Len Amoruso, managing partner of the New York office of Murphy & McGonigle, a 55-lawyer firm that caters to the financial services industry, spoke about the firm's management structure, compensation model and workplace culture. “The system is set up to reward you—the more you hustle, the better you can do,” he said.

The conversation was part of a series on midsize law firms.

Q: How big is your firm, where is it located and what are its primary areas of practice and focus?

A: Murphy & McGonigle is composed of 55 lawyers and approximately 75 employees, and we are located in New York, Washington, D.C., and Richmond, Virginia. We are industry-centric, with a laser focus on the financial services industry, and its related legal, regulatory and compliance needs. We cover every area a financial services company could need—at all stages in their growth and development—and we are asset class agnostic. Our clients include national banks, broker-dealers, investment advisers and hedge funds as well as national and international securities markets and exchanges. Because our lawyers have worked inside at companies on Wall Street, we can combine strong legal advice as well as the accompanying recommendations as to how best to implement them within the company's control structure in a cost-effective manner. Many firms can do the former, but very few can combine deep regulatory experience with the practical “in-house” counsel experience.

Q: Please explain your firm's governance structure and compensation model.

A: The founders of the firm, James Murphy and Tom McGonigle, serve as the executive committee for the firm and oversee day-to-day operations. Each of the three offices has an office managing partner. I serve in that role for the New York office. We have a forward-thinking and healthy compensation model. For equity partners, we are compensated through a combination of the percentage of business originated and a percentage of what we bill. The system is set up to reward you—the more you hustle, the better you can do. For nonequity partners, the compensation is a combination of salary and a discretionary bonus.

Q: What do you view as the two biggest opportunities for your firm, and what are the two biggest threats?

A: The financial services marketplace is constantly evolving; for example, currently, we are witnessing how cryptocurrencies, blockchain and other digital innovations are disrupting the status quo. We are very fortunate to have pioneers in these areas at the firm, and we are well-positioned to help financial services companies of all sizes take advantage of these opportunities, while helping to protect them against regulatory risks and other obstacles. One of our new partners, for instance, served as general counsel and chief compliance officer for the first New York state-chartered trust company providing blockchain systems for post-trade settlement, and he was the first general counsel for the New York State Department of Financial Services. The second opportunity is to continue doing what we have been doing. A leader of a large law firm recently told me, “It's incredible what you guys have done in such a short time [the firm is only seven years old], and it's recognized by your colleagues throughout the national bar.” We have such a high concentration of talent from the financial services sector that in the four years I have been here, I have not had a client come to me with a need we could not handle.

As for threats, we want to stay on top of our costs and remain focused on where the puck is going.

Q: After the recession hit, the prevailing theory was that midsize firms would start to see more work come their way from large clients who could no longer justify paying Big Law rates. What has been your experience?

A: We were founded in 2010, after the recession. So you could say that our model—to keep prices reasonable and to bring in high-level talent—is both different and timely. This approach has resonated well with clients. We now represent many of the major financial institutions in the country in one fashion or another, as well as many small and medium clients—most have told us they appreciate the combination of cost-efficiencies and specialized talent. Twelve of our partners are former SEC lawyers, for instance, and we have lawyers who worked in senior positions at the Department of Justice, Securities and Exchange Commission, Financial Industry Regulatory Authority, Commodity Futures Trading Commission and the New York State Department of Financial Services. A major financial institution just hired us and said, “We have been watching you guys and looking for opportunities to work together. You've got a really deep bench, and you are much more cost-effective.”

Q: Are your clients pushing for more alternative fee arrangements, and if so, what types? Is your firm amenable to those requests?

A: Because our rates are 20 to 30 percent lower than many of our competitors, I think more of that type of fee pressure is felt at the larger law firms. We want to build relationships with clients, so we are amenable to alternative fee arrangements if it is important to the client.

