Should I Start a Law Practice?

These are my musings on starting your own law practice. Take them for what they’re worth…

I’m going to preface this post with a quote from a friend of mine, who will remain anonymous: “I went into solo practice after getting laid off from biglaw. I worked in biglaw for over 10 years… this was such a change. My first year in solo practice, I made about $7,000. I went from making over $150,000 a year to $7,000. I lost everything that year – my savings, my IRA, I even had to sell my car and my motorcycle… at one point, I actually went on food stamps. I felt bad, being a lawyer and getting food stamps, but I qualified for them. Things are finally starting to turn around, but man, I lost everything…”

A stark contrast from what you hear over at Solo Practice University, where all solos are happy, making lots of money, and spending their time just generally being awesome. (well, the solos who sign up and pay money, of course!)

As you might imagine, I get a lot of calls and emails that go like this:

“Hey Jordan, I hate working for this law firm. I’m thinking about starting a solo practice. What are your thoughts?”, or “Hey man, I just graduated law school and I can’t find a job. What are your thoughts on opening up a solo practice? Is it realistic for me? How much will it cost? I don’t have anything in the bank right now except $70, but that’s already spent…”

I wish the answer was “Hanging a shingle is a license to print money! Everything is so awesome. When I’m not counting my money, I’m out driving my new BMW and spending my summers down the Jersey Shore! Every lawyer should be a solo! You don’t need money, a plan, experience, a network, or anything to get started – just a desire to be awesome. Hell, a new client just made me a trophy for badassery!

Too bad I’m not here to pat you on the head, rub your belly, and give you a balloon. More importantly, I’m not here to sell you anything. Honestly, I don’t really care whether you start your own practice one way or another.

So, as a young guy with a law firm, I will try and answer those questions and explain… but like all things in lawyer life, “it depends.”

Right off the bat you should know this: I spend more time working now than I did when I was a full time associate at a law firm. I also make less money.

Got that? Starting your own law firm is not a way to get rich quick or make a lot of easy money. On the other hand, I get to write this blog, I have a Twitter account, all my clients are mine, and I can drink a margarita or browse the internet during the workday if I feel like it. I take on clients who I want to, and reject matters I think are stupid. That stuff isn’t usually okay if you work for a law firm.

Whether you should start a law practice depends on you. It’s not a good idea for everyone with a law license.

Should you start a practice? Depends on what you want out of life. If the answer is “lots of money right now and less work” the answer is no. Solo practice is a ton of work, and it won’t pay as much as a law firm job in most circumstances. (unless you bring a huge client with you).

If you value independence, freedom to be selective about clients, and risk taking, you might like solo practice. But when you run the place, you will spend many many many hours working. You have to be pigheadedly dedicated to having your own firm. There are a lot of ups to being the boss, but a lot of downs, too.

The upsides are generally this: no firm politics, take a half day when you feel like it, take on clients you want, reject clients you don’t like, work from home without permission, choose your own hours (I like to start late and work late), and wear whatever you think is appropriate to work. You’ll never come into work and find out you’ve been laid off or fired. Most law firms also won’t let associates have a Twitter account or write blog posts without approval. (which makes sense because you don’t want your associates running around and saying stupid stuff that could hurt the firm or lose a client. It’s not out of “meanness”, it’s out of doing what is best for the firm). It’s also nice to handle matters from the intake to the conclusion, and make a difference in someone’s life.

But there are many downsides to having your own firm: money is inconsistent (especially at first), you are responsible for EVERYTHING, not knowing where your next meal is coming from, it’s expensive, and the hours can be incredibly long without much money. It takes a tremendous amount of dedication to run your own firm. You will get burnt out from working all the time, but you can’t dump off the slack on someone else. Without a staff, vacations are difficult because you don’t have associates to cover your hearings and paralegals to check your email.

Are you willing to starve sometimes for freedom? Can you afford to starve for a little while, or do you need a guaranteed steady income?

There is absolutely nothing wrong with having a traditional job with a steady income. Even more so if your family situation warrants it.

Candidly, there are days when I wake up and say “I miss working full time for my former firm. All I had to do was show up, bill my hours, do a good job, go home and enjoy my money.” Vacations were easy to take because a paralegal monitors your email and your colleagues cover everything while you’re away. Sometimes I look at my colleagues and think to myself: “Wow, Joe Smith just got promoted to partner and bought a brand new BMW. It must be nice to make that kind of cash… hopefully I can afford to pay all my bills this month.”

Bottom line: starting your own firm has it’s upsides and downsides. Not everything is bad about firm life. Not everything is great about being on your own. Whether you should start a law practice depends on what you want out of life and your own circumstances.

You are not entitled to practice law. Even if you have a law license. Anyone who tells you differently is giving you bad advice or trying to sell you something.

“I don’t have any experience, any money in the bank, or any potential clients. But I really want to practice law and there are no law jobs out there! People are telling me I should just open up a solo practice. Is that a good idea?”

No.

That’s a recipe to fail. Sorry. It just is.

Solo practice isn’t a magical alternative for anyone with a law license but no job and no money. If you have no clients, no experience, and no money in the bank, starting up a law practice is probably a bad idea for you. It’s not realistic. It’s not a good idea. It’s a way for you to get yourself into trouble and possibly hurt your clients.

Keep in mind that Jay Foonberg drove a taxi for a few years while saving up money to open up his practice. It’s in his book in the part where he suggests having a years worth of living expenses saved up.

Just because the economy stinks and law jobs are scarce doesn’t mean that solo practice is right for you.

I know it’s not what you want to hear. But I’m telling you the truth. Anyone who tells you differently is trying to sell you something.

If you can find a job right out of law school, that is a better route to take.

