My Shingle : MyShingle : Solo and Small Law Firm Management and Marketing

Searching for fodder for blog posts, I came across this advertisement posted by a soon to be 70 year old retiring lawyer who is seeking buyers for his law practice located in Syracuse, in Hamilton County, Kansas.  According to the ad there are only two other lawyers in the County, thus allowing for a County-wide practice.  And with the firm located just sixteen miles from the Colorado border, with reciprocity between the two jurisdictions, expansion into a second state is a possibility as well.   Finally, the firm uses practice management tools like Amicus, HotDocs and QuickBooks, which allows for automatic document production and scheduling and includes a database with a list of 4000 contacts. 

Though a young lawyer taking over this practice might want to consider moving to a cloud based system which is the wave of the future, at least the attorney selling the practice has invested sufficiently in technology to enable a seamless transfer and provide a new owner with the means to hit the ground running.  Often, when I travel on speaking engagements, I am struck by how many long practicing lawyers have not taken the time to invest in technology, and still run practices heavily dependent upon support staff and paper.  When these lawyers retire, what will they have to pass on?

To find an answer, I spoke to the preeminent authority on selling a law practice - Ed Poll of LawBiz Management, publisher of the Law Biz Blog and author of many, many books on law practice, most recently, Growing Your Practice in Tough Times Ed graciously answered my questions on law firm succession, selling a practice, what lawyers can do to position themselves for retirement and how younger lawyers may be able to position themselves to take over retiring lawyers' practices.  Ed also has some of his own videos on this topic
here  and here.

Finally, if you're not yet ready for retirement and thinking about your future plans, check out Lawyers at Midlife by Michael Long, John Clyde and Pat Funk, published by DecisionBooks (which also published Solo by Choice).  Lawyers at Midlife helps lawyers decide whether and when to retire, how to make the transition to the next stage and closing a practice.  The book contains extensive practical advice interspersed with personal commentary by the authors and other lawyers.

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In May 2008, I discussed a tantalizing question posed by reader who at the time was employed in a federal clerkship, after having spent two years at biglaw.  He asked  do I go solo now and forfeit the $50,000 clerkship signing bonus from a large firm, or take the leap into solo practice immediately after the clerkship?  Though $50,000 is a lot of money to turn down, this particular question wasn't a tough call and I encouraged the reader to go for it.  In this reader's situation, he'd already spent two years at a large firm, plus another at a prestigious clerkship and still, he couldn't shake the gnawing desire to start his own shop. 

The story has a wonderful ending.   Here's an excerpt of a note that I received from Hamid Jabbar, owner and principal of  Jabbar Legal:

Well, I am writing you to provide an update on what has happened.  Indeed, I went for it!  I have had my own solo practice up and running since the beginning of this year, with absolutely no regrets: .  The first few months were difficult, but I started making money in month three and am doing quite well now.  I'm so glad that I didn't let the larger state of the economy prevent me from taking the leap (everyone thought I was crazy).  I know now that if I can make it work in these trying times, I will be just fine...I couldn't be a happier lawyer now.

Take a look at Hamid's bio (which I wasn't familiar with until now as he didn't share many details when he wrote me) and you'll see why big law just wasn't big enough for someone like him.

Does every person who starts a practice experience success?  Not at all.  But how will you ever know if you'll succeed or fail if you don't give it a try?  Hamid Jabbar forfeited $50,000 to take the leap to solo practice.  You may not even need to risk as much. 

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From Newsday, I learned that the Nassau County Attorney's office hopes help out in this economic downturn by opening its doors to bring on several volunteer lawyers who haven't been able to find other employment.  Positions range from working with the county's Home Ownership Center to advise in mortgage default situations to defending the county in litigation and appellate matters.  Already, an advertisement in the New York Law Journal has drawn 50 applicants, 80 percent of whom are currently unemployed.

