Opening your own law firm?
October 25, 2010 8:34 PM Subscribe
Opening your own law firm?
Hi, I have a dear friend who is an attorney out of work for a while. He has been doing a bunch of pro bono work and even doing a few consulting gigs for startups. I wonder if it makes sense to open his own firm with the clients he has built relationships with and then try to grow into something larger. He is incredibly smart and very passionate about the law. Anyone have experience with this?
-Costs
-Difficulty
-How to attract clients/market yourself
-Tips, what to avoid
He is licensed in NY and CA and went to a top tier law school.
Hi, I have a dear friend who is an attorney out of work for a while. He has been doing a bunch of pro bono work and even doing a few consulting gigs for startups. I wonder if it makes sense to open his own firm with the clients he has built relationships with and then try to grow into something larger. He is incredibly smart and very passionate about the law. Anyone have experience with this?
-Costs
-Difficulty
-How to attract clients/market yourself
-Tips, what to avoid
He is licensed in NY and CA and went to a top tier law school.
Strongly echoing Kate's number 7.
Let me add: The biggest obstacle for anyone starting any new business is the cost of (1) personnel and (2) office/storefont space. For solo lawyers in medium to large cities, there are a number of office sharing centers which provide an effective alternative to doing it yourself from scratch. And in any size town, it should be possible with some asking around to find a firm that is willing to share office space with a new practitioner who is not competing in its area of work. Often those arrangements even lead to a little referral/overflow work from the host firm.
posted by megatherium at 4:09 AM on October 26, 2010
Let me add: The biggest obstacle for anyone starting any new business is the cost of (1) personnel and (2) office/storefont space. For solo lawyers in medium to large cities, there are a number of office sharing centers which provide an effective alternative to doing it yourself from scratch. And in any size town, it should be possible with some asking around to find a firm that is willing to share office space with a new practitioner who is not competing in its area of work. Often those arrangements even lead to a little referral/overflow work from the host firm.
posted by megatherium at 4:09 AM on October 26, 2010
What area of law does your friend practice in?
I have a friend who burnt out on the corporate grind and Skadden Arps and dropped out to open a small general practice. It did not work out for her. The biggest issue was that she had time getting people to pay her, and judge's (she reports) wouldn't let her off her cases even if it was clear that no more pay would be forthcoming.
The bottom line was that she was a very good attorney but she didn't have the right skills and disposition to run a business. Starting a law firm is starting a business as much as it is practicing law.
It sounds like your friend might be in a better position, as he already has clients he could potentially bring along. It would also probably be easier to get paid by companies than by individuals. But the question, really, is whether he wants to run a company.
posted by alms at 5:12 AM on October 26, 2010 [1 favorite]
I have a friend who burnt out on the corporate grind and Skadden Arps and dropped out to open a small general practice. It did not work out for her. The biggest issue was that she had time getting people to pay her, and judge's (she reports) wouldn't let her off her cases even if it was clear that no more pay would be forthcoming.
The bottom line was that she was a very good attorney but she didn't have the right skills and disposition to run a business. Starting a law firm is starting a business as much as it is practicing law.
It sounds like your friend might be in a better position, as he already has clients he could potentially bring along. It would also probably be easier to get paid by companies than by individuals. But the question, really, is whether he wants to run a company.
posted by alms at 5:12 AM on October 26, 2010 [1 favorite]
The main difficulty of opening your own practice/business is that you have to do multiple jobs at the same time. In this case, your friend will need to be a lawyer but will also have to deal with managing an office, doing/overseeing business structure set up and accounting, etc. Not that it is impossible. Many small businesses owners start out doing everything then outsourcing stuff or hiring staff as they can afford it. The first thing he should do is find a good accountant!
posted by MsKim at 7:23 AM on October 26, 2010
posted by MsKim at 7:23 AM on October 26, 2010
Nthing what katemonster said. Two more things, though: your friend should also grab a copy of Solo By Choice, and should think really hard about being not just a lawyer but an entrepreneur in a start-up.
It is really really REALLY hard at first. Your friend may be a fantastic lawyer and a brilliant person, but the skills they will need to succeed on their own are a) a tremendous stomach for risk, because -- if they are lucky -- their cash flow will be highly variable for at least the first several years; b) the ability to sell themselves over and over again without getting discouraged; c) the ability to manage a lot of the stuff that the business managers at their firm used to manage, like billing and then calling and calling clients who don't pay.
In the same position as your friend, although it was very shortly after I got laid off that I decided not to work for another firm. I started a practice with a partner which has worked out pretty well given how young it is, but we are still financially touch-and-go and waiting tables / doing odd jobs to make it work.
My father was a self-employed, not-terribly-successful, residential carpenter for most of the time I grew up, and right now it feels a lot more like that did than what I imagine it feels like to have your own law firm.
posted by gauche at 7:40 AM on October 26, 2010
It is really really REALLY hard at first. Your friend may be a fantastic lawyer and a brilliant person, but the skills they will need to succeed on their own are a) a tremendous stomach for risk, because -- if they are lucky -- their cash flow will be highly variable for at least the first several years; b) the ability to sell themselves over and over again without getting discouraged; c) the ability to manage a lot of the stuff that the business managers at their firm used to manage, like billing and then calling and calling clients who don't pay.
In the same position as your friend, although it was very shortly after I got laid off that I decided not to work for another firm. I started a practice with a partner which has worked out pretty well given how young it is, but we are still financially touch-and-go and waiting tables / doing odd jobs to make it work.