Some of the best advice that was ever given to me was this: “Work for someone else as long as you can. Then, when you think you’re ready to start your own practice, work a little longer.” That was from my former boss, James, who started his practice about three years out of law school. Almost 30 years later, he’s doing just fine and ready to retire with all his boats, vacation houses, and money.

Personally, I could not have started a law practice right out of law school. I would have made too many mistakes, and most of the mentorship advice I get comes from my former employers. There is just so much to know. My partner Leo did it, but he is pretty exceptional. He also started by taking on very small cases, and eased his way in. And he had free and fully furnished office space from his now partner (me).

Working for other people allowed me to build my social network and save up money.

My Uncle Jim, a successful commercial litigator with his own practice gave me this advice: “Your goal should always be to build a practice, and to have your own clients, but do it as much as you can on someone else’s dime. Work for someone who will let you bring in your own clients and will also teach you how to practice law the right way. There is no shame in collecting a paycheck from someone else. I had tried about 20 jury trials before I went out on my own.”

Some folks will try and sell everyone on solo practice. They will tell you how great it is, how you don’t need a boss, and how it’s so much better being solo than working for someone. And of course, for a fee, they’ll be happy to mentor you and teach you all you need to know! But they’re also looking to make a few bucks off you, so take their advice with a grain of salt. It can be very dangerous for you and your clients to start a solo practice with no money, no experience, and no network.

Having a job at a law firm and working for someone else is a great situation, especially for new lawyers. Working at a law firm (even a big one or “sophisticated one”) is not nearly as bad as SPU makes it out to be. I learned a tremendous amount of stuff while working at a high end boutique firm, and made some money to boot. I am still Of Counsel at my former firm, because they were understanding enough to give me a part time / per diem position. Imagine that.

Every law job you have will create more contacts and increase your social network. Your former bosses will often be people willing to mentor you, or help you out with cases you’re not able to handle.

If you can find a job right out of law school, take it.

It’s never the “right time” to start a law practice unless you have portable clients, experience, and money in the bank.

If you want to start a solo practice, when should you do it? I asked my Uncle Jim. His response: “Honestly, it’s never a good time. You won’t wake up one day and all the stars have aligned. I would do it before you have kids if you’re dead set on it. The answer to your question differs from person to person, and it varies on whether you have money in the bank, portable clients, and a good network. It also depends on if you have a spouse that works, health benefits, and how much money you need to survive. You are not going to make any money your first year of practice – trust me! I took it to the chin that year. Thankfully, my wife had a good job that kept the bills paid.”

It will take you at least a month to setup the bank accounts (trust and operating, and you may need a separate one for each state), email accounts, calendar, fax, phone, website, getting your licenses / tax accounts, setting up your e-file, ECF and PACER accounts, form file, etc. You won’t be making money during this time, so also take that into account. (And don’t start your own law firm while working for another law firm, that could get you into trouble if they don’t know about it. You don’t want to be accused of fraud. That would be bad.)

At some point, you have to make the decision, but the answer is different for everyone. I decided to start my practice right after I was married, but before I had kids. I started it because I knew I wasn’t going to be happy working for a law firm long term. Was it the right time? I dunno. We’ll see.

The common solo practice pitfalls.

The biggest mistakes I see young lawyers make when starting a firm is this:

1. Not being committed to starting a solo practice or starting a solo practice for the wrong reasons

2. Being under-capitalized in terms of experience, a network and money.

3. Not comprehending how much work goes into having your own practice, and often for not a lot of money.

4. Wasting money on crap like marketers and snazzy websites and not focusing on building real relationships with real people, and taking on stupid cases because it’s “easy money”

5. Not having a plan on how to start and grow a practice – (setup your email, calendar, website, practice areas, etc.)

Do you really want to have your own practice, or do you want to get rich quickly, not work very much, or half-ass it until you find a job?

Starting a solo practice “until something better comes along” is a recipe for failure. Starting your own practice requires a huge commitment.

When money comes in, often you need to dump it right back into the firm to upgrade your technology, take high quality CLEs, wine and dine potential clients, replenish your supplies, get better office space, hire staff, up your malpractice insurance coverage, fund a contingent fee case, etc. This means putting money back into your firm before taking a nice vacation or buying a new iPad. A lot of the money you make will go right back into the firm. That is how your firm will expand and become profitable.

Unfortunately, many young solos I have met aren’t committed to their practice. They are just taking stuff on until a real job comes along. In turn, they never buy the nice scanner, hire the secretary, or upgrade the office space because “that good job is right around the corner.”

If you want to succeed in your own practice, you have to commit to it.

Do you have enough money to start a law practice? Under-capitalization is bad.

Uncle Jim: “Don’t take on clients that you don’t like. If you don’t like them, neither will the jury. You’ll also find that 80% of problems come from about 10% of your clients. You’ll regret the bad cases, but you’ll rarely find yourself wishing you hadn’t turned down a matter. Try and cut that 10% as soon as possible.”

Imagine this: your mortgage is behind. Your office rent is due in 5 days. The phone hasn’t rung in weeks, and a client stiffed you on a big bill.

And you’ve got $35 in your operating account.

Plus, you had no money when you started the law firm. So you spend a lot of time at the post office, the bank, and keeping your books yourself. You don’t have a good scanner, a good printer, or a postage machine. You had to turn down a good case because it would have to be filed in federal court, and you don’t have the $201 to get admitted there. Most of your time is spent chasing your tail doing administrative stuff instead of working on client matters and getting new clients in the door.

Suddenly you get a call: “Hey, I ate a bay leaf in a burrito over the weekend. It really hurt. I’ve worked with three other lawyers but I don’t want you talking with them. But I will pay you $2000 to file a lawsuit.”

If I got that call, the response would be a letter thanking them for contacting us, but we’re not interested. Here is the number to the Philadelphia Bar’s lawyer referral service.