I realize that on the surface, the prospect of free labor sounds eminently attractive.  Indeed, for a few weeks now, I've been considering hiring volunteer lawyers to help out with my trade association but I've been too busy to organize the kind of structured program that would make their time worth my while.  As for my own practice, again, I'd love to bring a volunteer on board, but for the bulk of my present work, the learning curve is just to steep to make this kind of arrangement feasible.  I'd love to take on a few pro bono matters and supervise a volunteer, but finding the work also takes time.

In addition, I'm just not a fan of free labor.  I've had one or two free volunteers at my practice over the past 15 years, but mostly, I've paid even though when I started out, it usually meant a $10/hr salary, with the intern or clerk receiving payment before I did.  In at least one case, I found the free employee unreliable and not really very motivated, but because I wasn't paying her, I didn't feel that I could crack down on her as much as I would have if she'd been paid.  And assuming that  a diligent volunteer were working for me, I'd feel as if I were taking advantage even if I were teaching him or her the tricks of the trade.

I know that Seth Godin has a free internship program but that's a little different. After all, I'm sure that most of us would make time to work free for a Supreme Court justice for a couple of months if given the chance.  But I'm not so sure that the training and contacts that I - or most of my colleagues - could provide are a fair trade for three or six months of work that we might ultimately bill to paying clients (which is another issue - is it fair to hire a volunteer and collect cash for their work?)

So let me know what you think.  If you're unemployed or looking for a career transition, would you volunteer to work for a lawyer or non-profit and what would make it worth your while.  And if you're a solo, have you hired volunteer lawyers (students getting school credit don't count) and how did it work out?  Or would you use a volunteer at all and why or why not?

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I try to respond personally to the many emails that I receive from readers, but every so often, the email raises a question that has broader interest to other readers, so I post it here.  Here's an email that I recently received, with my response - but I welcome you to chime in:

Q:  I am a second year corporate associate at a biglaw shop in a major city. Along with a significant number of colleagues, I have been let go because of the economy.   Though I did not think about it before, I am now seriously considering hanging out my shingle. I don't have a great deal of experience, but I hope to make up for that with ability, hard work and personality.

I have a question that, I hope, might of interest to some of your other readers. In short, if I were to open my own practice, I would like to cater primarily to business clients, doing contracts, M&A, real estate and corporate governance work. I realize, however, that cultivating business clients takes time. Though I have some entrepreneur-friends who, I am assured, would hire me in a heartbeat, my bread and butter in the first year or two would probably be referrals and walk-ins more typical to the solo I would become - wills, divorces, residential real estate, personal injury.

My question is this: is it a feasible business model to sustain a practice in the short run with consumer matters while developing business contacts for later specialization? My concern is that by building expertise in areas that don't pose a long term interest, I would pigeonhole myself and never quite become a business lawyer.

Put another way, should I (a) open my doors and start developing business clients, while "eating what I can" in the meantime, or (b) invest more in client development prior to opening up?

If you are fairly certain that you would like to handle transactional and corporate matters for business clients, those areas should serve as your primary focus from the start of your practice.  As I'll describe below, I believe that there are many ways that you can make this practice area fairly profitable from the inception.  However, I also understand your concern about being able to make money and thus, you may want to choose one or two consumer practice areas to supplement your earnings at the outset. (Note - I am assuming that you are interested in non-business matters primarily for cash flow reasons, not for personal interest.  For solos who are interested in a variety of practice areas, I would encourage you to sample several before settling on a few core practice areas).

Here's the rationale behind my advice.  First of all, even consumer cases like personal injury or family law or probate may not be easy to come by without marketing.  So you'll probably need to spend some time trying to proactively attract consumer cases.  References to "door law" or "threshold law" aside, many of these clients won't simply walk in off the street without any marketing effort on your part.  In addition, based on your background, I'm guessing that you probably don't have much familiarity with these types of matters and as a result, you'll also need time to get up to speed.  All of this effort in other areas will detract from your ability to build up your corporate and business practice. 

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Here's a question from a reader of this site and Solo by Choice:

I spent two years at a large law firm and now clerk for a federal district court judge.  I want to start my own practice after my clerkship concludes, but if I do, I'll be turning down the $50k starting bonuses that firms routinely offer to law clerks.  Should I go to a firm and take advantage of the bonus and get some more experience or give up the money and start my firm when the clerkship ends, relying on the 6 months or so of expenses that I'll have available?

