Getting your “law license” is no different than getting any other kind of professional license. It gives you the right to work in the state where you want to practice your profession and the right to set up your own business. Having the latter is deeply ingrained into what it means to many people to be successful. Many attorneys believe that the true route to success and happiness is through having their own law firms.
![Should You Start Your Own Law Firm?]( "Should You Start Your Own Law Firm?")
But is starting your own firm the right move for you?
Choosing to start your own law firm is a significant decision that will have profound implications for the rest of your career. Starting your own firm might take your career in a new, glorious direction, or not. It might impede your professional advancement and hinder your entire career. You must think through the pros and cons very carefully. Starting a firm is extremely challenging. You might succeed, but the odds are that you will fail.
But is starting your own firm the right move for you?
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Choosing to start your own law firm is a significant decision that will have profound implications for the rest of your career. Starting your own firm might take your career in a new, glorious direction, or not. It might impede your professional advancement and hinder your entire career. You must think through the pros and cons very carefully. Starting a firm is extremely challenging. You might succeed, but the odds are that you will fail.
Every great firm (and there are literally tens of thousands of successful firms out there) started somewhere. You too could be the next attorney to start a great law firm and there is nothing stopping you except understanding whether this is the right decision for you.
I seriously contemplated opening my own law firm when I was still practicing at Dewey Ballantine in Los Angeles. Discouraged with the politics of the firm and believing I could make just as much money starting my own firm, I set the wheels in motion. The Internet was in its infancy (i.e., pre websites), so I took the first steps by taking out an advertisement in the Yellow Pages ($750 a month) and then rented an office. I picked a date for my departure from the firm, set up my new office, purchased a copier and a new Dell Computer, and I was ready to go.
Recognizing that all law firms need a source of regular and ongoing business operations to succeed, I had already lined up clients for my new firm—friends who were successful entrepreneurs. I was confident I could bill $100,000 to $200,000 a year from these clients, which would be sufficient to sustain my firm. I also understood that if business from these clients was not sustainable, I would need additional and separate sources of business, hence the Yellow Pages advertisement. It is important to always have a backup plan so the phone continues to ring with new businesses.
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When I gave my notice to my law firm, the attorneys told me the same piece of advice I am going to tell you in this article: “If you leave here and start your own practice, you will have a next-to-impossible time getting a job in a large firm ever again. Speak with some other law firms if you are unhappy here. Take a few months to make up your mind.”
Incredibly, Dewey Ballantine told me to take a few months to figure out what I wanted to do and to continue working while I looked around. On its recommendation, I started speaking with legal recruiters and going out on law firm interviews. Meanwhile, my phone started to ring with calls from “clients” responding to my Yellow Pages advertisement. I met with them in my “other office” after work hours at Dewey Ballantine. My new clients included the following:
I learned that although I was lucky enough to have some “real” clients (small companies owned by people I knew), the reality of starting my own firm included having to take undesirable cases to pay the bills. Most of the potential legal work that I had lined up from my Yellow Pages advertisement depressed me so much, I decided against having my own firm. During this period of contemplation on where I wanted to take my career, I was still going out on interviews with law firms, and that experience confirmed that I was no longer interested in working in a law firm, even though working as an attorney for someone else still seemed better than starting my own firm.
During this time, I also came to realize that the only people who seemed like they were enjoying their work were the legal recruiters who were sending me out on law firm interviews. I soon recognized that for me, it would be more fun and more satisfying to help attorneys find jobs than to set up a solo law practice. So I became a legal recruiter.
A topic that comes up frequently in the course of my work as a recruiter is about starting one’s own law firm:
Although I became a recruiter, I actually love the practice of law and have never really left it. In time I did decide to start a law firm and, except for a period of dormancy, while I got my legal recruiting company going, my firm has been operating for years handling matters for my companies as well as for outside people and businesses.
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My firm has a few attorneys and is moderately successful because of my business plan and analysis ensuring I am offering the appropriate legal work for what the market needs. For example: (1) I have my own companies as clients; (2) I am in a small town of 13,000 people (Malibu, California) where there are only two other small law firms; (3) there are a lot of wealthy people willing to pay top dollar for legal services; and (4) I know how to recruit good, stable attorneys because I have been doing it for most of my career.
An honest evaluation of my firm includes an acknowledgment that it might not be as successful if I did not have a built-in client base, special recruiting skills, and very little competition. Every business—a law firm included—needs some sort of special advantage or selling point in order to succeed. What can you offer to clients that your competition cannot? The most important thing for continued, ongoing success is to have a marketing pipeline that consistently delivers new matters to your door.
Given my professional background, I understand both the desire to start your own law firm as well as the challenges of actually running a small firm and the even greater challenges of being successful at it. Hence, the basis of this article: the top 10 reasons to start or not to start your own law firm.
Despite the challenges, people can start small law firms. Here are the top 10 reasons why you might have what it takes to go solo and be successful at it.
Many attorneys who leave law firms do so trusting that they have clients who will go with them and give them ongoing work. Many of these relationships may be decades old. Due to the attorney’s skill and work history with the client, he is secure in the continuance of the relationships and workflow.
For example, I know many patent attorneys who do work for large clients in various industries and their work is so sophisticated few people can do it. The client likes the attorney, appreciates the attorney’s sophistication, and is interested in continuing to work with the attorney regardless of whether the attorney is solo or not. I also know of real estate attorneys and corporate attorneys with similar ingrained client relationships. In one case, I saw the general counsel of a healthcare company leave, start his own law firm, and build it up to 50 attorneys doing work for the healthcare company. (That lasted until the healthcare company fired the attorney and the entire law firm spectacularly went out of business).