But you need the money so you take on the case. Now the bench and the bar know you as “the guy who took on the suit where the guy swallowed a bay leaf.”

Making matters worse, the bay leaf guy calls you constantly, sends you several emails a day, and he is always questioning your judgment. You also lose a lot of time because there is time spent on his case that you can’t bill for – like taking the mail to the post office or having to drive to your buddy’s office to borrow a scanner and printer. At the end of the month, bay leaf guy even demands you cut your bill for all those phone calls and responding to those emails. And you do it, because otherwise the rent isn’t getting paid.

That’s no way to succeed.

While the solo cheerleaders tout Jay Foonberg’s book, one part they always overlook is the chapter where Foonberg said he had a years worth of living expenses before starting his practice. Foonberg worked as a cab driver and saved all his money. Not having any money means having to take on crappy cases and crappy clients.

If you’re undercapitlized, you’re desperate. Desperate is no way to practice law.

If you’re currently working for a law firm, completely unhappy, and set on a solo practice, see if your firm will let you work there part time or per diem. It makes the transition to solo practice much easier. This is what I did. By maintaining a reduced roll at my former firm, I keep my cash flow, contacts, relationships, and it gives me a place where I can bring in bigger cases that I couldn’t take on with just Leo. (read up on this, though. I suggest the “Complete Guide to Contract Lawyering.” Make sure you’re cognizant of conflict and ethical issues).

Do you have a plan?

Here is a bad plan: I want to hang a shingle and take on any work where clients will pay me. I’ll figure it all out as I go. I’ll get all my clients off Twitter, Craigslist, and Facebook. I hear that’s the new thing.

Here is a good plan: I want to take on certain kinds of clients. I will not take on clients too far outside the areas of law where I am comfortable.

To make it all happen, I will use Google Apps for my calendar and email, and Dropbox for my network. (as my state ethically allows cloud computing). Our phone system will be through Nextiva, because I priced it all out and they were the most reasonable. My office will based in (a part of town where I can afford it, and there is a market for what I do.)

If I get in personal injury cases that I can’t afford to finance, I will co-counsel with Joe Lawyer. If I get in a bankruptcy case, it will go to Amber Able.

Based on the amount of work I have coming with me, and the amount of money I have in the bank, I can afford to go XXX months without turning a profit while keeping the lights on.

How much money will it cost me to start a solo practice? Is starting a law practice realistic?

This varies depending on how much stuff you already have. The short answer? A lot. Between $15,000 and $30,000 if you want to do it right. You can do it on the lower end if you have a working spouse. If you plan on taking contingent fee cases, you will also benefit from having a line of credit.

Here is what I believe you need at a minimum:

  • Good clients with money. Otherwise, how are you going to pay for all this stuff?
  • Corporate formation if you’re starting a firm. Costs around $600 – $1200. If you’re starting a partnership, you’ll need by-laws or a membership agreement, plus a plan in the event one of the partners dies. (if you have pending cases, how much goes out to the deceased partner’s spouse, etc.)
  • Scanner (recommendation: ScanSnap S1500). Cost: $500. Bonus: it comes with Adobe Acrobat Pro.
  • Good computer. I use an iMac and Apple for everything. (Sorry, Tannebaum.) That said, if you’re going to use a Mac, I highly recommend you have access to a PC. There are some things (like SSI) that you will need a PC for. My backup laptop is a PC. The iMac cost me $1800 and the PC cost me about $1000. Leo uses a Macbook.
  • CLEs to keep your license current. You can find some free ones, but normally you’ll have to pay for some of them. We spend about $2000 a year on CLEs.
  • Malpractice insurance. Many state bar associations require malpractice insurance. This is about $1200 a year, give or take, for a young lawyer to get 300/600 coverage. You can usually pay this in monthly installments.
  • Office space. There is no debate, you need an office starting out. Are you planning on taking depositions in your living room? I pay $490 a month for two offices (mine and Leo’s). However, to get the space in the first place, I had to put up three months of rent. Factor in money for internet, electric, taxes, etc. Plan to have to pay first, last, and a security deposit up front.
  • Cell phone. Just don’t give it to clients. Trust me. Smart phone is unnecessary but convenient.
  • A postage machine and postal scale. I recommend the DymoTwin Turbo and an Endicia account. The TwinTurbo cost me $140, plus I keep about $100 worth of postage at all times. A lot of people like Pitney Bowes machines, which also work well. But if you don’t have a way of printing postage from your office, you’re going to waste a lot of time at the post office. And yes, you will still have to mail physical stuff no matter what anyone says. Many older clients don’t use email, and many courts still don’t have e-filing. Sorry it’s not convenient.
  • At least a case of paper. Many courts will require paper copies of stuff.
  • Good laser printer and backup toner. Yes, you might need to file a hard copy of that 2000 page brief. If it’s due today, and your printer runs out of toner… you’re screwed. Cost is between $200 – $500.
  • Office supplies: blue pens, yellow pads, paperclips, staplers, staple remover, envelopes, post-its, etc.
  • Fax machine. I recommend MyFax. It’s $10 and you can put up to 5 users on one number.
  • Hard drive for backing up your files.
  • Adobe PDF Professional. Version 8.0 comes with the ScanSnap S1500 and can be upgraded to version X for $199.
  • Health Insurance (if your spouse doesn’t have a job). Ours costs $121 per man. It would cost me $400 m/o for a family.
  • Business cards and letterhead. This doesn’t need to be extravagant. My first business cards came from VistaPrint. Now we have super snazzy business cards.
  • Furniture: You will need a desk, client chairs, filing cabinets, bookcases, and some stuff to hang on your walls. Thankfully, most of this stuff can be bought second hand. Factor in about $3000, at least. Check out thrift stores, tenants who are leaving your building, and retired lawyers for a lot of this stuff. Craigslist is even good.
  • Legal research: We get our legal research through the Pennsylvania Bar Association and Jenkin’s Law Library. I don’t recommend spending a lot of money on getting Lexis or Westlaw. We also take a lot of CLEs and have built up a nice law library. My PA Bar membership costs about $220 a year (worth every cent) and Jenkins is about $130 a year per lawyer. (also worth every cent). But you still need to spend some money on legal research.
  • Bar dues: These are about $250 a year, per state. So we pay about $1000 a year to be licensed in PA and NJ. (for two attorneys).
  • State Rules of Criminal / Civil Procedure, and local county rules if you do criminal or civil work. A lot of times you can get the current year from an older lawyer, as they come out every six months. $600.
  • Federal court admissions: $201 per District Court but it’s a one time fee
  • Telephone. Don’t be a loser and run your practice off a cell phone. My physical phone cost $80, and it costs $42 a month through Nextiva. (So that’s a total of about $84 a month for both of our phones, plus the $160 to buy the phones)
  • Suits, ties, dress shoes, dress shirts, and a briefcase. When I graduated law school, my Uncle Jim gave me a bunch of his old suits and dress shirts. I picked up a few nice ones at the thrift store. Every year when people ask what I want for Christmas, that’s usually #1 on the list.
  • Money in the bank for unforeseen circumstances. “Damn, the printer is completely dead and I have a brief due before 5:00. Take this stuff to Kinkos and get it printed now, I don’t care what the cost is.”
  • A car. Leo and I split my awesome 2004 Honda Civic. You will need to drive to places.

