By maintaining a conservative approach to expanding the firm, leaders at the Tampa office of Shutts & Bowen have kept growth positive.
Company. Shutts & Bowen, LLP
Key. Taking a long-term view has helped Shutts & Bowen stay price competitive during a difficult economic time.
The decision to begin doing business at a new location always involves some risk. In 2006, one of the state's oldest law firms took a risk by opening an office in Tampa.
Now, as Miami-based Shutts & Bowen, LLP celebrates its 100th anniversary, the Tampa operation is looking to double its 20,000 square feet of office space and seen spectacular growth — based mostly on significantly undercutting competitors' prices. That is not the most common refrain for law firms, but it is really working in the downturn.
Law firms are no different from other companies struggling to survive as the economic slowdown slogs on. After riding a wave of activity in the middle of the decade, layoffs and cutbacks are often becoming a necessity.
Not so at Shutts. By maintaining a conservative approach to growth, the lawyers who work in Suite 1500 of the Wachovia Center have grown four to 30.
The firm has adopted “a very strategic growth pattern,” says R. Alan Higbee, managing partner in the Tampa office, creating what he calls a “hand picked A-team,” of lawyers claiming experience with “very sophisticated transactions.”
As a result of their success, the group was able to break even within a year of opening their doors.
And Higbee calls the firm's performance in 2008 and 2009 “phenomenal,” putting their profitability well ahead of schedule from an industry perspective.
Higbee works closely with Lee Nelson, head of the Tampa office's real estate group, to grow the Shutts team. Both came to Shutts following other area practices, and Nelson provides a vivid description of his own motivation for doing so, with which Higbee agrees.
Says Nelson: “You need another hill to climb sometimes.”
Given Shutts' recent performance, it appears he and Higbee have done that and more.
Despite the Shutts' 100-year history, while many lawyers knew the Shutts&Bowen name, local potential clients did not.
Overcoming that disadvantage was a key challenge for the firm early on. And doing so was made more difficult by its lean approach — the same lawyers doing casework were also responsible for brand building.
At the same time, staying lean has helped Shutts maintain the firm's most effective client-winning feature — a low price point.
When times were better, Higbee admits that his firm may have missed out on some of the highest peaks the industry has seen over the past few years.
But now, lower overhead is helping to maintain growth during a slowdown.
It's definitely an advantage over the competition, Higbee says. He cites numerous examples of bringing just one other lawyer to meetings he attends for clients, while the other side brings four or five.
He suspects that behavior may be a result of the other side having nothing to do, and that it will likely hurt them in the long term.
“They're making their problem the client's problem,” he explains — not a long-term strategy for growth.
By instead balancing utilization effectively and keeping bill rates down, Shutts & Bowen's Tampa lawyers have even been able to compete with high-powered firms based in New York. For the price of a
third-year associate lawyer from the Big Apple, you can get a 27-year veteran from Shutts.
From what Higbee hears, clients are impressed with the results. He says some have even equated the experience to outsourcing, given the steep discount.
Of course, offering a lower price will win your business a lot of work. But firms that go too low might be missing out on potential revenues that customers would be willing to pay.
They could always try to raise their rates to equal or just below their competitors' to try to maximize profits?
Higbee doesn't think so. “A lot of other folks have gotten stupid,” he says of competitors' rates.
According to him, you won't find anyone at Shutts billing $1,500 an hour, like you might at other firms — and perhaps more importantly, the firm is confident in the appropriateness of its rates.
“It's where we think the market should be,” Higbee asserts.
Shutts' lower prices have helped the firm land some of the typical clients you'd expect for a Tampa law firm, like some veteran real estate players in the local market.
But for the most part, their ability to compete on price has helped them build a relatively unusual client base — fewer locally based firms, and more international companies with regional divisions (one of which just closed on an acquisition of an Iowa-based company worth billions of dollars).
Shutts' ability to land work with those larger clients has helped it grow. And things continue to look positive for 2010. “We're as busy as we've ever been,” says Higbee — hence the need to double the firm's office space to 40,000 square feet.
But like any business owner who's seen recent success, he and Nelson both know: the fight isn't over. As Nelson puts it, “There's no immunity from the winds of change.”
In fact, in their search for new space, Higbee and Nelson have heard that three other large-scale law firms are looking to enter the space.
In general, as competition increases, Higbee realizes that winning business will continue to become more difficult: “The consumer's going to have more choices than they've ever had,” he allows.
To stay on top, the firm has to stick to its steady growth plan.
Today, that means resisting the temptation to hire too many additional lawyers just to capture new bankruptcy business. That segment will slow when the economy heats up.
For Higbee, the firm's outlook shouldn't be on the next three months, but rather on the next three years.
That's not to say Shutts & Bowen won't do bankruptcy cases. Higbee points to the work done by Lynn Sherman, a colleague in the Tampa office, as proof.
But hiring Sherman did more than generate short-term bankruptcy work. It created opportunities for other Shutts lawyers to create new relationships, as well, something which Higbee values greatly.
“You're going to build your practice around long-term relationships,” he says.
With that in mind, the right type of hire will not only bring existing work under Shutts' roof, but will also help the larger firm grow. “I know it's cliche,” Higbee says, “but we really look for the one-plus-one-equals-three.”
Shutts may continue hiring in 2010. But if they do, it'll be with one timeframe in mind.
“We have a long-term view,” Higbee says.