (and I’m not just talking about my wife!).  Doug has ‘em in Oklahoma for crying out loud.  That’s a little tongue-in-cheek, of course, but the point is that big cities — and big firms — no longer have a lock on the new expertise.

This changes everything.  All of a sudden, when big city and middle coast firms are compared, the spotlight shines almost exclusively on expenses, which is where we really shine.

There is another feature that attracts companies to large firms (which are typically big city firms) — raw capacity.  You want 35 associates to handle your patent prosecution needs?  There’s a big firm or two (or twenty) that can do that.  In fact, they’ll make sure those associates start on it tomorrow evening.

None of our firms, individually, can do that.

But our network can.



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Anonymous Says:

May 26, 2005 06:34 PM

Rethinkers, I warn you, the following may be considered apostacy by some readers.

Maybe you should rethink the "unsustainable associate salaries" crack.

It seems to me that you've completely forgotten the basics of supply and demand. As long as the demand outstrips the supply, associate salaries will be sustainable. So the mid-coast small firms will have to increase supply (as Sr. Matt noted, maybe by networking) in order to provide an alternative. And I mean GREATLY increase supply. I read an article yesterday re the huge increase in patent filings. As I'm sure you know, we're talking 353k U.S. filings in 2004. This will supposedly increase to around 500k in 2010. That means you're going to need to increase supply of attorneys (or output/efficiency) commensurately. While this expansion continues, it seems to me that midcoast firms could explode with growth and not dent the ability of the E and W coast associates to charge big bucs. Of course, by 2010 India may be cranking out patents like jelly shoes. Nevertheless, I'm sure the demand will continue to increase for some time to come.

My point is that well-paid associates aren't "subsidized" by clients--they're compensated based on current economic realities. In any event, don't ignore the partners, which command $450-$900 per hour.

Finally, as the demand increases even further, it's only a matter of time before small firmers realize that they can command higher prices too. After all, why should your clients and big-city counterparts have all the Rosewood conference tables? I warned you this might contain apostacy.

Matt Buchanan Says:

May 26, 2005 09:30 PM

Anon --

Thanks for the great comment.

I'll let Doug address the supply and demand aspect. After all, it was his "crack" that got it started. I wonder, though, how supply and demand principles apply to the legal services market. I suspect its not as simple as it sounds. Clearly it's not a perfect market. After all, lawyers have a monopoly and there are some things that prevent clients from "shopping around," such as conflicts of interest.

For me, I find another aspect of you comment interesting -- your anonymity. I wonder why you wouldn't put your name on the comment. Is there a concern some of those $450-900/hr (really? have they gotten that high?) partners might see your name on a blog and label you an apostate?

And, since you made me pull out the dictionary to look up 'apostacy' (ok, I really used Google), I'll give you one. I, for one, don't like rosewood. I actually prefer sandalwood. Bonus points if you can figure that one out.

Anonymous Says:

May 27, 2005 09:34 AM

As for supply and demand, I challenge you to find me a "perfect market."

As for the monopoly fallback, it doesn't really play out in these facts. Yes, lawyers have a monopoly in that we are the only people allowed to provide legal services. But lawyers don't have a monopoly relative to other lawyers. Example? Price a patent application. Go to three firms of varying size and location, and you'll get three VERY different estimates (even though the quality of the product might be very comparable). It seems difficult to argue that there's a whole lot of monopolizing going on when there are so many choices and the market is so large.

Of course, we can always pay a NY antitrust attorney $750/hour to help us fight about how to define the market.

Sandalwood? I won't touch that one--even anonymously.

RM Says:

May 29, 2005 08:10 AM

You should check the May issue of Forbes. It has a listing of their "Best Places For Business" and the No.2 slot was Boise, ID. The No.1? Casper, WY. Hmmmm....maybe they''ll have to stop calling it "fly over country."

Nipper Says:

May 29, 2005 08:55 PM

Hmm...Last time I checked, Boise was #1 (

Boise's review is here:


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