Factor in how much of that stuff you already have, and figure out how much you need. That, plus living expenses (mortgage, groceries, cable, internet, car payment, student loans, etc.), is what it will cost you to start a law firm.

There is also a bunch of stuff you don’t need, even though lots of people will tell you it’s essential. Most of it is not. Trust me, you do not need:
  • An iPad. They’re cool but totally unnecessary. Do I have one? Yup. Did it revolutionize my practice, or infuse it with awesome? Nope. But I sure do like playing Kingdom Age, Spy Hunter, and Joust when I’m bored. It’s convenient if you travel or go to court a lot. That’s about it. Oh, and my wife and I keep in touch via “Draw” and “Words with Friends.”
  • A super snazzy website. We’re still using the free website that Leo created. We have a nice, new, updated website coming out at some point but it’s at the bottom of our list of things to do. Just create a free website that lets people know how to contact you.
  • A logo. We have one, it’s fun, not necessary.
  • “SEO Optimization”. Unless you like getting lots of telephone calls from tire kickers.
  • A marketing / PR firm. Spend your time developing relationships. Take friends, family, and other lawyers out to dinner or lunch. Join a neighborhood civic association, go to a happy hour, or join a bar association committee. Just get out there and interact with real people. A quote from my Uncle Jim: “Take potential clients to a ballgame. Even if it ends up being a total waste of time, at least you’ll have gotten to watch a game.” The more stuff you do, the more clients you’ll have.
  • Social Media or a social media “consultant”: social media is fun. It is. It’s a good way to keep up with friends and family. It’s not necessary and it’s not the best source of clients. I get in about 5% of my work from Facebook friends, but they’re usually people I knew from high school who would have called me anyway. I’ve never gotten in a case from Twitter or through this blog. If you’re already on Facebook and you stay in touch with your friends, that is more than enough. Put it this way – I wouldn’t center your business plan on social media.
  • Case management software. A lot of people like Clio or RocketMatter. I’ve heard good things, but I don’t think it’s necessary. Google Apps works fine for us.
There is a bunch of stuff you can get very cheap or for free that’s useful for a law practice:
  • I prefer OpenOffice to Microsoft Office. OpenOffice is free.
  • Leo prefers Pages to Microsoft Word. It costs $20, but it’s only available on Mac. It also saves stuff as a .pages, which can only be opened in Pages.
  • Billings for Mac. Cost is $20. You will need some type of billing program to keep track of your time and generate invoices if your work is done hourly.
  • I use Mozilla Thunderbird instead of MS Outlook. Leo uses his Gmail client.
  • Email, calendar, and document sharing is all done through Google Apps. Google Apps is free, but it’s not just a cheap alternative. It’s the best email, calendar, and document sharing tool around. Period. Yes, you can send emails from @yourdomain.com via the Gmail platform. Why any lawyer isn’t using Google Apps baffles me.
  • Dropbox for electronic file storage. The free version accounts for 2GB of space. Once you need more than 2GB of space, you will have enough clients to justify paying the $90 to expand your storage.
  • Endicia for postage. No monthly fee. You only pay for the postage that you use. You need to by a Dymo label printer, but this is a much cheaper alternative to Pitney Bowes.
  • Square for taking credit cards. Yes, you should accept credit cards. Square is free to startup and the fee is reasonable. There is no excuse for not taking credit cards when Square makes it this easy.
  • Adobe PDF 8.0 Professional comes with the ScanSnap S1500. You can upgrade to version X for $199. You need Adobe PDF Professional as courts are moving more towards e-filing.
  • MyFax for faxing. It costs $10 a month. You can have 5 users on one account sending and receiving electronic faxes. Converts everything into PDF.
  • PNC Bank, who hosts our operating account, gave us free business checks and a “for deposit only” stamp. PNC is a fantastic bank and their website is superior. (our trust accounts are with a different bank to make sure no mistakes are made.) If you’re unsure who to bank with, I recommend PNC.
  • I listen to music all day at work through Pandora One.
  • Skype or Facetime (for Mac). If a client can’t get into your office for whatever reason, you can still have a productive meeting using Skype or Facetime. Both are free.
  • Google Scholar. There is a host of free legal information on here.
Don’t even think about pirating your software. Unless you like the idea of Marc Randazza coming after you.
There are lots of resources about how to start a law practice. Before you start your own firm, you should read them. You can find them here:
  1. How to Start and Grow a Law Practice by Jay Foonberg. The most important book you will ever read about the practice of law. I recommend it even if you work for a law firm.
  2. Solo by Choice: How to be the Lawyer You Always Wanted to Be by Carolyn Elefant. The most important modern book on how to start a law practice.
  3. $olo Contendre by Marc Garfinkle
  4. Make It Your Own Law Firm by Spencer Aronfeld
  5. The E-Myth for Lawyers by Michael E. Gerber
  6. The Millionaire Real Estate Agent by Gary Keller. To get an idea on how to start and run a successful business. A lot of the principles are applicable to law practice.
  7. Read My Law License, Simple Justice, and My Shingle. Do not waste your time on “solo cheerleader” blogs or Solo Practice University.
  8. I know I’m going to get crap for this, but I recommend you read Tony Robbin’s books. They are fantastic. A vision and motivation are important.
  9. Jay Foonberg also has a guide on how to manage a lawyer trust account with forms. Buy it. Managing a lawyer trust account is not exactly rocket science, but his guide is well worth the $80. (Hint: trust account money is not yours. You need to be able to account for every cent of your clients’ money. Keep your lawyer trust account managed meticulously. Make sure you can give each client an accounting at the drop of a dime. Be extremely cautious about any check you write from your lawyer trust account. Do not ever pay for personal expenses or firm expenses out of your trust account for any reason – even if you’ve earned the fee.)
  10. Technology is important. I like PDF for Lawyers, Lawyerist, Virtual Law Practice by Steph Kimbro, MyShingle, Legal iPad (sorry Brian), and other blogs about technology. Otherwise I would be running my practice a lot less efficiently.
  11. Personally, I hate the Solosez listserve. Yes, I met Leo and a few other good people on Solosez. But I can’t stand it anymore. You’re practically required to begin any email with “Hi: I’m a total idiot.” Followed by riveting questions like: “Would it be okay if I paid all my law firm stuff out of my trust account and then reimbursed my clients when I get money in? Stuff is tight around here right now.” But maybe you’ll like it. A lot of my friends do.
  12. Brian Tannebaum writes a section called “The Practice” on Above the Law. You should read it.
  13. Eric Turkewitz also writes a section on Above the Law. You should read it.