An attorney needs to be very careful in assessing whether or not a client will follow him and continue to give the attorney work. Attorneys who manage this can succeed as solos or with small firms.
Things can also work out if an attorney’s former firm sends work to him. This frequently happens, with departing attorneys getting fed smaller cases and other work from their former law firms. Many attorneys who have left large law firms have been quite successful in these situations and continue to be successful so long as they maintain good relationships with their former law firms.
For example, I know of several attorneys who have left large law firms on good terms after not being made a partner. This typically happens at major firms that simply do not have the capacity to add too many partners. But if the attorneys leave on good terms, the law firms often will feed them enough work for them to be successful as solos or with small firms. Some major American law firms had humble beginnings based on a lone practitioner maintaining a good relationship with a prior firm. (The caution here is that the law firm will quickly stop sending work if it feels that anyone is having a bad experience using the attorney.)
Similarly, attorneys who leave in-house positions are often better able to understand the client’s needs and what is in the client’s best interest they are able to get the company to feed them work. This can benefit both the solo firm and the company as long as the solo firm is not prohibitively expensive compared to what the client was spending on the in-house attorney. These kinds of arrangements have also led to the founding of many successful law firms. (The caution is that the work can quickly disappear if the company goes in another direction. Thus, the attorney should always look for work in several places.)
Attorneys often like to start law firms with a group of peers who become their new “partners.” If attorneys have worked together for any length of time, they often complement each other’s strengths and weaknesses:
This sort of combination can often work out better in the long run than a solo practitioner arrangement because the attorneys are coming together with the idea that they will function as a group and each one has well-defined responsibilities that make the group run efficiently. If these attorneys are partners and worked together for a while at the firm they are leaving, they often already have clients, and leaving allows them to have a “ready-made law firm” that is likely to succeed.
These types of arrangements are often how the largest and most successful firms in the country started. Discouraged with one sort of management paradigm, a group of partners strike out on their own and do something “new” that the market likes and helps the law firm grow. The new paradigm is often quite helpful for recruiting attorneys to work in the firm as well.
Some attorneys have experience in fields such as patent law where they may be experts in specific types of microwave frequencies, patenting a certain class of drugs, or they could be experts in some type of exotic electronic device. Other attorneys may know how to do a certain type of tax transaction, ERISA work, set up certain types of corporations, do other corporate transactions, or understand the way a client buys and sells real estate.
If an attorney has several years of experience in a certain practice area for a few clients and those clients always need the work, the odds are pretty good that one or more of those clients will follow the attorney if he or she leaves and sets up his or her own firm. I have seen numerous attorneys succeed as solo practitioners with specific skill sets. Personal temperament may play a role in forming your practice. If you prefer to do transactional work and the work is primarily non-contentious so that you are unlikely to be up against powerful adversaries, then the odds are pretty good you might have a successful solo practice.
On the contentious litigation side, many attorneys have had success when they were defending relatively minor employment matters for small clients and/or providing employment advice to companies.
Regardless of what the attorney does, he always needs to have a well-defined skill that few other attorneys have so specialized work is consistently sent his way. The well-defined skill might be as simple as having worked on a particular transaction or type of lawsuit and subsequently offering expertise in that area to others with those same issues or disputes.
Some people are natural hustlers and just have a knack for business. They may have operated businesses from the time they were teenagers and love business, trading, getting clients, making money, and just have a natural understanding and drive for this. These individuals may read marketing books in their spare time and have an overall love and drive to succeed in business operations.
These sorts of individuals often succeed when they start firms. If you are one of these people, then the odds are you can do well regardless of what might be stacked against you. If you have good business and marketing skills, it does not really matter where you went to law school or how you did there because those skills can take you a long way.
I run across people all the time with great business minds who are practicing law with their own law firms. Some have broken off from them while others started right out of law school. With a good business mind, an attorney can start a successful business practicing law.
The truth is that most attorneys do not have great business minds and often start firms for the wrong reasons. A desire for freedom or independence is different than having a good business mind. A good business mind will generally make someone a better businessperson than a lawyer. A good legal mind will generally make someone a better lawyer than a businessperson.
My small law firm in Malibu is “moderately” successful because there are not a lot of other options for people who want a local lawyer. People literally walk in the door and call on the phone regularly with various types of work. Sometimes the people actually can afford to pay!
However, the real “heavy hitters” in the town where I work are certainly likely to drive 45 minutes or so to an attorney in Los Angeles or West Los Angeles if they have serious legal issues and are interested in spending a lot of money. Nevertheless, I have a geographic advantage because people searching for law firms locally are likely to find our firm.
The solo practitioner is thus likely to succeed if he or she opens a firm in an area that does not have many attorneys. Being one of the only attorneys in a town is sort of like being the only doctor in a town: People need to use someone and they will be likely to use you if you are one of the only options. I have received phone calls from attorneys who are working in remote towns around the country and are getting ready to retire and want me to find an attorney to help take over their practices. There is a lot of work out there when you get outside of major cities.
Attorneys can be successful in their own practices if they are in small towns or relocate back to a small town they are from. You can definitely succeed if you do this. Larger cities, however, are extremely competitive, and it is often more difficult for attorneys to succeed in solo practices in them due to the competition from larger law firms and the number of law firms and others competing for their work.
