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Bigger or Better?

Written by: James Chan

Article Overview: There are pros and cons in trying to grow your company to a larger size.

Bigger or Better?

Margaret Gatti’s law firm is small and highly specialized. It works for companies and for other law firms solely on international tax, trade, investment and customs issues. One of her clients, she says proudly, is a billion-dollar company.

Margaret has no philosophical objection to expanding her firm, so long as she can maintain close control over the growth and continue to offer high-quality services to her clients. But she believes that getting bigger while staying good is not easy, and she doesn’t foresee any significant expansion.

As with many entrepreneurs, Margaret’s business is the result of a set of talents and circumstances that are unique to her. “What I do is an accumulation of all I’ve done,?she says.

It is a big step to stand aside from so personal a creation and watch as it inevitably turns into something else. The chief reason for doing so is if you intend to sell your business to someone else, something that doesn’t seem to be a high priority for Margaret right now.

She traces her current career back to childhood, as the daughter of a multilingual mother. Margaret had an interest in and aptitude for foreign languages. After getting a master’s degree in Germanic studies, she worked briefly for the Library of Congress, and later was hired by the international department of a large bank. The bank paid for her to earn an MBA degree at night, then sent her abroad. She spent the late 1970s working in Germany and Eastern Europe, where she became fascinated by the mechanics and the magic of international trade. One transaction that particularly intrigued her was when she participated with a group of banks that made loans so that Poland could purchase US grain that was fed to pigs that were eventually exported to America in the form of canned hams.

When her bank was absorbed by Mellon Bank, which had a large international department, Margaret was brought back to the US. She continued to work in international trade, dealing not with foreign bankers but with executives of companies that did business overseas. During that time she made 200 or so key contacts who, she says, later made it possible to set up her own business, though she wasn’t thinking about it at the time.

Mellon eventually promoted her to be head of its international department, but just as she was settling into her new job, many developing countries were beginning to be delinquent and default on their debt payments. Banks retrenched. Companies that wanted to do international business had difficulty getting loans. Margaret left the bank in 1987, and a few months later she decided to return to school and get a law degree so that she could become an all-around international trade expert.

In order to support herself while she was at law school, Margaret became an entrepreneur. She set up an import–export company, because that was what she knew about. “I always build on what I did in the past,?she says, though she adds that during her years as an employee, she never thought about being in business for herself. She did well enough with this business to pay the family bills and the tuition bills. And it gave her confidence, once she earned her law degree, to set up her own firm rather than to go to work for someone else.

“When you are older, you want control over your life,?says Margaret, who was 37 when she founded her law firm in 1991. “I wanted to go wherever I wanted to go.?

Her firm has done so well that younger lawyers have come to her trying to learn how to replicate her success. She discourages them, saying that the firm worked only because of the knowledge she acquired and the people she came to know before she was a lawyer.

Similarly, her practice is so much the result of her own idiosyncratic career that she has difficulty conceiving of a logical way for it to grow. Two years ago, she says, she took on a lawyer who was also trained as an accountant whom she hoped to train as the firm’s specialist in tax matters. It didn’t work. Training the new hire was difficult. Margaret wasn’t confident of the new lawyer’s work and felt she had to check it. “She was a drain on me,?Margaret says, and the experiment ended.

She says that a significant advantage of staying small is that big law firms aren’t threatened by her, and they feel comfortable making referrals or asking for help. Her fees are lower than theirs because her expenses are lower.

Margaret is busy enough to pick and choose her clients, and she is not forced by high overhead to take on clients with unreasonable expectations or unethical requests. In a career that has had as many twists and turns as hers, it is difficult to predict her course with certainty, but her business will probably remain small. “I’m very happy to stay where I am,?she says.

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Article Tags: accumulation, aptitude, canned hams, chief reason, close control, dollar company, eastern europe, foreign languages, gatti, germanic studies, high priority, high quality services, international trade, law firms, library of congress, mba degree, mellon bank, mother margaret, trade investment, working in germany



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