Is your social network big enough to justify starting a solo practice?

Another question I get in is “how do you get paying clients?” The answer? I just know a lot of people – other lawyers, neighbors, colleagues from high school, and college, etc. I try and leverage those networks.

It’s usually like this:

“Law office. Jordan speaking.”
“Hey Jordan, it’s me, Chris. I met you back at the happy hour a few months ago. Do you happen to handle unemployment compensation stuff? I just got laid off and the employer is disputing my benefits.”
“Sure. Can you come to my office this week? Let’s sit down and talk about what’s going on.”

“Law office, Jordan speaking.”
“Hey Jordan, it’s me Kevin. I just got in an inquiry about a First Amendment case. You know I only do personal injury. Would you mind sitting down and talking with this client.”
“Sure. Thanks for thinking of me.”
“My pleasure. Thanks for sending me that good personal injury case last year.”

Facebook Message: “Hey Jordan. We used to have math together back in 7th grade. You were always getting put in detention. I can’t believe you’re a lawyer now! I’m contacting you because I started this business and I need a hand with it. Would you mind sitting down and taking a look at this stuff? I was gonna use LegalZoom, but I figured I should hire a lawyer for something so important.” (Yes, I get a few cases off Facebook. It’s usually from old friends. It’s not from having a law firm Facebook page, it’s from knowing people.)

My social network also allows me to take on new cases I couldn’t handle without co-counsel, and to figure out whether I can take on a certain type of case. It goes down lik ethis:

“Hey Adam, it’s Jordan.”
“What’s up good sir?”
“Just got in a great case. My neighbor was sitting at a toll booth and was rear-ended. Huge damages and liability is clear cut. You wanna co-counsel with me and split the fees? I’ll pay half the costs, you first chair the trial if need be.”
“Sounds great. Let’s setup a meeting with the client and discuss.”

“Hey Pete, it’s Jordan.”
“What’s going on, man?”
“I haven’t handled a certain type of case before. I know you do a lot of this type of work. Do you think I should refer it out or take it on? I’d be happy to give the client your number if you think I’m in over my head.”
“Nah, you’ll do fine. Tell you what – drop by my office and I’ll lend you my practice guide on how to handle these types of cases. If you have any questions just give me a call. I know you’ll do a good job. By the way, I just got in this new potential client but I don’t have time to deal with it. I’ll give her your number. Could be something there.”

You need a social network. The bigger network you have, the more clients and resources you will have. Most of your clients will come from people you meet while “out and about” and other lawyers. You will also need a network of lawyers who you know are good, and that you can refer work to with confidence that they will do a good job. I have someone I trust for bankruptcy, personal injury, criminal defense work that is outside our league, etc.

I didn’t meet these people off Twitter, either. They’re people I know, whose work I’ve seen, and I can vouch for. I know that my clients won’t come back and say “Why did you refer me to that lawyer? She was a moron!”

It’s also much easier to develop a social network while you’re employed. You’ll become friends with co-counsel, opposing counsel, and other members of the bar. Once your network is developed, work just sort of rolls in.

Mentorship is important, and it can’t be bought.

Finally, you will need mentors. The more, the better. Good mentorship can’t be bought, either. There is nothing more valuable than calling someone with 20 years in the trenches and saying “What do you think of this?”

