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In one weekend I heard this from a successful entrepreneur and from a General Electric senior counsel: big firms are arrogant,   overpriced, and we will not play with them anymore.

One of my close friends has been very successful in overseas finance over the last 3 years.  Recently, he began several new ventures and approached big law firms for advice and assistance. My friend, let’s call him Arthur as he’s very private, asked the lawyer from the BF to review some paperwork for a real estate venture. From experience as a hands-on, high IQ personality, Arthur knew that he could do it himself. But it would take him too long when he had other priorities to attend with his new ventures.

The lawyer from the BF firm told Arthur he would have to retain the firm for $10,000 before he could take on the project and help him.  Arthur was livid and tried explaining to the BF lawyer that this was an easily contained project of reading and advice which should not cost more than $2,000!  The BF lawyer stood his ground and quickly lost Arthur as a client.  Not only did he lose Arthur as client for that firm, but for all BFs.

Arthur soon after found a former BF lawyer, who not only turned the work around in only 2 days, but for $600!!!  Which leads me to my next story….

My wife is attending an employment law seminar in Miami and heard a senior counsel from GE talk about hiring law firms. I used to be GE legal and from experience GE only used established BFs.  I can only guess that 3 years later, and a recession (GE Capital’s losses are not helping), that GE has now reconsidered. According to this source, GE is now retaining boutique firms, as well as former BF solos and outsourcing discovery operations to India.

Both stories end with people who have the capital and need to retain BFs, that choose not to deal with the bureaucracy, expense and in some cases the perceived arrogance of BFs.  I still believe that BFs will have a role, but some will have to redefine what a BF is.  In many cases, they may benefit from building new ventures and building those brands rather than resuscitating the old one.  Yup, say goodbye to some of our cherished Dudley Fudleys and Moore!

Solos and small firms (SSFs), while a viable service option for less complex tasks, cannot scale up to compete with BF’s massive infrastructure and pedigree stables of talent. Only when SSFs organize themselves into L-VEN’s (legal virtual enterprise networks), will they achieve what was never possible before – scale and autonomy.

SSFs will need to build networks of trust amongst themselves to scale up. When they do, they will have dealt the final blow, the one from which nothing can save the rapid decline of BFs.

Game over!

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We all know how that inquiry ends.

My favorite answer to that question came from the first associate I ever hired.  A former Marine, older than me and solid as a brick of gold, Rod would always lift up a clenched fist, cocks it as if about to strike a blow and says slowly: “let me do to you what they should have done to me when I was asking about going to law school!!”   Chuckle chuckle!

It was right after Hurricane Wilma. The entire street was without electricity and my neighbor was running me a line from her generator to power my refrigerator, one light and a fan!  As is common during these post apocalyptic events, neighbours actually emerge and talk to each other on the street.  What else is there to do?

I’m talking to a group of about 5 neighbours, including one in a bathrobe and towel that stopped on her way to hot shower at another neighbour’s with a prized gas heater. A young mother approaches with a somewhat tiny 14 year old son and tells me her son wants to be a lawyer.  I clench my fist, lift it up to my face as if ready to strike and I see terror in his little face.

I can’t do it like Rod. Instead, I blurt out if I were to do it all over again I would study finance.  Now both of them are confused.

I explain. The most important additional skill to have is understanding finance.  Knowing how money flows. How to structure deals, that are mutually beneficial to both parties, have minimal tax implications, allow you a percentage of the deal.  Recently, we have seen a mayor push towards lawyers learning finance, especially in-house lawyers.

When I was sent to GE University in Crotonville, GE paid a Columbia professor about $20,000 to teach 160 lawyers finance for a day.  In this large u-shaped auditorium, the front middle row had only 2 seats: Cohen and Colon. Day and night. Cohen was a tax lawyer for GE, former CPA and LLM in tax law – quiet as a stone underwater.  Colon: NBC and Telemundo media counsel, former tabloid lawyer, knows everything about TV, movies and celebrities, and can’t stop talking.  At some point in our accelerated finance education we were asked to perform a complex equation.  10 minutes into the lecture no one can answer the question regarding this equation – except Cohen. He mumbles, quietly at first, then louder. But will not raise his hand. Lawyers from 40 countries are falling over each other to get the right answer. To be the one to get a triumphant “YES!” from Columbia’s finest.

I urge Cohen on, “c’om on, say it, raise your hand, you know it!” He shakes his head while recoiling from his paper pad as if it had turned into a venomous snake.

“You do it”, mumbles Cohen.

Without hesitation, I raise my hand and answer.

“YES!” shouts the professor. “Finally!”

I beam, knowing the entire auditorium is wondering how I (the TV guy) solved this finance puzzle.  Ahh…it feels good to be the finance king.

“Colon, how did you solve it?” asked the elated professor

Silence in the auditorium, everyone listening. I laugh and say, “it was easy. He told me – pointing to Cohen.”  Auditorium breaks out into laughter. Thus did my first great moment in finance pass.

Moral of the story: if you still can’t grasp finance, sit next to a genius. Money doesn’t care who answers the question as long someone is paying attention to it.

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