I have seen several attorneys start law firms because they knew they would have friends or family members who could send lots of work. A few years ago, an attorney called me out of the blue and we spoke for some time because he had been fired and had no idea what he was going to do because he was fifteen years out of law school. He told me that he wanted to get a position in another law firm. I asked him if he had any business and he said “no,” but that his brother-in-law had a big company and might send him some work. On a whim, I asked him to call his brother-in-law and speak with him about the possibility of giving him some business. A few days later he called me and told me that he did not need my help finding a job after all.
“What happened?” I asked him.
“My brother-in-law said he was sending $1 million a year in litigation to a law firm he did not really like. He said I should stop screwing around working for law firms and set up my own firm. That is what I am going to do.”
A few years later, I called him to check in and see how everything was going and he was doing very well and could not have been happier. His law firm was even expanding and he was bringing on more clients.
If you have someone who will send you a lot of work, starting your own firm is often a great idea. This is especially true when the person sending you to work is a family member or a close friend. In some cases, that person might even be your parent.
The most important thing for the survival of any law firm is having a constant source of work. That work is your lifeline and if a close family member or friend is willing to give you that work, it can often ensure your long-term survival with your own law firm. As a cautionary measure, you should make sure that you always try to expand your practice beyond that one close client.
A good solo practitioner needs to know how to HUSTLE to make money. If you want to succeed, you should not have any fear whatsoever of getting any type of business possible—you need to have no shame. A business needs to bring in money to survive and bringing in money means you often need to do the sort of work you do not want to do and are not proud to do. Your pride should never be an issue when you are building your business. You should start out ASPIRING to potentially advertise on the radio and television. You should have no problem whatsoever making videos telling people to use your services. In short, you need to WANT IT and do whatever it takes to get it.
You should not care what other lawyers think about you. You are building a business and doing whatever it takes to do so. The best marketers are showmen and salesmen and they cannot build a business and get stuff going unless they are out there getting people excited about their services. This is what you need to do in order to make money.
When I am building my businesses, I do whatever it takes. I make videos. I send out marketing pieces. I hustle all I can because this is what is required. Do people make fun of me or criticize me? Of course. Do I care? In all honesty, I used to. But now I measure my success compared to those who are critical of my business-building efforts and I feel good about myself. If you want to build your business, your heart needs to be in it and you should not be afraid to do whatever it takes.
When you look at the most successful people out there, you will generally see that they are never afraid to put themselves out there. If you are like that, it will help you build a business and succeed. Self-promoters and others with “guts” can do phenomenally well with their own law firms.
Some people, for a variety of reasons, work better alone. This is just how they are made up. There is nothing wrong with this. They may be uncomfortable taking orders, working in a structured environment, or have difficulty getting along with people and prefer to have their own law firms. This is perfectly fine and is something that works for countless attorneys—and is also a good reason to start a law firm on your own.
Most solo practitioners operating with one or just a few attorneys have a bit of this in their disposition. The structure of a law firm or the inevitable conflict inherent in working with other lawyers is just too much for some people and they are happier on their own. These attorneys may get some training in large law firms and then for the sake of their sanity, work on their own under conditions and in an environment that makes them happy and comfortable.
This is very common and often a better alternative than having a big blank on your resume after losing a job. If you have some work to do, there is nothing wrong with saying you are operating a solo practice. It is better to have something than nothing—at least if you are operating a solo practice, it looks like your services are in demand and someone is interested in paying you for your work. Having a big blank on your resume often sends warning signs to potential employers because it looks like no one wants you at all.
This is a good reason to open your own law firm and one of the best reasons to do so. Many attorneys reach the conclusion that they just want to do things their own way and take this route, which is perfectly fine.
Without my being overly pessimistic, it is important you be aware that, like most new businesses, most law firms fail. It is one thing “working inside of a business” as an attorney and it is another thing entirely to operate a business. These are two separate skills, just as being a professional basketball coach is not the same thing as being a professional basketball player. They both may understand the game but that does not mean that they could do each other’s jobs. Sometimes it works, but most of the time it does not work. Here are the main reasons that most solo practitioners and new law firms fail:
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Most attorneys do not realize what they are getting into when they “start their own business” and the difficulties they will face.
When attorneys speak with me about starting their own law firms, one of the first things I ask is how much money they are currently making. If an attorney is making $200,000 a year, this is a good income. The attorney often figures: “My billing rate is $400 an hour. If I just bill 500 hours on my own, I will make as much money. Even if the attorney could bill the same amount of money to clients working on his or her own as he or she was billing while working inside of a law firm (the attorney actually would not be able to do this), this flawed business logic misses the following:
In addition to this $200,000 a year, the attorney is generally getting:
I could list for pages the amount of support, benefits, and other things that go into making a law firm successful and productive. The point of this, though, is that paying an attorney $200,000 a year often costs the law firm $400,000 to $600,000 a year when everything is figured in. In some cases, the law firm cannot make this work and will end up losing money even if the attorney is billing 2,000 hours a year at $400/hour ($800,000) and the law firm is paying the attorney only $200,000.
“How is this possible?” you may ask.
Without sufficient business acumen, the expenses of the business can quickly get ahead of the income, and eventually, the firm collapses. This is what happened to Brobeck; Finley Kumble; Mudge Rose; Howrey & Simon; Dewey LeBeouf; and many other once-great names in the legal profession.