Unfortunately, the response will often be: “I think it’s stupid and the judge will sanction you. You need to think more, ya dummy.”

If you’re paying someone for mentorship, do you think they will be that candid with you? Do you think they’ll tell you that your idea is stupid, and that you’re going to get yourself into a lot of trouble? I dunno.

But it’s better to get torn down by a mentor than it is a judge, the disciplinary board, or a malpractice attorney. Bad things happen in law.

My uncle and former employers are usually my “go to” mentors.

In conclusion…

The things to consider:

- Do you really want to commit to starting your own firm? Or are you being sold snake oil that starting a law practice from scratch is a ticket to print cash and enjoy having more free time?
– Are you throwing away a good law firm job just to work more hours often for less pay?
– Can you afford to starve for awhile?
– Do you have a plan about how you’re going to setup your practice?
– Do you have enough money to start your own firm?
– Does your social network warrant starting a law firm?

Ask yourself those questions first before you jump into solo practice. And just remember, “it’s gonna take money, a whole lotta spending money, it’s gonna take plenty of money, to do it right child. Its gonna take time, a whole lot of precious time, its gonna take patience and time, to do it, to do it, to do it, to do it, to do it, to do it right child.”

[Update: Sam Glover from Lawyerist did a nice post about this topic yesterday]

30 Responses to Should I Start a Law Practice?

  1. […] Rushie pretty much totally copied me and wrote a post about how much it costs to start a law firm, but he added all sorts of extraneous stuff like should you start a law firm in the first […]

  2. Craig says:

    Thanks for this. I got here off of the Lawyerist blog and this was very eyeopening.

  3. Scott says:

    Great list. I’m planning to launch my firm after the holiday, and I’m glad that I’ve accounted for the vast majority of your checklist (here’s to an overly elaborate business plan).

    A few questions/comments:
    1) At least in my state, you can get current pdf copies of procedural rules from the supreme court site for free. It’s always worth checking out what your state courts and legislature make available and at what costs (both in time and money).

    2) Research tools are not optional for some practice areas, so I’m jealous you can do without the expense.

    3) You might add a partnership/company agreement to the startup costs. I wouldn’t go into business with anyone without knowing how benefits and burdens were going to be allocated. Not to mention issues of death/incapacity, and what happens if you break up the band. In theory all partners/shareholders are attorneys, so DIY is a possibility. That said, I’d be inclined to at least have the agreement reviewed by a business attorney who knows a thing or three about taxes.

    4) Care to elaborate on Nextiva? I started up and ran a services business for a few years out of college, so prior experience tells me I shouldn’t expect my phone lines to burn up for twelve months.

    • 1. Yup. Here in Pennsylvania, the problem is the local rules. They’re supposed to be online, but often they’re not. But I believe it’s imperative to ensure you always have the most up to date copy of whatever jurisdiction you’re practicing in.

      2. I agree with that. We have access to a couple law libraries that offer full Lexis access. Google scholar really is amazing, though. I’ll usually start with Scholar and then head to the law library if I need something more.

      3. Good point. A friend of ours did that for us. Cost was $600. He also did our incorporation.

      4. I did a lot of research when it came to a VOIP phone system. We shopped around. We looked at 8×8 office, Vonage, Vocalocity, etc. What we needed was someone who would give us multiple phone numbers and I wanted an auto-attendant. (so when you call in you get the “Welcome to Mulvihill & Rushie. For Leo, press 100, for Jordan press 101″). Nextiva was game. They gave us 5 phone numbers, so we have two Pennsylvania numbers and three New Jersey numbers. The auto-attendant came with the service, and Leo’s wife did the recording.

      We pay $42 per phone line, and this includes everything. We bought our phones through Nextiva, and they were a little under $80 per phone. The phone was easy to setup – you just plug it into your router. No special adapters or anything like that.

      It’s easy to check your voicemail remotely and to set it up so your phone will call your cell phone. It’s also easy to add phones. When we started the firm, we only had one landline phone. Then when things picked up, Leo got his own landline phone and it was a simple process.

      Customer service is great, but the website is a bit clunky.

      All in all, Nextiva has been good and very affordable. Definitely fits our needs.

      I started with Vonage and eventually outgrew it. (I wanted multiple extensions, an auto-attendant, etc.)

      • Scott says:

        Thanks, that’s an excellent rundown. It’s very competitive with the full price vonage plan.

  4. RTK says:

    For those that have secure, paying jobs, there is no good time to go out on your own. Just poll a few people close to you — about half will tell you you’re crazy (mostly other firm lawyers) and half will tell you to go for it. I say this because taking general advice on whether or not someone should start their own shop is kind of worthless. Nobody know your situation better than you do. The people who give you this advice will either have an agenda (i.e. your boss or co-worker who does not want you to leave the firm vs. your wife, who doesn’t want to starve) or will not know enough to be helpful (most of your drinking buddies).

    Specific advice like that given above is invaluable. The nuts and bolts of what and how to do it are more universal. But, the big questions are too personal and it’s largely a waste of time trying to find an answer. For me, the analysis, not surprisingly, revolved around my personal financial situation, my network, and my tolerance for risk. Within each of these categories are numerous sub-analyses that are too subjective to be of value to anyone else.

    There’s never a good time, but there is a less bad time. If you can not lie to yourself, then you should be able to determine when that is. It’s difficult to do this objectively — with the pressure of staying in a crappy job with crappy colleagues — but, as a lawyer, you better be able to do it. It will be your first real test on whether you can handle making decisions on your own.

  5. […] you are a solo or thinking of opening your own office, I recommend you read Philly attorney Jordan Rushie’s candid post about his experiences in staring his own practice. It’s interesting reading if you want to […]

  6. Erin B says:

    Great post. Good luck!

