Mike…brings a combination of assets to the firm…he is able to reassure our young CEO clients. Young CEOs are much more inclined to not trust lawyers than they are to trust them; with Mike sitting at the table, there is an immediate trust factor.
Washington DC-based Tandem Legal Group is a corporate and commercial law firm serving young and fast growing companies. Tandem’s co-founder and CEO, Michael McDevitt, is not a lawyer.
I was an associate at Howrey for two years and at Latham for six years. I was completely burned out. For a while I wanted to do just about anything except be a lawyer.
I tend to gravitate towards entrepreneurs, and many of my friends had started and were running their own companies. They were not enamored with the lawyers that they worked with. So I helped them out on a few matters, and in doing that I realized that there is a huge market for top lawyers to help companies small enough where the work of a lawyer can make a difference.
When I was at Howrey and then at Latham, I did work for very large companies, like auto manufacturers and airlines. What I found is that even the best lawyer in the world working on a very important case, and being successful on the case, makes little difference for those very large companies. But in helping out my friends’ companies, I found that I could really make an impact.
At Tandem, our clients are emerging companies, not start-ups. It is emerging companies that start to encounter legal issues where having a good lawyer — not just any lawyer but a good lawyer — can make a difference.
One day I was reading an article about Rule 5.4, and it discussed the fact that nonlawyer ownership is prohibited everywhere in the US, except for the District of Columbia. That was the moment when I connected the dots.
Mike McDevitt and I had been friends for a long time, and we had often spoken of starting a business together. He and I burned out of our jobs at about the same time. We wanted to create something together — we just didn’t know what it would be.
We had complementary skills sets: business on his side, and law on mine. Those are two of the most valuable assets to have when you are starting a business. Law has become such an integral part of business, and in many cases it is a determining factor in the success or failure of a business. There are so many laws and regulations that a business needs to make sure it is not violating, putting the company at unnecessary risk.
Growing a business as he did, Mike had gone through a lot of lawyers. We talked about his experiences with lawyers at length, and let’s just say that he was not a fan of the legal industry. I had my own opinion on how law firms worked, and notably on their inefficiencies.
In sum, Mike and I were both extremely unhappy with the legal market, from opposite sides. The provider was miserable and the client was miserable. It didn’t make sense. It can’t have to be this bad. It was clear to me that there was a huge unmet need, for clients as well as for lawyers.
When I read about DC’s Rule 5.4, I called Mike and I said “You know how much you hate lawyers? I am not 100% sure yet, but I think we can start a law firm where you are co-owner, and we can fix the problems. At least, we can fix them for our clients.”
His dislike of the legal world was the first hook for Mike. The second hook was the opportunity to work with a variety of emerging companies, instead of just one company.
Emerging companies — companies that are in the process of scaling — face so many legal issues. For example, they are looking to raise capital, and investors take a careful look at the legal risks — do you really own your IP? What is your corporate structure? What is your equity structure? Are you sure there are no phantom owners?
It is because of Mike that Tandem has been able to grow so quickly. He brings a combination of assets to the firm. Firstly, he knows an incredible number of people, and is able to use his network to put our clients in touch with the right people. This enables our clients to get the help they need much more quickly and without a painful trial and error process to find the right people. Secondly, he is able to reassure our young CEO clients. Young CEOs are much more inclined to not trust lawyers than they are to trust them; with Mike sitting at the table, there is an immediate trust factor. Mike helps new clients to become comfortable with us much faster than with another law firm.
Mike and I are aware of the arguments made in opposition to nonlawyer ownership of a law firm, and notably the argument that it will inhibit lawyers from exercising their independent judgment.
Now that we’ve been in business for a while, we think these arguments border on comical. Law is so impenetrable. We deal in grey areas, and with a lot of information. Anytime we are examining a nuanced legal issue, Mike’s eyes glaze over. He doesn’t know enough about law to get into the weeds. So the idea that he would try to influence our legal judgment — we’ve never even come close to that happening, and it is difficult for us to imagine how it could. It’s as if you told your surgeon how to do their job.
DC’s Rule 5.4 has been in effect for many years. No one is aware of any complaint having been made against a firm for reasons that relate to the firm having a nonlawyer owner. That says a lot.
Mike is not yet taking a salary. He sees his involvement in Tandem as a long-term project. His motivation is the opportunity to help young CEOs succeed in growing their businesses. Tandem is a platform for him to be involved in a variety of businesses.
When we first learned about DC’s Rule 5.4, we were surprised that more firms do not take advantage of it. But after thinking about it, we realized that in fact it makes sense. DC is very small — if you are a firm of any significant size, then you will want to have an office outside DC. A law firm’s clients do not contain themselves to DC, so how can a law firm? But if you have an office outside DC, then you cannot take advantage of DC’s Rule 5.4. That alone eliminates many firms. In addition, it takes a special kind of person to join a law firm as a nonlawyer, under the constraints of DC’s Rule. I get the impression that the Rule was designed expressly for lobbying firms, and that those are the firms that primarily take advantage of it.
DC’s Rule 5.4 does not allow for passive investors. This seems odd to me. You would think that a passive investor would be even less likely and less able than an active one to try to influence the lawyer’s judgment.
If there were two changes to our ethical rules that I would like to see changed, it is firstly the restrictions on unauthorized practice of law as it relates to multi-state practices, and secondly the restrictions on nonlawyer ownership of law firms, including the restrictions on passive investment in law firms. I think that lawyers could do a lot more for their clients if those restrictions did not exist.
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