Operating a business is difficult. There are scores of moving pieces to be familiar with, to understand, and to know how to manage. You need to continuously stay informed so you can make decisions that keep the business alive and profitable. You also need to set reasonable and attainable goals and recognize that the substantial majority of businesses fail within the first year. It is rare for any business to last more than five years. It is rarer still for any business to ever gross more than $1 million.
It is important to determine the amount your business needs to make to be sustainable. I used to run an asphalt business and I had crews working seven days a week and sometimes 24 hours a day. I had all sorts of trucks and equipment and spent a lot of money and time operating the business. If I brought in $100,000 a month and was able to clear $10,000 or $15,000 from an operation that size, I thought I was doing pretty well and I worked very hard for that money. I determined that a profit margin of 10 to 15% is very good for any business!
If you are a solo practitioner and gross $2,000,000, you still need to pay for office space, a secretary, a paralegal, copiers, a bookkeeper, vacation days for employees, and more. The expenses quickly add up. Most businesses fail because the people who started them do not know how to keep track of their expenses compared to their income. If you make $200,000 a year after grossing $2,000,000 a year as a solo practitioner with a small law firm, this is good! But it is not easy and the odds are probably stacked against you by 95% regardless of how successful you think you are going to be.
“I will keep my expenses low and make more money!” you say.
You may … but this is all easier said than done. Practicing law is a completely different exercise than running a business. Running a business requires you to watch the money all the time and make a series of “daily” strategic decisions about the best places to deploy your resources so that you make money and do not lose it. Running a business requires that you have first-rate customer service and do other things very well to succeed. It is nearly impossible to succeed when you do not know how to operate a business well.
A few years ago, I met a highly credential guy who used to be an attorney with a large law firm and had a book of his own clients that generated a few million dollars a year. With his book of business, he was making $400,000 to $500,000 a year at his law firm and he decided to open his own practice. He went to each of his clients and told them that if they gave him a retainer, he would work on only their matters at the new firm that he was planning to operate out of a shared office he was renting.
About half of his clients agreed and he ended up getting a series of retainers totaling $1,000,000 for the year and thought he was doing extremely well. However, after one year he lost almost all of his clients. For whatever reason, he was not servicing them in the same way and they were not as happy, he did not know how to operate a business and made mistakes, his clients wanted the name of a larger law firm, and so forth. Unable to pay his bills, he ended up becoming a “financial adviser," essentially, a stockbroker. Incredibly, just a few years after being a highly paid and respected partner in a major American law firm, he was approaching his old clients “hat in hand” asking them if they were interested in purchasing the latest hot stock or mutual fund.
This cautionary tale—and I have several of them—should show you that running a business is far different than working inside of a law firm or succeeding there. Even if success is realistic, it is not easy for even the most talented of attorneys.
When you are operating your own business, you are responsible not only for doing the work (and getting the work done) but other things such as:
This multitude of responsibilities is huge and something that is far, far more extensive than sitting down at a desk and doing work or sitting down at a desk and doing work plus trying to generate business. None of this is easy. This does not mean that it is impossible; it just means that the skills necessary to be a successful attorney (inside a law firm, for the government, or in-house, for example) are far different than the skills needed to succeed with your own business.
Take something as simple as getting clients to pay their bills. Most solo practitioners and attorneys with small law firms will tell you that they rarely collect 80% of what they bill. Clients are “fickle” and when you do not have a large name behind you, it is often difficult to get them to pay their bills. Attorneys run the risk of not getting paid all the time, and it is even more difficult when you have your own law firm.
“I will require everyone to have a replenished retainer at all times!” you might say. Good luck with that. This might work to some extent depending on your practice area; however, this generally will also reduce the number of clients who are interested in hiring you.
It is common for attorneys who cannot get jobs (for whatever reason) to become solo practitioners. For example, this happens when attorneys cannot get jobs because:
The point being: Most attorneys (but not all) who become solo practitioners do so due to the fact that other people will not hire them. People who get divorced, or hire personal injury attorneys, and so forth do not know this, of course. But attorneys from most law firms and most companies do.
There is nothing wrong with starting a solo law practice, and I am not trying to denigrate attorneys who have done so (I did as well). Nevertheless, most attorneys who do this are doing so because of the lack of options and are putting themselves at a distinct disadvantage because they generally no longer have access to
The majority of attorneys who start their own practices do so because they have to and not because they want to. I have spoken with thousands of solo practitioners throughout my time as a recruiter and virtually every single one of them became a solo practitioner and started his or her own law firm because the attorney had to as opposed to wanting to. Law firms, in-house counsel, and others who hire attorneys know that a solo practitioner is likely doing what he does because he or she had no other options. This means there is (sadly) a stigma attached to being a solo practitioner because it often carries the message that “I am doing this because no one wants me.”
There are two sides to every story, including that of a solo practitioner. Many do become very successful, take on important civil rights and other cases that change history, make huge incomes with personal injury cases, and experience profound success far beyond what they would have in a large law firm. This is the “positive side” and for those who succeed (or even come close to succeeding), nothing can beat being your own boss and making an impact. Some of the happiest attorneys out there are solo practitioners and many even end up building large, successful law firms. There is absolutely nothing wrong with being a solo practitioner when you succeed. The problem is that most solo practitioners become solos because nothing else materializes for them and the world knows this.
Once you become a solo practitioner, very few large clients will ever hire you. Most decent-sized companies that can afford to pay high legal fees will generally always choose a larger law firm to represent them. The name of the law firm carries a lot of weight and shows the opposing side that the client means business. If you are a solo practitioner, then your odds of working on matters as large as you were working on when you were inside of a law firm are very slim indeed.