  7. William Chuang says:

    This is the best post on starting out a solo practice I have read so far. It is very insightful, and comprehensive. Good job!

  8. Thank you Jordan for recommending my book “Make It Your Own Law Firm.” I am truly honored to be included on your list of must reads books. I hope those who read your blog will be inspired to start their own successful law firms. Your advice is spot-on.

  9. Anonymous says:

    Great post. The only thing I will add is I think he minimizes case management. Its the life blood of the firm. Google apps is good but use something designed for billing and calendaring. I used abacuslaw for 15 years and just switched to a cloud based case management – FANTASTIC. My firm also uses google voice. Once the call comes into main line, the client hits the lawyers extension and it goes to their google voice account. In the world of text message(i know most lawyers dont like text messages because hard to track) but with google voice all text messages are recorded and limitless (for now). Good luck and excellent advice!

  10. […] a gander at my articles, where I like to begin with a fictionalized narrative, often at Jordan’s […]

  11. Obviously I’m only leaving a comment here because Jordan mentioned me, and because it’s the best post I’ve read on the topic in a very long time – maybe ever.

  12. KruegerLawyer says:

    I’ve “gone solo” twice, and I agree with 99% of this post — my only disagreement is about case management software. It’s essential. Absolutely required – keeps track of time, schedules, people, cases, etc. Whether you go with Clio or Credenza or just use the front end of PCLaw (professional billing and accounting software is also a must), you need to be organized and not miss ANYTHING. That’s why you need case mgmt. software.

    But other than that, this is the gospel. You need money in the bank; and you have to be careful to keep your overhead low, your cash flowing and your clients behaving. Ignore this column at your peril.

  13. Bruce Avery says:

    Another source for office furniture is auctions. In the DC area Rasmus always has at least one professional firm that is auctioning off desks, file cabinets, etc. I’m sure other cities have the same thing. We did our entire office this way. I got real cherry (wood) file cabinets for much less than retail for the metal ones. The metal ones are even cheaper at auction.

  14. Great post. I however agree with the commenters who think practice management software is essential. I use Clio and love it. It was perfect for me when I started out, as it came with a 30-day free trial. (I started out with nothing and had to keep expenses to an absolute minimum.) I use Google Apps for other things, but when it comes to client matters – time tracking, note tracking, and so forth, Clio is wonderful.

    Also, in civil litigation I need good legal research. When I started out, I spent hours going back and forth between Lexis and Westlaw. Each has various price plans and discounts, and if you negotiate the reps will usually work with you. I ended up choosing Westlaw, as the rep found an affordable plan for me, and I preferred the service over the other.

    Finally, regarding back-up: There are great cloud-based back-up services like Carbonite and Crash Plan that I prefer over a harddrive. I chose Carbonite, and it restored all my documents after an unfortunate accident when my Macbook got drenched in a tropical storm.

  15. Adam says:

    Lot of good info here. What do you think the advantage is for incorporating if you are a solo. $1,200 is a big blow, plus in many states there will be a yearly fee as well. Given that you’ll probably have to personally guaranty everything, how does incorporation protect you? As for CLE’s, I’m a firm believer in continuing legal learning, but there is tons of free stuff online from lawyers blogs and websites and other sources. If you are focused on one or a few practice areas, you don’t need many CLE’s, you just need to stay updated on changes in the law. Some of your other start-up costs can be cut down by entering into an office sharing arrangement. Many firms will even have desks and bookcases that they aren’t using. As for case management software, all I need in my litigation practice is a calendar to keep track of deadlines, meetings, depositions, etc. Lawyers survived for hundreds of years with desk calendars and nothing more for case management.

    • I’m not a solo. When Leo was a true solo, he was not incorporated. Here in Pennsylvania, solos can incorporate as a “professional corporation” or an LLC. LLC fit our purposes better for personal liability, tax reasons, etc. It’s not entirely necessary for a true solo, I don’t think.

      Here in PA and NJ, you can only take a certain amount of CLEs online. I take all of mine in person, but that is just how I do stuff.

      Yes, you can start a firm based on an office share arrangement and use other people’s stuff. I let quite a few solos use my conference room and borrow our stuff. Often I will send them overflow work. However, if you can swing it, I think you’re better off being totally in control. My name is on our lease. It’s my space. I dictate who uses it, and I don’t have to worry about the “parent” law firm closing it’s doors. I think that is a better way to practice.

      Why go solo if you’re not truly independent or can’t afford it? Just work for someone else and enjoy the steady paycheck, in my opinion.

  16. Z. says:

    Using Square to process client credit card payments, which just dumps them straight into a bank account minus the service fee, can cause ethical trust accounting problems in some states – you should check with your bar.

    http://oregonlawpracticemanagement.com/2012/03/12/my-experience-with-square-up/

  17. csmall says:

    Wow. Great post. And long! You cover a lot, but I thought I’d provide my two cents. I opened my law firm in 2009 after moving to Seattle from Kansas. I didn’t know anyone and didn’t have any contacts.

    Last year I grossed over $220K.

    The reason I’m telling you this is because I think it is possible to do.

    The problem, as I see it, is that people focus on the wrong things when they start out. They think about practice management software and office space and office furniture and how to incorporate, when they should be thinking about one thing:

    HOW TO GET CLIENTS.

    That is the key to a successful law firm, no matter what anyone says. If you don’t have clients, if you aren’t making money, then you aren’t servicing yourself or the clients you have.

    When you start, identify your practice area, identify your ideal client, and start doing whatever you can to get yourself in front of those people.

    And no, telling your friends you opened a law firm is not enough. You must be proactive.

    With that being said, I wanted to comment on a couple of other things you said, just based on my own experience (and everyone’s experience doing this is going to be different).

