Atlanta Business Chronicle – by Dave Williams, Staff Writer

Four veterans of traditional Atlanta law firms didn’t set up their own shop five years ago because of the recession.

The economy was still booming at the time. But Taylor English Duma LLP’s “new model” approach to pricing, staffing and compensation is well-suited to today’s downsized corporate budgets.

So much so that after breaking into Atlanta Business Chronicle’s list of Top 25 law firms last year at No. 24, the Cobb County-based firm leaped to the 16th spot in the 2010 list published July 23.

“This was a good idea in 2005,” said Marc Taylor, one of the firm’s founding partners. “It’s a great idea in 2010.”

Taylor English Duma is one of a growing number of law firms across America that are overhauling traditional organizational structures in an effort to reduce overhead. The savings they achieve through leaner operation allows them to give price-conscious clients a better deal.

“Cost certainty on the client’s part has become increasingly important,” said Joe Galtonji, managing director in the Chicago office of Hildebrandt International, a leading consultant to the legal industry. “[But] it’s not just the economy. [The recession] is accelerating pressures that existed anyway.”

Taylor said his firm keeps a tight rein over all three cost centers that affect law offices: real estate, staffing and compensation.

He said the firm’s Cobb County location near the Cumberland/Galleria area makes the price of office space reasonable.

“This is a great place to do business, and I’m not paying to be in downtown, Midtown or Buckhead,” he said.

Taylor English Duma houses all of its 76 lawyers on one floor, another of the firm’s cost-cutting features.

But one floor won’t be enough for the 125 lawyers the firm eventually plans to employ. The firm’s leadership recently approved a proposal to add a second floor to its building to accommodate that expected growth.

Another space-saver is that the firm has relatively few non-lawyers on staff. With only 23 employees on the payroll who are not lawyers, Taylor English Duma’s lawyer-to-staff ratio is much more lawyer-heavy than Atlanta’s older, higher-echelon law firms.

“Many of these great firms started when technology wasn’t very prevalent,” said Scott Duma, another of the firm’s founding partners. “They were very staff-heavy. Because we had the benefit of starting later, we could actually use technology like it’s supposed to be used and add staff when it was needed so clients got the most service.”

Taylor said his firm’s lawyer compensation model is quite different from the traditional approach. He described the old-school system as a vertical model, one in which the top lawyers are paid vastly higher salaries than their entry-level colleagues.

“They don’t determine your compensation based on what you’re doing now but on what you did historically,” he said. “That lets your law firm get loaded at the top with people who aren’t producing.”

Taylor said his firm uses a horizontal model in which most of the lawyers are earning roughly the same. With fewer high-profile lawyers at the top of the hierarchy and fewer lawyers fresh out of school at the bottom, the experience levels of Taylor English Duma’s lawyers are more equal, he said.

“Our top guys aren’t going to make anywhere near as much money,” he said. “[But] we don’t hire baby lawyers.”

What that leveling allows the firm to do is charge clients lower rates. In fact, Taylor English Duma has abandoned the traditional system of billing by the hour in favor of alternatives like flat or capped fees.

Hildebrandt advocates such alternative billing practices for its law firm clients.

“Billing by the hour places all the onus with the client,” Galtonji said. “It’s an uncomfortable situation and doesn’t encourage efficiency on the part of the law firm.”

Besides the obvious benefit to clients, Taylor said charging lower rates also helps the lawyers who work for Taylor English Duma because it relieves the pressure they face in what can be a high-stress profession.

He argued that the old vertical model of structuring law firms places tremendous pressure on the few who make it to the top to stay there, while they constantly feel the need to justify the exorbitant rates they are charging.

He said they tend to work longer hours than they might otherwise, leaving them less time for their families and civic activities. “It is a difficult way to make a living, full of enormous pressure and sacrifice,” he said. “At the end of it, no one’s happy with what they’re making.”

On the other hand, Taylor said the system his firm uses allows lawyers to flourish.

“It gives you the security to practice law without fear of losing your job,” he said. “You’re not charging rates that make you blush.”

Duma said the law firm’s lower rates are helping attract large corporate clientele to Taylor English Duma who otherwise might have gravitated to the more traditional downtown or Midtown firms. Those companies are big enough to have their own staff of lawyers but still find they can save money with Taylor English Duma.

“In-house counsel get a lot of pressure about their budgets,” Duma said. “They’re looking for more efficiency in day-to-day contracts, labor and employment issues, routine business tasks.

“Once we got in there, they knew our attorneys could do more sophisticated work. Now, we have a very healthy mix of big corporations with in-house counsel who need support and businesses looking for full service.”

AFC Enterprises Inc., the Sandy Springs-based company that owns Popeyes Chicken and Biscuits, has its own in-house staff of lawyers but uses Taylor English Duma to handle all of its litigation, said Sonny Cohen, AFC’s general counsel. He said AFC is paying only about half what it used to pay for outsourced legal work.

“Other firms will give you discounted rates,” Cohen said. “But you’re getting a junior associate versus a partner in the firm. … We’ve been very pleased with it.”

The full Atlanta Business Chronicle story can be read here. (Subscription required).