How Legal Networks Ltd. is helping free-lance lawyers and local businesses by providing technical, niche-oriented legal service projects that bring the two together cheaply
By Daniel Bates
When the former Ben Franklin Technology Center of Western Pennsylvania faced massive mismanagement and a government investigation into other improprieties, the government leapt into action.
It fired the top management and all but closed the local state-funded program that was supposed to spur economic development by funding the commercialization of new technology.
But then the completely revamped center, now called Innovation Works, found itself with a rather odd and cumbersome legacy: more than 400 funding contracts with local technology developers, in which the recipients promised to pay royalties to the center if and when the technologies became revenue generators. The problem was, few had ever paid royalties. Worse, nobody had monitored or enforced the agreements.
Enter Innovation Worksı corporate counsel, Klett Leiber Rooney & Schorling. According to Doug Goodall, director of Innovation Works, the law firm acknowledged that someone needed to review all of those contracts to make an assessment of who might owe what.
That someone needed not only legal expertise in the area of contracts but also a technical understanding of technology transfer and development as well as the time to commit to such an enormous and unusual project. This wasnıt something Klett Leiber wanted to tackle nor could this government program afford to pay its hourly rates for the project.
This was a job for Legal Network Ltd.
Legal Network Ltd. is, in effect, a temporary services firm that gives companies access to a database of more than 2,000 attorneys who either work as sole practitioners or have been downsized out of their corporate counsel jobs and decided to free-lance their services. Clients pay between $50 and $100 an hour to rent an attorney, who is hired on an hourly or project basis. The firm then pays each attorney an hourly rate, but only for number of hours worked.
This alternative form of practice gives attorneys the freedom to pick and choose assignments without having to hustle new clients themselves. In fact, many on file are sole practitioners who use the service to fill in the gaps during slow periods. As Karl Schieneman, managing director of this 5-year-old firm, notes, the attorneys best suited for this kind of work are ³not the rainmakers in law firms.² Rather, they often are the ones with the best technical expertise who are good with document review, research and other sometimes tedious legal work.
For clients such as InnovationWorks, the service gives them access to a large pool of attorneys with often highly technical niche expertise, without having to pay the much higher prices of a large law firm with lots of overhead expenses.
Michael Betts, a Blawnox-based sole practitioner who specializes in commercial corporate litigation, often turns to Legal Network to help fill the legal ranks in particularly large projects.
³It works very well for me because Iım able to manage my overhead a lot better than if I had to hire other lawyers,² Betts says. ³I use the services when I have a major or more complex matter that requires more than one lawyer, or if things have to be done in a certain timeframe. A lot of those projects are cases where I need a lot of document review or research.²
Legal Network Ltd. is the brainchild of Schieneman, an attorney who earned a masterıs degree from Carnegie Mellon Universityıs Graduate School of Industrial Administration in 1992 and a law degree from the University of Pittsburgh. His partners in the firm are Brad Franz, an attorney with Houston Harbaugh, and Lawrence Kolarik, a national accounts manager for ADP.
Schieneman came up with the idea while working as an associate-on-contract with Pittsburgh law firm Marcus & Shapira. He had been hired on contract specifically to help with a large lawsuit against Phar-Mor during its sizable financial scandal.
³No. 1, it got me through the door without having to go through a difficult hiring process,² Schieneman says, ³and my performance is what opened up new doors.² The idea of being hired on contract to work on a project, he says, ³appealed to my background of being a businessman and a lawyer.²
While continuing to work for Marcus & Shapira, he formed Legal Network in 1995, and by 1996 was breaking even. In 1997, the firm experienced 200-plus percent growth in revenue over the previous year.
³I thought we were catching the national trend at that point,² Schieneman says. ³After all, itıs the fastest-growing segment of the professional services industry. Itıs a $500 million industry that is growing at a rate of 30 to 40 percent.²
At the same time, he found it more and more difficult to manage on the side. So he ³took the leap.²
Today, the firm employs three full-time people and maintains an active database of more than 2,000 lawyers. Active lawyers, he says, likely will earn between $60,000 and $100,000 a year, annualized. Schieneman says the firmıs revenue this past year was expected to climb to between $1.5 million and $2 million, although he would not be more specific.
³But thereıs no overhead involved here,² Schieneman says, except for the small office space his firm occupies in the Regional Enterprise Tower in downtown Pittsburgh.
Back at Innovation Works, Doug Goodall says he liked Legal Network because it has ³a cadre of specialists who are available on a free-lance basis.²
For its contract project, Innovation Works hired attorney Patricia Koehler, whose background was in technology transfer and development, through Legal Network. She set up shop full-time in the organizationıs offices, offered an initial assessment of the scope of the problem, then set out to scrutinize every one of more than 400 contracts that had been established over the past 10 years.
As a result of her work, Innovation Works has secured a commitment from the funded companies to pay back nearly $600,000 in royalties, and Goodall expects that number to increase as the organization moves forward in its effort.
³It not only was a legal issue but a technology issue,² Goodall says. ³And [Koehler] did a masterful job for us.²
So masterful, in fact, that, when the Legal Network contract between Koehler and Innovation Works ended, the organization secured her services directly for future projects.
Says Schieneman of his success: ³Itıs a fun business when youıre helping lawyers and helping businesses solve their problems.²