Thanks for your question.  As many of my readers know, I'm not the throw-all-caution to the wind, settle-for-nothing less than starting a practice type of person.  I do believe that in  some situations, it may make more sense to accept a good job offer after law school, even for a year or two to start building contacts and to keep options open down the line.  However, your situation is not one of those.   Based on your letter, you are ready to start your firm now.  And in fact, in the long run, you may hurt your career more if you return to a job that you don't want instead of starting your firm.

Consider this - even after two years at a firm and a year at a clerkship, you still crave starting a law firm.  There's a voice, a spark inside you that isn't going to rest until you give it a try.  You can go back to your former firm or try a new one, but that voice will haunt you.  And as you toil over documents or try to get your fix of working with a client directly through the firm's pro bono program, you'll begin to feel resentful and perhaps even start to sabotage yourself with an uninspired performance.

I realize that the $50,000 ups the ante quite a bit.  But let's face it - if you take that money, realistically, you are committing to at least another two, possibly three years at a firm.  If you jump ship any sooner to start your own practice, your firm is going to figure, rightly, that you took the job to to build up a nest egg to start your own firm.  And suddenly, any of your accomplishments at the firm become suspect.  Take a client and the firm's going to assume that you were angling for it all along.  Why risk your reputation, your most important asset in your career, for a clerkship bonus and a bit more short term security?

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Go east, young lawyer if you want to start a law firm.  As this article reports, a recent study released by the Pope Center for Higher Education shows that North Carolina needs more lawyer in light of recent population growth and a strong economy.  The catch - only graduates of accredited ABA law schools qualify to take the North Carolina bar.  And while the bar accepts comity, waive ins don't come cheap - expect to pay $1500 for comity admission.

Have you moved to a new state to take advantage of the economy? In what circumstances would you consider it? And North Carolina readers - is the article true? When it comes to law practice, is North Carolina a better place to be?.

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Thanks to a lemon of a credit market, associates at McKee Nelsonhave the opportunity to make a huge vat of life-changing lemonade. Above the Law's David Lat is reporting here that NY/DC based McKee Nelson, in an effort to avoid economically-induced, forced associate layoffs, is offering associates two options: (1) a full bonus, plus four months pay to anyone willing to leave the firm voluntarily or (2) a full bonus plus a year's sabbatical at 40 percent of the $160,000 salary. Option 2 carries two caveats; first, the firm cannot guarantee employment at the end of the year and second, the firm wants associates to use the sabbatical to "make the world a better place."

Lat suggests that associates use the time to fulfill their dreams of finishing a novel, or studying painting. But I've got a better idea: what about starting your own law firm and becoming the lawyer you always wanted to be?

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Q:  I'm only applying to law school now, but I am hoping to open up my own general practice as soon as I graduate.  Here is my situation:  I am fairly sure that I will be admitted to a law school in the city where I am intent on living and opening my firm (School A), as well as another law school in the middle of nowhere and hours away from my preferred location(School B).  School A costs 27k per year and School B costs 11k.  Both schools are similarly ranked 3rd/4th tier.  Should I go to the school with less tuition (and thus, less crushing debt) or go to the school where I can establish a network (potentially allow me to make valuable connections for business)? I want to take on less debt  so I can take bigger financial risks opening the practice, but I also want that network and feel that I should know the area before I begin to set up a firm there.  More specifically, I would like to know whether having prior local work experience in law school, through an externship or clinic helpful to starting a practice, or can I just pack up and move to any city and start drumming up business?

A:  Nothwithstanding the difference in cost of roughly $50,000 (figuring 81,000 in tuition at School A versus $33,000 for School B), I believe that you should attend School A.  Here's why.   

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Seth Godin has some great advice on the best time to start a firm:  maybe last year, maybe never.  But the second best time is now.  So go for it (and read Godin's entire post).