If a decent-sized client (or even an important individual) uses a solo practitioner for a matter, then he or she might look like a fool to the other side. The other side will interpret this as “weakness” and think that the client cannot afford an attorney with the resources of a larger law firm with teams of attorneys, paralegals, and support staff. There is very little incentive for large clients to ever hire solo practitioners because large clients need the resources that only large firms can provide.
Even very wealthy individual clients use large law firms for divorces, trusts and estates work, and other personal matters. People who are worth millions of dollars generally keep company with other very wealthy people and all of these folks know the “legal hierarchy” and therefore do not use solo practitioners for important matters.
An exception to this is that solo practitioners may work on “safe” parts of sophisticated transactions and other matters for larger clients. Many smaller real estate developers have trusted relationships with solo practitioners to do work for them. Many very wealthy people also often use solo practitioners for work in this way.
The majority of solo practitioners earn a significant portion of their money from contingency work (especially personal injury). Not all do, of course, but the majority have some involvement in this sort of work. Even on the transactional side, solo practitioners often have a contingency role. For example, if a corporate attorney is working on a deal, he or she may take a small amount of equity in exchange for waiving or lowering fees. A real estate attorney may take a small amount of equity in a deal/project in exchange for a fee when the project sells. Large law firms do not do this, as they would rather “get paid now” rather than hope to get paid later.
Solo practitioners spend their days negotiating with clients and there are few clients who walk through their (office or spare bedroom) doors who do so not expecting a deal or asking the attorney to take a reduced fee, delayed fee, or contingency interest in a case. Most of these solos end up doing this work because they need to and do not have a steady stream of clients willing to pay them by the hour. This results in an income for most solo practitioners that can fluctuate wildly from year to year and certainly is not conducive to such things as getting a mortgage and buying a home.
Because most solo practitioners do not attract large clients, they generally spend the majority of their time working on matters for smaller clients. These smaller clients typically run out of money faster, negotiate rates aggressively, fail to pay their bills on time and fail to pay for the sort of thoroughness (in-depth research and so forth) that wins cases and deals. Thus, solo practitioners end up doing inferior work to what they would do in a large law firm. As a result of consistently working for shallow-pocket clients, the work quality of solo practitioners rapidly deteriorates to the point where they do the minimum amount of work necessary on each matter, thus limiting their professional experience and development, in turn making them into poor attorneys.
I have hired solo practitioners who formerly worked in large law firms to work in my law firm. In some cases, these attorneys may have graduated from top law schools at the top of their classes and had a few years of experience in large law firms before being thrust out on their own. With no other attorneys in their law firms, they developed horrible habits that often are close to irreversible. They take shortcuts, are sloppy, and become eager to do things quickly rather than with a high level of quality (and then get paid as much as possible for their poor work product).
Large clients not only want a good name doing work for them, but they also want a good work product. Attorneys coming from large law firms with good pedigrees may think that they will not develop poor work products by going solo, but this is simply not the case. Without peer review of work, these attorneys almost always end up developing poor work products because they are no longer working on sophisticated matters and are forced to cut corners on the matters they do work on.
Many solo practitioners quickly bring on others to work with them and start small law firms. Others may leave a law firm with a few trusted attorneys and start a law firm this way.
These "partnerships" rarely last.
They typically break up for financial reasons and disputes about money. Like a marriage headed for divorce, each party wants to get more out of the relationship than the other. If there is not enough money, attorneys have no qualms about leaving the firm to find the money somewhere else.
Having watched this process play itself out throughout my career, it is safe to say that the odds of most partnerships succeeding are very rare indeed. They do work and can work, of course, but most do not. They do not work because not everyone contributes equally. Large law firms have intricate processes and methods (developed over decades) to determine how the “spoils” of their efforts are to be divided. New law firms generally do not have experience in setting up and handling these types of processes and the firm ends up imploding.
Law firms have a whole series of processes in place that makes them successful.
Regardless of how you evaluate it, large law firms are built to succeed and have all sorts of internal processes designed to ensure success. Solo practitioners have none of these things and that makes their success far less likely. They tend to bill fewer hours and to spend more time on “lower value” administrative and other matters than attorneys in large law firms.
For the reasons outlined above, by going solo, attorneys are generally putting themselves in roles where they (and their clients) are likely to be less respected by other people of influence within the legal world. Solo practitioners thus have a more difficult time being effective advocates than lawyers with large law firms.
Judges and opposing clients generally have far more respect for larger law firms than they do for solo practitioners. They know:
Very few important clients would ever allow a solo practitioner to be involved in their significant legal matters. Regardless of whether the solo practitioner can do the work, clients know that solo practitioners are not likely to be taken as seriously by the other side.
Unless the solo practitioner has unique skills (patent prosecutors with electrical engineering degrees, certain types of real estate and corporate attorneys) or significant business (generally in excess of $500,000), the odds of a solo practitioner ever going back to a large law firm are extremely slim. Namely, large law firms believe that: (1) the solo is doing this because he has to; (2) the solo does not like working with other attorneys (or cannot get along with them); (3) the solo may come to a large law firm and leave again (taking the large law firm’s clients with him); and/or (4) the solo practitioner’s skills have deteriorated to a level where he is no longer suitable for a large law firm.