Q: There is much debate around how law firms can foster the next generation of legal talent. What advantages and disadvantages do midsize firms have in attracting and retaining young lawyers, particularly millennials?

A: There has to be an authentic appeal for the next generation to be drawn to a firm, both for up-and-coming lawyers within the firm and for laterals who are considering a move to the firm. This is my first law firm after serving as deputy director for the New York office of FINRA and as chief compliance officer and general counsel of a publicly traded financial services (trading) company. When I was looking at different law firms, the thing that struck me about Murphy & McGonigle was that there is such deep level of experience that I felt I could learn and grow here. In just the past few weeks, we have brought in a pioneer in cryptocurrency and the law, a former federal prosecutor in cybercrime, and the former chief regulator of NYSE Liffe US, a CFTC-registered futures exchange. In Washington, D.C., one of the country's leading securities defense lawyers, himself a former SEC trial lawyer, joined us this week from another large law firm. So our pipeline of next generation talent and leaders is strong and quite healthy. We also benefit from being the kind of place that does great work and is at the same time very collegial, without the sharp elbows you may find elsewhere.

Q: Does your firm employ any nonlawyer professionals in high-level positions (e.g., COO, business development officer, chief strategy officer, etc.)? If so, why is it advantageous to have a nonlawyer in that role? If not, have you considered hiring any?

A: Yes, at Murphy & McGonigle we have nonlawyer directors for our technology, human resources, finance and marketing functions. Our lead for diversity and inclusion is a lawyer. We appreciate the professional experience in business that these professionals contribute to the firm. Because we put a premium on being a friendly and collegial environment, our nonlawyer professional staff work closely with our lawyers. It may sound trite, but people care about each other at the firm. We all work hard!

Q: What if any technology advancements have you made in your firm in recent years? What are the challenges in implementing tech changes?

A: Our chairman, James Murphy, recognized technology as a key differentiator for Murphy & McGonigle from the firm's inception, and has made it an operating principle of the firm. Several years ago, we created The Innovation Lab, which explores new ways to deliver value and new services to clients using developing technologies. Following the U.S. Treasury's Capital Markets Reform Report issued in October of 2017, the Innovation Lab launched CapitalMarketsReform.com, a place for clients to stay up-to-date on the 91 capital markets reform recommendations. Another product, the M&M Defend App, provides on-the-spot guidance for how to deal with critical encounters with law enforcement. With the uptick of SEC subpoenas to tech companies in the ICO space, the app has been especially relevant lately. The Innovation Lab is increasingly involved in the Hyperledger Project and Chamber of Digital Commerce, two industry efforts aimed at advancing cross-industry blockchain technologies. Murphy & McGonigle was the first law firm to join the Hyperledger Project. We also recently launched Blockchainlawcenter.com, a resource for developments, analysis and events in the blockchain space.

Q: What would you say is the most innovative thing your firm has done recently, whether it be internal operations, how you work with clients, etc.?

A: We are always looking to do things that are smarter and more efficient in order to make things better for our clients. For example, our approach to e-discovery bucks the trend of assembly-line practices. Our proprietary approach, StraDIM (Strategic Discovery & Information Management), consolidates under a single attorney all aspects of discovery. By leveraging a wide range of analytical tools and keeping abreast of changes in law and technology, we can deliver customized solutions to clients. In a recent case for an investment bank, StraDIM technology analyzed 10,000 documents efficiently, and quickly located the 1,200 that were relevant to the case. The lawyer leading the case could then review only the 1,200 relevant documents, saving time and money for the client. Many law firms outsource e-discovery; we keep it in-house as we believe this is more efficient and effective than outsourcing.

Q: Does your firm have a succession plan in place? If so, what challenges do you face in trying to execute that plan? If you don't currently have a plan, is it an issue your firm is thinking about?

A: In addition to the two founders of the firm, there are many leaders within the firm who have the stature and experience to take on greater responsibility. The firm regularly includes succession planning in its strategic planning process.