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A reader writes:

Do you have any recommendations on how to pick up contract work from local attorneys or solos?  I want to approach local firms to see what their needs are for subcontracting out work.  Do you have any ideas on how one should go about doing this?  I'm not looking to do contract work full time, but only for supplementary income until I get my firm off the ground.

Like my colleague Jon Stein, I've learned about contract work from both the giving and receiving end.  This experience has given me some strong views about what works and what doesn't.  Here's my advice below:

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Solo Wannabee wonders whether you can start a law practice part time.  Surprisingly, the conventional wisdom on this question is no, that solo practice demands full time commitment to make it and that client demands are full time.  But that's not my view.  As I've said before, there are as many right ways to hang a shingle as there are shinglers - and a part time practice can work just fine provided you manage expectations properly.

One of the misconceptions of part time practice, and one that I made myself when I was working part time, is that part time means a twenty  or twenty five hour billable work week.  But that's not the case.  I mean, you could just work 20 billable hours a week - but what happens when that work dries up and you've not been diligently marketing? 

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Below, a reader writes in with advice on some frequently asked questions related to solo practice.  The reader's questions and our answers are interspersed below.  Readers, since I've only started one practice, after all, I'm the first to admit that I'm not an authority on all ways to go solo.  What I've learned from blogging here and meeting other solos is that there are as many routes to success as there are shinglers.  So please write in and send comments that reflect your own unique experience. 

(1) My spouse and I have set one year as our goal to start the firm - we want to save at least six months of expenses before we take the leap.  Is that realistic or do you think it will take more time to get up and running?  How much capital do you think one needs to get started?

Though I've seen other numbers, saving to cover six months of expenses seems reasonable.  Sure, you could wait until you've got a year's worth of expenses covered, but as I advised this reader, there's always a tradeoff between waiting and getting started.  You don't want to start out on the wrong foot with insufficient savings but at the same time, you don't want to put a firm on hold permanently as you save and build up clients. 

In terms of capital, it's relatively easy to start a small firm on a shoestring these days.  I'm guessing that you and your wife have at least one home computer that's powerful enough to be transformed into a work machine.  And with computer prices falling, you can even purchase a decent laptop as a second office machine for $1000 or less.  You'll also need to pay malpractice, the cost of which will depend upon your jurisidiction, state and practice area, but can probably be located for $200/month or less starting out.   Other expenses would include business cards, stationary, phone service (here, you can use a cell phone if you already have one),  and  potentially office payments (see response to  Q. 4)  And then there's health insurance if you and your spouse will both be self-employed.

One suggestion I'd make given that both you and your spouse are considering a firm is that you stagger your start up.  For example, if you are both employed, you could leave your position and hang the shingle, while your spouse would continue to work for another six months to a year.  You'd have the benefit of insurance coverage, plus your spouse's earnings could go into the firm.  Perhaps, thereafter your spouse could leave or cut down to part time.  This would give you both the ability to get your practice started with some set revenues still coming in the door.  Then, you could work to wean yourselves off your spouse's salary to full dependence on law firm income.      

 

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Editor's Note:  Recently, I've been receiving a number of inquiries seeking advice on starting a practice.  I'm going to try to address as many as I can, as quickly as I can, in what will hopefully be a regular "Questions & Advice" column.  If you send me an email with a question, try to eliminate any identifying information so that I can use it in a column.  I'll get in touch with you prior to posting, but it will make my job easier if I don't have to reformulate questions.  With that, my first question topic is how to handle the naysayers, particularly when you're a relatively new attorney.

Reader Question:  I am not happy with my current position and for three months have been working on this idea of starting my own firm.   I feel confident in my abilities to competently represent clients in my practice area, even though I've only been practicing for just over one year (it's a field where I have personal experience and which I worked in during two summer law clerkships). 

My plan is to begin in a home office, use web-based case management software, and digital phone - all of which will make it easier to move when I (hopefully) can afford a "real" office.  I am single so I do have think about things like paying for my own health insurance, meeting my rent, paying my student loans, and putting food on the table.

 

I was quite confident in my ability to do all this by the end of this calendar year.  But a colleague who started her own practice as the same age as I am advised me against it,  saying that it's harder than anyone can imagine to get clients and to manage your own practice.