Regardless of how you spin it, the solo practitioner rarely is going to be welcomed back to a large law firm. Even if a solo practitioner has a good book of paying clients, the solo practitioner is rarely going to have clients who are paying the same rates they would have to pay to a larger law firm; therefore, the work is not “portable.” While solo practitioners sometimes do go back to work inside of law firms, it is quite rare.
In my experience, what happens to most solo practitioners is that they spend a significant portion of their time trying to negotiate how much and how soon they will get paid for whatever they are working on rather than doing work. I have seen solo practitioners negotiate with a client for two hours on the phone about attending a hearing for a client, drive two hours round-trip to pick up $1,000 in cash before attending a 15-minute hearing, and then spend another hour negotiating to get $1,500 to file a two-page motion. The work of many solo practitioners is often more style than substance and more about negotiating with clients about money than anything else.
Because solo practitioners spend so much time chasing down clients who will pay them and waiting to get paid various “contingency” checks, it becomes very, very difficult for them to make money. Without large clients willing to pay ongoing hourly rates, solo practitioners often spend their time trying to get people to pay them and not practicing law.
You can succeed by owning your own law firm. While there is a lot to learn and understand when deciding to have your own law firm, the most important point is that you always need a source of work. As long as you have work (and plenty of it), and try to hone and not weaken your legal skills, you will do well. Most businesses (solo law firms included) fail because they do not have enough clients buying what they are selling. Finally, you must have the temperament and disposition to “hustle,” to go out and make sure you have a constant stream of work. In my opinion, no one should start a law firm without considering all of the pros and cons delineated in this article and making sure it is the right choice for him or her.
Lawyers who want to start their own business have to evaluate the pros and cons of starting their own practice. Owning your own business may give you complete control over the business and all of its assets, but operating one comes with its own set of challenges.
The majority of lawyers who start their own businesses believe it is all about "practicing law". However, they do not realize that besides dealing with legal issues, they will also need to deal with staffing, finance, accounting, and marketing of their law firm. You must evaluate your skills and attitudes before starting your own law firm.
Despite the appeal of going solo practice, you should weigh the pros and cons before starting your own law firm.
You can become a new business owner and set your own priorities when you start a business. You have more freedom and flexibility as a small firm compared to a larger firm. Although you would have more freedom, it does not mean that you would be working fewer hours. In contrast, you would have to work harder than ever. However, you would be directly reaping the rewards of your labor if you did so.
As a consultant, you may begin with any client, but as time goes on, you may be offered more interesting projects. In addition, you can focus your practice on a particular area of law if you wish.
Thanks to technology and cloud options, starting a law firm is becoming more affordable. A home business can be started for as little as $3000 if you decide to practice there. Attorneys that start their own practices tend to avoid the cutthroat politics and ambiguities inherent in large law firms.
In most cases, you can never return to working in a large law firm again, unless you have specific skills that make you an invaluable member of the team. This is due to the negative perception that solo practitioners' skills are no longer good enough, they are unable to work with others, or they do not have the skills to work in a large firm.
As a business owner, you have to handle everything from soliciting clients to finding employees, finding an office space, and keeping your accounts. However, few lawyers have the entrepreneurial mindset needed to create successful law firms. Make sure your overhead costs do not exceed your cash flow until the new law practice can afford them.
Lawyers who want to go solo have to deal with the loss of camaraderie with other attorneys, especially when they were previously part of a larger firm. As a result of your relationships, you could rely on your support system. A smaller firm may require you to develop a new support system and to look for mentors.
Starting your own law firm can be intimidating. If you wish to start your own law firm, you must follow the below checklist:
Creating a legal practice requires an in-depth business plan. Creating a mission statement, understanding your competitive advantages, and planning financials and marketing strategies are all part of this process. You can then plan for the future based on an understanding of what your business will look like.
Your plan should include a summary of the location, the focus of the practice, as well as goals and objectives. A startup budget and a monthly budget will be necessary, as well. Conduct market research on potential clients and the capital needed for the first three months to operate the firm.
With your business plan in place, you will need to identify the legal areas you plan on practicing. Choose the position that is the best match for your strengths and weaknesses.
Today, it is rare for a lawyer to provide a generic practice. Your credibility and network will be enhanced if you choose a clearly defined practice area.
Your practice may be named after you or based on your expertise. Consider using a name that reflects your expertise but is not misleading.
It violates the Rules of Professional Conduct, for example, if you use the words "and Associates" when there are no associates in your firm. A sole practitioner's practice is also in violation if "Group" is used.
Determine the organizational structure based on how you intend to manage and run the firm. For example, sole practitioners can choose sole practitioner, professional corporation, or single-member LLC, while multi-member firms can choose a professional corporation, partnership, LLC, or LLP.
Your practice area will have a lot to do with your ideal location. Before selecting the right place and office space, consider different locations and options. You may want to rent a space, share an office space, or work from home. You can save money, pool resources, and feel less isolated if you share an office space.
An office will need office furniture, supplies, and equipment, such as printers, computers, business telephones, files, office furniture, reception furniture, and staff furniture.
Consider ways to attract new clients if you do not already have a client base. An effective referral network is the first step in this process. Make every effort to build relationships with local lawyers and seek out opportunities for referrals.
In order to form a network, lawyers can join a lawyer association in their area. These associations utilize a listserv, which is an email list management software that contains members' e-mail addresses. A mentor who has experience can show you the ropes and mentor you.
Lawyers can no longer survive without technology. A telephone book is no longer a place where people look for lawyers. Google does the job for them. People looking for credible information about a business usually check out the business website first.
Keeping your law firm's books can be stressful, especially if you handle it yourself.