    When it comes to the amount of money it takes to start a law firm, less is more. I borrowed $5000 from my brother-in-law and I’ve never looked back. This is one of the things I’m going to talk about on my blog soon – lawfirmmarketingmastery.com – but it’s best to hold off on some of the things you mentioned above until you actually have clients.

    Who needs practice management software if you only have 3 clients?

    Again, all in all it’s a great article. Full of depth and thought.

    One last thing, though, before I leave, that I agree with you on.

    If you are going to start a law firm you’ve got to go all in for at least six months. That means no interviewing for associate positions or checking out the latest bar journal for open spots. Focus on your business, focus on getting some clients, and if you put your heart and soul in it, after that six months you’ll probably never need to look at a classified ad again.

  18. […] the big picture, I think Jordan Rushie’s reality-check about starting a solo practice and this interview on The Girl’s Guide To Law School give some of the best single-article advice […]

  19. Barry says:

    Been a solo 8 years. Still scratching for every penny. Some friends doing much better. Some got out of solo practice. Cant disagree with anything here. Practicing law is expensive.

    Any lawyer who can quote George Harrison lyrics is someone to whom I’d refer a case. Too bad I’m not in Philly..

  20. Thanks, Jordan, for recommending my book, Solo Contendere, in your excellent blog which I just read for the first time. Shame on me. Your post is insightful and helpful. While optimism and energy are important ingredients for success, your emphasis on knowing lots of people points out an even more fundamental truth. Your take on mentoring is spot on (after 35 years at the bar, I still have mentors). I am encouraged about the future of our profession when I see lawyers such as you writing to share knowledge with your colleagues,

  21. Kansas says:

    Jordan, this is a good post. I always have worked in very small firms since graduating in 2001 from Washburn, and the pay was not high. I’ve been solo for four years and it has been very hard. I think in part due to the situation in KC where I live and this area has been very depressed with regard to my practice area. Which is tax, muni, real estate. Deals just not happening, although this year things seem to be picking up finally (ironically, see below). I started my firm with a small tax practice of repeat clients that brought in around 20K. That was my book. I spent 10 years prior to doing my own thing working for small firms with all the crazyness and instability (low pay, long hours, crazy or bad management sorts of partners, firms break up, partners lose a client or just get tired of paying you, etc.)

    Since going on my own in 2009, I’ve had a number of clients go bankrupt, a few times with me holding the bag unfortunately. I’ve branched out into litigation the last couple of years and it pays better than small-biz tax and transactions, when you get paid.

    However, I am burned out and I dislike the various adversarial and irritating qualities of litigation. Tired of fighting my clients for fees. My only large client, a SALT rep firm, just started cost-centering me hard, demanded large cuts last quarter and this on my very reasonable bills. New ownership.

    I’ve not netted more than 25K since 2009 when I went on my own, and I work all the time, at least 65 a week and much more during the first quarter when all the tax stuff comes in. I’m sure some of it is me, not getting enough up front and so on, but I am just over the whole thing.

    I’m going back to college to be a petroleum geologist. This was a hard decision, but now that it’s made I feel a lot less depressed. It ain’t like I can’t go back to practice if I really have to. Maybe I can be the world’s best expert witness for fracking cases after I put in a decade or two in drilling.

  22. As someone celebrating 25 years in practice, the majority on my own, great insight on the challenges of having your own practice. I also, highly recommend Michael Gerber’s book on the E-Myth.

    The one thing I would add as the “AHA” moment that I had was that it doesn’t matter how good an attorney you are in your field if you don’t have a good plan to get the word out about yourself. And I am not talking about throwing away tons of money in advertising. I have learned cost effective and MEASURABLE ways to build my practice that have built my reputation and stopped me from wasting money on useless ads. One of the best things I did was to change my website from a fancy online brochure to a site that people can go to in order to find answers to their questions on bankruptcy and foreclosure issues.

    The one tip I will share is that your website should not be all about you but, rather, should try to get into what are the questions going on in your potential client’s mind and how can you answer them when they do a Google search so that when they find your site and you provide them with answers, you have already started to develop a relationship as a trusted adviser. When someone is desperate for answers, they don’t care what your logo looks like or if you were on your law review! Don’t be afraid to give out free information. If you answer a potential client’s question, they are more likely to call you for an appointment.

  23. Jen says:

    Thanks for all of the great info! It was so honest and gave me a lot to think about. Does anyone happen to know the best way to look into other attorneys looking to share office space? I’m in Harrisburg, PA and have never come across anyone advertising for something like that.

    • Considering joining the Pennsylvania Bar Association and get active on a listserve. You’ll meet other PA attorneys from all over the state. There are a lot of good listserves available. Leo is on PaCDL.

  24. Anonymous says:

    Major question is why did the op get laid off in the first place? Laziness maybe? If your lazy working for someone else, your likely going to be even lazier when you go out on your own. Slacking definitely does not bode well if your going out on your own…

  25. therapistsamschaperow says:

    If I may say, I think renting an office from a place with a lot of supports in place can be vastly different than just going totally solo. For example, we have a business coach who can help an atty practice here and be successful even easier than being totally solo.

    Sam Schaperow, M.S.
    PsychologyCT.com

  26. therapistsamschaperow says:

    Oh, and one more thought:
    I’m sure there are some non-law practices that would be willing to even barter w/an atty, such as to be able to ask questions to the atty in exchange for whatever expertise the non-law practice has (e.g., a family law atty can ask a family therapy practice questions easily and at any time, while the practice may ask the atty things about wording of contracts, etc.). Another barter possibility is some places might even offer a rent rate reduction in exchange for legal services that the atty has time for if the atty is new to private practice.

    Sam Schaperow, M.S.
    PsychologyCT.com

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