Now, I'm scared.  Even though I do not doubt my legal abilities and even though I know I can and am willing to work for hours each week and I get so excited just thinking about my own practice, I'm back tracking from the idea.  I know that success can't be guaranteed, but now I wonder whether I should wait until I have more money saved up or I have my own client base I can take with me to a new practice before I go solo.

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Ann Israel, a biglaw recruitment attorney who writes a column for New York Lawyer typically responds to questions about how to make partner or what's the best law school to choose.  It's rare that she gets a question like  this one from an attorney wondering whether he should go solo after his first year out of school.   Ms. Israel is biased against solo practice, so predictably, she advised against the move - but I was surprised to find that I don't disagree with all of her advice.

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Gee, what should  this advice seeker and recent grad (at NY Lawyer) do here?  Work for $19 an hour doing document review at a large firm in hopes of getting some experience?  Or continue to look for a more challenging permanent position?  Uh, what about the most obvious option:  working for yourself.   Even if you have doubts about finding clients, court appointed cases pay $60 or more in New York.  And you could also find lawyers to pay a bar admitted attorney at least $30/hr to perform legal research or writing or make a court appearance.  Plus, what better way to find a permanent position than to involve yourself with all of the networking needed to start a law practice?

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David Swanner,  a South Carolina  solo weighs in with some good advice about starting a practice out of law school over here at his web log, South Carolina Trial Law.  David knows about going solo after law school first hand - because he's done it successfully.

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One of our readers writes:

I graduated law school last year and am finishing
up another graduate degree...and am
taking the bar this summer.  For law students with
little "real world" legal training (some law
clerking), any advice on going solo out of law school?
I read on your site about attorneys getting $40/hr
court appointed cases, but I much prefer non-trial
work.

For starters (and even though my reader didn't ask this question), I harbor mixed feelings about attorneys going solo immediately after law school.   On the one hand, I absolutely believe that with enough determination and desire, going solo after law school can be done successfully (and when my archives return, I'll post to links to stories about where that has happened).  Moreover, for new graduates who've had careers prior ot law school and potential contacts through that experience, going solo right after law school may be the best way to capitalize on prior work experience. 

At the same time, however, I don't think going solo is an optimal situation for new graduates.  It's not so much because new grads lack legal experience but rather, they haven't yet developed contacts in the legal and business community.   Going solo is exhilerating, yes, but it can also be demanding and nervewracking.  It's tough enough to try to master new skills and run a business and market while at the same time havingthe added burden of introducing yourself to  other lawyers in the community and establishing some credibility with them. 

A post-law school job - even one that only lasts a year or two - can help a new grad establish presence and credibility and get paid for doing it.  For example, if you work for a judge after law school, you have an opportunity to meet the dozens of lawyers who appear before the court.  You also have a chance to join the local bar and perhaps organize CLEs or other events which is a great way to get to know colleagues.  All while you're collecting a paycheck.  Same is true for a post law school job at any firm big or small.  The second advantage of working for a spell before starting a firm is that your former employers can serve as references for the quality of your work if someone is thinking abour referring a matter.

Having said that - and getting to the point of the question - there's much that  new graduates with no interest in litigation can do to get a practice off the ground.  For starters, they can seek out contract work - either a large document review project or work for other attorneys.  If they're interested in probate matters, they might want to try to set up a relationship with a PI or immigration attorney and see if those attorneys will refer their clients for wills and estate matters.  New grads can also give talks on business start ups or T&E matters to community groups as a way to drum up business.  And to gain skills, many jurisdictions offer inexpensive or free pro bono training on a variety of areas, including bankruptcy, wills and guardianships which teach the basics.  Usually, the only cost is a commitment to take on a case or two pro bono.

This is just a quick answer - and not entirely comprehensive due to time constraints.  Therefore, I'd like some feedback from readers on tips you have on getting started after law school - and of course, any success stories you might be willing to share.  And of course, keep reading MyShingle.com (and our online guide) for new tips on starting a firm, as they emerge.

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