There is a continued decline in jobs in Big Law as the legal landscape changes. Law school graduates are increasingly focusing on opening their own firms rather than seeking employment. By cutting costs and implementing the right technologies, you can start a company for under $3,000 if you adopt a DIY attitude.
Working from home will cost you almost nothing. However, you will need an LLC and liability insurance. LLC costs can range from a few hundred dollars to thousands of dollars depending on which state you live in. A typical attorney gives between $400 and $600 in liability insurance per year, but they can pay as little as $200.
On the safe side, we are thinking about $1,500 to begin. Additionally, if you do not wish to use your home office address, you may need to use a mail service.
How about shared office space? Startups and small companies that do not mind working together can lease portions of floors in buildings from companies like WeWork. Personal office spaces are often out of reach for most people, with rent in New York reaching 74 cents per square foot. Shared offices are a more affordable alternative. Rent is usually $220 to $450 per month for these spaces. It would be wise to weigh the cost against the benefits before choosing this option.
Search engines are used by 96 percent of potential clients to find legal advice. In other words, you must have your own website. Having a web presence is crucial to inviting potential clients to find out more about your company despite the network connections and word-of-mouth referrals you have.
With free tools such as Wix, it is possible to create a responsive, mobile-friendly website. However, you can consider hiring a professional if you are not interested in spending the time. Many service providers allow you to host your website and purchase a domain for less than $100 per year.
Adding up the totals so far: You could expect a total of $1,600 if you work from home. If you share your office space and pay a web designer, those numbers will go up.
With a cloud-based solution and a smartphone, laptop, and Internet access (which most of us already have), you can set up a paperless law firm in minutes.
Lean tech stacks are offered by cloud-based platforms. Smartphones are essential for mobile operations, and laptops are useful for office use. You can also use a tablet to read documents on the go, as they will be easier to read on a tablet than on a phone.
Firms may also find it difficult to keep track of their finances. Clio integrates with both Quickbooks Online and Xero, which are both great cloud-based packages. Xero Starter costs $20 per month, while Quickbooks for the Simple Start package costs $120 per year. Whichever package you choose, make sure that it suits your needs. Payments can be accepted directly into your Clio account with Boutique and Elite subscriptions.
Regardless of whether your office is paperless or not, scanning and digitizing paper will always be required. It is beneficial to have a dedicated scanner, and the Fujitsu ScanSnap can scan directly into Clio without having to go through the middle step.
Clio features a convenient design, affordable pricing, and award-winning customer support.
Attorneys would be required to store, encrypt, and backup their data on-site without a cloud-based practice management system. All of these functions consume time and energy, and all run their own overhead costs.
LLC: $1,000 (approximate; varies by state)
(Optional) Web Designer: Rates will vary
Annual fees:
Liability Insurance: $500 (approximate. Ranges between $400–$600 on average)
Web Hosting + Domain Name: $100
Clio (Boutique): $708
Maintain LLC: $200 (approximate; varies by state)
Quickbooks Online: $120
Microsoft Office 365 for Business: From $73 annually
(Optional) Shared Office Space: $2,640 (approximate; ranges between $220-$450)
Starting and running your law practice from home with Clio Boutique for the first year will cost you about $3,000.
I seriously contemplated opening my own law firm when I was still practicing at Dewey Ballantine in Los Angeles. Discouraged with the politics of the firm and believing I could make just as much money starting my own firm, I set the wheels in motion. The Internet was in its infancy (i.e., pre websites), so I took the first steps by taking out an advertisement in the Yellow Pages ($750 a month) and then rented an office. I picked a date for my departure from the firm, set up my new office, purchased a copier and a new Dell Computer, and I was ready to go.
Recognizing that all law firms need a source of regular and ongoing business operations to succeed, I had already lined up clients for my new firm—friends who were successful entrepreneurs. I was confident I could bill $100,000 to $200,000 a year from these clients, which would be sufficient to sustain my firm. I also understood that if business from these clients was not sustainable, I would need additional and separate sources of business, hence the Yellow Pages advertisement. It is important to always have a backup plan so the phone continues to ring with new businesses.
When I gave my notice to my law firm, the attorneys told me the same piece of advice I am going to tell you in this article: “If you leave here and start your own practice, you will have a next-to-impossible time getting a job in a large firm ever again. Speak with some other law firms if you are unhappy here. Take a few months to make up your mind.”
Incredibly, Dewey Ballantine told me to take a few months to figure out what I wanted to do and to continue working while I looked around. On its recommendation, I started speaking with legal recruiters and going out on law firm interviews. Meanwhile, my phone started to ring with calls from “clients” responding to my Yellow Pages advertisement. I met with them in my “other office” after work hours at Dewey Ballantine. My new clients included the following:
- A dean of a major university who had slept with his wife a single time, which produced a daughter, and thereafter always slept in a separate room. He was going through a divorce and gave me a “retainer” of $10,000 that I never cashed.
- An 18-year-old who was on crystal meth and drunk and got stopped for drunk driving.
- A married woman with multiple boyfriends and three children (she was unsure as to who their respective fathers were). She wanted a divorce.
- A man who was fired from his job at a veterinary hospital and wanted to sue the hospital for sexual harassment for firing him. Incredibly, I learned that the client had actually been sexually abusing animals and that is why he was fired.
- A woman who claimed that a teacher was biting her 4-year-old child to punish him. The teacher admitted to doing this and said it was the only way to make the child shut up.
