CLEVELAND, Ohio — Afif Ghannoum thinks this town’s biotechnology sector has gotten big enough for a small law firm.
The 29-year-old attorney four months ago used Craigslist to help launch The Ghannoum Law Firm, which focuses almost exclusively on transactions and intellectual property for the life-science industry. The business relies on a virtual workforce and an uncommon compensation method to provide lower costs.
Ghannoum said his niche approach is working because the medical industry is growing at such a fast pace.
“Our aim is to build the most concentrated (law firm) in biotechnology and life sciences,” the entrepreneurial-minded Ghannoum said.
The firm’s office space belies the size of the practice. Its 400-square-foot office in the heart of Cleveland’s downtown is the size of a small master bedroom. The entrepreneurial firm is moving up only slightly — to a 500-square-foot space — that offers two offices and a reception area.
Yet Ghannoum Law comprises nine senior and partner-level attorneys who are experienced in biotech issues. It aligns specific client needs with attorneys experienced in those areas. Most of its work encompasses transactions and intellectual property — work that can be done remotely. A nimble structure allows attorneys to work from their homes or client sites, without billable hour requirements. Attorneys are compensated only when involved in a project.
Ghannoum compares his approach to New York-based Axiom Global, which touts the catch-phrase, “The road less lawyered.” Axiom employs more than 220 seasoned attorneys specializing in numerous areas including corporate law, finance and life sciences. Its attorneys are employed full-time with benefits, but are not paid between assignments.
Axiom’s largely virtual nature — most attorneys work in their homes or at client sites, and not in a central office — and the absence of expensive real estate, perks and a partner-pay structure result in significant savings that are passed on to clients, said Ed Lee, practice manager for life sciences at Axiom.
Lee said he sees potential in Ghannoum’s firm, given the growth in the biotech sector and a push to rein in legal expenses among all firms.
“If they can get enough clients in intellectual property and transactional work, it sounds like they have a good business model,” Lee said. “There are so many new (biotech) companies sprouting up, there’s a huge client base. As long as (potential clients) can be assured of the quality of attorneys involved, they may opt to use a cheaper resource.”
Ghannoum spent four years working as a corporate and real estate attorney at Cleveland law firms Squires Sanders & Dempsey and Baker Hostetler. His father is Dr. Mahmoud Ghannoum, director of the Center for Medical Mycology at Cleveland’s University Hospitals Case Medical Center and is a recipient of the prestigious Bristol-Myers Squibb “Freedom to Discover” award. Medical mycology entails the study of fungus.
Afif Ghannoum got the idea for his new firm upon founding BioVentis (Adobe Flash), the Cleveland emerging technology strategy firm he still runs. He established that business seven months ago to help biotech companies with their development – doing everything from fund-raising and grant-writing to competitive intelligence studies and business administration.
Through BioVentis, Ghannoum said he became acutely aware of the complex legal needs among biotech firms. He also saw what he considered exorbitant legal fees they face for the most customary projects.
Frustrated, he began his legal venture by posting a request on Craigslist for partner-level attorneys experienced in biotechnology. The placement drew responses from more than 90 lawyers in Cleveland and another 400 in New York City. Combing through the responses, Ghannoum assembled his current cadre of nine attorneys, and he has placed two other ads since.
Four lawyers are located in Cleveland, one is in Boston and an additional four are based in New York City. One lawyer is a former senior patent attorney for biopharmaceutical company Bristol Myers Squibb. Another is a venture capitalist who previously worked at GE Asset Management and was head of investment funds for Turner & Roulstone, a Cayman Islands law firm specializing in finance and real estate matters.
The Ghannoum Law attorneys (eight of whom are employees, while one works as a contractor) hold a vast range of experience comprising corporate law, biotechnology, intellectual property, emerging technology and health care. Ghannoum says growing to 50 attorneys over the next two or three years is possible as the firm moves to expand its client base through more aggressive outreach, which presently consists largely of word-of-mouth.
In four months, the firm has attracted 20 clients — from a lone scientist to a publicly traded company in San Francisco. Most of its clients are located in Northeast Ohio, and 60 percent are biotech start-ups.
Ghannoum said many of his clients declined to be interviewed for this story because they were early-stage companies that don’t want to draw media attention. He also said some clients preferred not to discuss their legal matters in public.
One client he could discuss was Tracuro, a Cleveland firm developing technology for the treatment of wounds and urinary infections. It has investments from both Cleveland’s University Hospitals and Case Western Reserve University. Ghannoum Law executed the legal work involved in Tracuro’s formation earlier this year, serves as the company’s general counsel, and handles its patents, licenses, contracts and other negotiations. Afif Ghannoum holds a small equity interest in Tracuro as part of the payment for his firm’s services.
Tom Bradshaw, Tracuro’s president and chief executive officer, said it’s difficult to find legal counsel willing to deal with the uncertainties of a start-up. “(Ghannoum Law’s) business model appealed to me because funds are always limited in the early phase, and Ghannoum has an approach that matches those needs,” said Bradshaw, who is also chairman of Great Lakes Pharmaceuticals. Ghannoum’s father, Dr. Mahmoud Ghannoum, is the chief scientific officer and co-founder of Great Lakes.
The emergence of Ghannoum Law illustrates the increased competition among those seeking to serve the emerging biotech industry. But it’s hard to tell whether the firm will be able to maintain such a singular focus.
The current downturn in venture funding means money is harder to come by for biotech start-ups. That could be a plus for Ghannoum if companies need to look to lower-cost legal options. But if the downturn means a slow-down in the flow of start-ups, that would make it hard to sustain the firm’s medical-industry focus.
“Law firms (generally) try not to rely on a particular industry sector, if they can help it,” said Frank A. Curci, a partner with Jennings, Strouss & Salmon, a Phoenix, Ariz., law firm that specializes in biotechnology law. “As a general rule, industry diversification is best if a firm wants to succeed in the varying business and economic cycles.”
Many biotech-focused law firms, for example, also cover the green-energy business. Curci’s firm, for example, also focuses on the construction, technology and energy industries, among others.
But Ghannoum is comfortable focusing almost exclusively on the biotech sector, though his firm does a few real estate and non-profit projects. He hasn’t ruled out diversifying the firm’s business, but he said he is confident there is enough biotech work for his firm to thrive.
“We are very well positioned to address a lot of the unique issues (biotech) companies have,” Ghannoum said. “There’s a great opportunity here.”
[Front-page photo courtesy of Flickr user acloudman]