By Lee Schafer
Star Tribune (Minneapolis)
WWR Article Summary (tl;dr) This article takes a look at how a Minneapolis law firm is rethinking the traditional ways of operating a law practice.
Star Tribune (Minneapolis)
The Jux Law Firm put on a seminar this week that was anything but the usual law firm event.
The topic was traditional enough, picking the right legal structure for a new business, and the legal credentials of presenter Kim Lowe easily spill off the bottom of one page. Yet the dozen or so guests, seated on couches and bar stools in a northeast Minneapolis loft space, were treated to an evening less formal than a neighborhood book club meeting.
Lowe called this a “pop-up seminar” that was supposed to be at least a little fun, and with the charismatic Lowe in the center of the room it clearly was. It was just as clearly a money loser. These were aspiring entrepreneurs, long on hopes and dreams and short on money for legal fees.
“In a return on investment calculation, most firms would say this was a complete waste of money,” said Aaron Hall, Jux CEO and founder. “And a waste of time. But it is a living-out of our mission, to use our legal expertise to empower others.”
This unusual law firm’s mission of empowering clients came up several times in just a relatively brief conversation. Hall is far from having been proved right, that lawyers can rally around this kind of mission and keep pace with more traditional law firms, yet he doesn’t need to be right to be worth paying attention to.
Over beers or coffee, partners at traditional firms will volunteer that profit growth remains tough to come by and that a rethinking of traditional ways to run a firm seems long overdue. And here we have a small experiment unfolding.
Minneapolis-based Jux only has about a dozen lawyers, but the big idea isn’t avoiding the pitfalls common at big firms, with their bureaucracies and firm politics, by staying small. When Lowe last year looked to leave the Minneapolis firm Fredrikson & Byron, one of the state’s largest firms, she said she found that even a firm of only 25 lawyers “is just the same world I was in.”
Lowe had been keeping track of Hall, a former colleague who had started what’s now called Jux at the end of 2008. And Hall said he hadn’t gotten close to reaching 25 lawyers before deciding the traditional model no longer worked. “Honestly, I didn’t want to come to work anymore,” Hall said. “We realized we weren’t liking what we had become.”
That realization started a process that in 2016 led the firm to undergo a transformation. The names of partners came off the door and letterhead and Jux adopted its new, nontraditional brand.
More importantly, the basic structure of the business changed.
Instead of a traditional law firm with multiple partners, it became a professional services company without any partners. Hall is called the CEO and he owns the firm lock, stock and barrel, although he made it sound like the ownership stake is mostly a burden.
Hall’s primary complaint with traditional law firms is how they are organized. He framed the challenge by pointing out an odd legal problem these firms have — the prohibition against asking a lawyer to sign a noncompete agreement.
Agreements not to compete, maybe by agreeing to keep away from key customers for a year or two, are common for sales representatives and product designers in industries like software. Bosses don’t use these to punish employees who want to leave, of course, they are only trying to keep customers as part of the business and not the personal property of some account manager.
Agreements like this are simply out of bounds for law firms. Legal ethics dictate that clients get to freely choose the legal counsel they want. If a lawyer leaves a firm her client should have a right to call the new phone number the following morning.
That leaves senior partners at a big law firm more or less in control of the most-profitable clients, not the firm, Hall said.
And unlike in a traditional product company, law partners deliver the service, too, so they don’t even have to get along with other departments like customer service or engineering to serve their customers.
These are some of the reasons a big traditional law firm becomes a loose confederation of fiefdoms under a common brand. It’s possible for skilled and hardworking lawyers to find themselves at midcareer in a heated competition for clients, status and money, not with the firm down the street but with their own partners down the hall.
“So how are we different?” Hall said. “Our belief is if we hire people that share this mission then we’ll be able to trust each other, and stick together, because we are not worried about somebody stealing a relationship and going somewhere else where they can make just a little more money.”
When interviewing people about working there, Hall tries to figure out how committed someone is to being a good colleague as well as a good lawyer. He presents candidates with a thought experiment on how to best use a half-hour. One activity nets the firm $100, and the other uses that time to comfort a co-worker who just learned of the unexpected death of someone they know.
To him this isn’t a difficult choice.
Hall’s pitch to lawyers like Lowe and Todd Taylor, another former Fredrikson partner who joined Jux last year, is that they are not likely to find another place to practice law in the Twin Cities quite like Jux.
What Hall isn’t able to offer someone is a partnership stake in his legal-services business, at least not how he and his colleagues envision it now. He considers “the ownership issue” another one of the vexing problems that’s yet to be solved.
He doesn’t want to continue to be the owner. “Let me be real clear here, ownership often attracts egos,” he said. “And there’s no place for egos when we are focused on serving clients.”
To underscore just how much Jux is a work in progress rather than a new model for a law firm, Hall listed options he and his colleagues have examined for ownership.
Those included turning the law firm into a public benefit corporation or having it owned by a foundation.
“Frankly, we’re still struggling with all this,” he said.