My father was a self-employed, not-terribly-successful, residential carpenter for most of the time I grew up, and right now it feels a lot more like that did than what I imagine it feels like to have your own law firm.
posted by gauche at 7:40 AM on October 26, 2010
I did this; I was a hothead, and I walked out of a job and hung my shingle (I had been practicing for 4 years at this point). However, I did contract work for other attorneys for the first solo year, until I was able to get enough billables and clients to cover my rent and living expenses. I was also blessed by having some very good connections to prominent attorneys in town, so had a stream of referrals through those connections (as well as through the local non-profit lawyer referral service). I also had very low rent / overhead, so was able to get by until billables increased. I started out focusing on employment law (which was my background), but, several years later, practice in general litigation/business law/construction law.
My big points: Where's your work going to come from? How low can you keep your overhead (I wouldn't work from home, which would be cheapest, but you should be able to sublease a cubicle in someone's office)? Your friend needs to stay alive until he can get some cashflow going. There's no sense at all in paying for a fancy office and an assistant until you can cover those costs and feed the family. Also, I see lots of young attorneys take a bunch of contingency fee cases starting out as they promise big returns. This typically strikes me as a bad idea (and I've seen several practices go down b/c of it). It's really hard to judge a single or a handful of contingency fee case accurately, and you can't run multiple contingency fee cases without a sufficient administrative staff + overhead that young solos won't have.
If you'd like to send me a mefimail, I'll give you my email so that your friend can send me questions if he'd like.
In short-keep your costs low. Know where your work is coming from.
posted by seventyfour at 8:08 AM on October 26, 2010 [1 favorite]
My big points: Where's your work going to come from? How low can you keep your overhead (I wouldn't work from home, which would be cheapest, but you should be able to sublease a cubicle in someone's office)? Your friend needs to stay alive until he can get some cashflow going. There's no sense at all in paying for a fancy office and an assistant until you can cover those costs and feed the family. Also, I see lots of young attorneys take a bunch of contingency fee cases starting out as they promise big returns. This typically strikes me as a bad idea (and I've seen several practices go down b/c of it). It's really hard to judge a single or a handful of contingency fee case accurately, and you can't run multiple contingency fee cases without a sufficient administrative staff + overhead that young solos won't have.
If you'd like to send me a mefimail, I'll give you my email so that your friend can send me questions if he'd like.
In short-keep your costs low. Know where your work is coming from.
posted by seventyfour at 8:08 AM on October 26, 2010 [1 favorite]
Oh, also: REGULARLY INVOICE. Cut and paste this x100. Attorneys (including me) are often terribly at invoicing, even though that's the only way they get paid.
Also, my mentor once told me that if you can bill (and receive payment for) 4 hours a day, you're OK. Not great, but you're keeping the doors open. Set a billing goal. You don't need to bill the kind of hours you did as an associate, as the overhead is lower and you're not paying the partners. 4 hours is a manageable floor. That may seem low (and it is), but there are a lot of nonbillable tasks to take care of each day.
posted by seventyfour at 8:13 AM on October 26, 2010
Also, my mentor once told me that if you can bill (and receive payment for) 4 hours a day, you're OK. Not great, but you're keeping the doors open. Set a billing goal. You don't need to bill the kind of hours you did as an associate, as the overhead is lower and you're not paying the partners. 4 hours is a manageable floor. That may seem low (and it is), but there are a lot of nonbillable tasks to take care of each day.
posted by seventyfour at 8:13 AM on October 26, 2010
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2) One of the first books most 'sezzers will mention when asked is Jay Foonberg's How to Start and Build a Law Practice.
3) Most of my clients don't really care what law school I went to, except that it's the local university that almost everyone here has some loyalty to. It's a tier 1 and they're generally impressed, but I don't think I'd be better off if I'd gone to Yale (or noticeably worse off if I'd gone to a tier 2).
4) Most of the solos I know have developed a fairly small niche in which they're an expert. One of my friends does divorces, another does immigration, a third does commercial property (evictions and so forth). My practice area is one that lots of other lawyers (at bigger firms, mostly) claim to do -- but it only makes up about 10% of their practice area, if that. My clients are pretty skeptical of that and prefer someone who specializes.
5) Difficulty -- in my mind, this is kind of a non-issue. It's kind of like having a dog. I love my dog, so although I don't like vet bills, midnight potty runs, or barf on my rugs, I deal with it all pretty cheerfully. If I didn't like her, those would be impositions I would resent.
Similarly, I love my work and being a solo, so I get satisfaction even out of doing the parts of the job I don't love for their own sake. I spent the entire evening tonight wrestling with Wordpress, which is not remotely interesting to me, but I was willing to do it for the good of my business. Which brings me to point 6.
6) I don't think anybody goes into solo practice because it's easier than the alternatives. It won't be, unless he really has a passion for it. But I honestly can't tell you how hard or easy it is -- working big law looks incredibly hard to me. Being a courtroom litigator looks hard to me. Other people feel exactly the opposite. It depends on the individual.
7) Lawyers are willing to talk. And talk and talk. If he decides he's interested in pursuing a solo practice, he might try to contact a few local solos and ask them for informational interviews. Or ask the same questions on solosez -- what people wish they'd known when they got started, what was their best investment when starting up, etc.
posted by katemonster at 9:30 PM on October 25, 2010 [2 favorites]