I learned that although I was lucky enough to have some “real” clients (small companies owned by people I knew), the reality of starting my own firm included having to take undesirable cases to pay the bills. Most of the potential legal work that I had lined up from my Yellow Pages advertisement depressed me so much, I decided against having my own firm. During this period of contemplation on where I wanted to take my career, I was still going out on interviews with law firms, and that experience confirmed that I was no longer interested in working in a law firm, even though working as an attorney for someone else still seemed better than starting my own firm.
During this time, I also came to realize that the only people who seemed like they were enjoying their work were the legal recruiters who were sending me out on law firm interviews. I soon recognized that for me, it would be more fun and more satisfying to help attorneys find jobs than to set up a solo law practice. So I became a legal recruiter.
A topic that comes up frequently in the course of my work as a recruiter is about starting one’s own law firm:
- I speak with attorneys all the time who have started their own law firms or want to do so. Can this work out? Of course.
- Does this often not work out? Of course.
- Should you do it? It depends.
Although I became a recruiter, I actually love the practice of law and have never really left it. In time I did decide to start a law firm and, except for a period of dormancy, while I got my legal recruiting company going, my firm has been operating for years handling matters for my companies as well as for outside people and businesses.
My firm has a few attorneys and is moderately successful because of my business plan and analysis ensuring I am offering the appropriate legal work for what the market needs. For example: (1) I have my own companies as clients; (2) I am in a small town of 13,000 people (Malibu, California) where there are only two other small law firms; (3) there are a lot of wealthy people willing to pay top dollar for legal services; and (4) I know how to recruit good, stable attorneys because I have been doing it for most of my career.
An honest evaluation of my firm includes an acknowledgment that it might not be as successful if I did not have a built-in client base, special recruiting skills, and very little competition. Every business—a law firm included—needs some sort of special advantage or selling point in order to succeed. What can you offer to clients that your competition cannot? The most important thing for continued, ongoing success is to have a marketing pipeline that consistently delivers new matters to your door.
Given my professional background, I understand both the desire to start your own law firm as well as the challenges of actually running a small firm and the even greater challenges of being successful at it. Hence, the basis of this article: the top 10 reasons to start or not to start your own law firm.
A. Top 10 Reasons To Start Your Own Law Firm
Despite the challenges, people can start small law firms. Here are the top 10 reasons why you might have what it takes to go solo and be successful at it.
1) You Have a Group of Clients Who Will “Go” with You and You Trust Them to Give You Work, or Your Former Law Firm or Corporation Will Give You Work
Many attorneys who leave law firms do so trusting that they have clients who will go with them and give them ongoing work. Many of these relationships may be decades old. Due to the attorney’s skill and work history with the client, he is secure in the continuance of the relationships and workflow.
For example, I know many patent attorneys who do work for large clients in various industries and their work is so sophisticated few people can do it. The client likes the attorney, appreciates the attorney’s sophistication, and is interested in continuing to work with the attorney regardless of whether the attorney is solo or not. I also know of real estate attorneys and corporate attorneys with similar ingrained client relationships. In one case, I saw the general counsel of a healthcare company leave, start his own law firm, and build it up to 50 attorneys doing work for the healthcare company. (That lasted until the healthcare company fired the attorney and the entire law firm spectacularly went out of business).
An attorney needs to be very careful in assessing whether or not a client will follow him and continue to give the attorney work. Attorneys who manage this can succeed as solos or with small firms.
Things can also work out if an attorney’s former firm sends work to him. This frequently happens, with departing attorneys getting fed smaller cases and other work from their former law firms. Many attorneys who have left large law firms have been quite successful in these situations and continue to be successful so long as they maintain good relationships with their former law firms.
For example, I know of several attorneys who have left large law firms on good terms after not being made a partner. This typically happens at major firms that simply do not have the capacity to add too many partners. But if the attorneys leave on good terms, the law firms often will feed them enough work for them to be successful as solos or with small firms. Some major American law firms had humble beginnings based on a lone practitioner maintaining a good relationship with a prior firm. (The caution here is that the law firm will quickly stop sending work if it feels that anyone is having a bad experience using the attorney.)
Similarly, attorneys who leave in-house positions are often better able to understand the client’s needs and what is in the client’s best interest they are able to get the company to feed them work. This can benefit both the solo firm and the company as long as the solo firm is not prohibitively expensive compared to what the client was spending on the in-house attorney. These kinds of arrangements have also led to the founding of many successful law firms. (The caution is that the work can quickly disappear if the company goes in another direction. Thus, the attorney should always look for work in several places.)
2) You Have Support from a Group of Other Attorneys You Know and Trust Completely Who Will Work with You
Attorneys often like to start law firms with a group of peers who become their new “partners.” If attorneys have worked together for any length of time, they often complement each other’s strengths and weaknesses:
- One attorney may be very good at business development.
- Another attorney may excel at financial matters.
- Another group of attorneys may have a reputation for doing exceptional work.
- Another attorney in the group may have very good interpersonal skills that make the attorney well suited for recruiting.
This sort of combination can often work out better in the long run than a solo practitioner arrangement because the attorneys are coming together with the idea that they will function as a group and each one has well-defined responsibilities that make the group run efficiently. If these attorneys are partners and worked together for a while at the firm they are leaving, they often already have clients, and leaving allows them to have a “ready-made law firm” that is likely to succeed.
These types of arrangements are often how the largest and most successful firms in the country started. Discouraged with one sort of management paradigm, a group of partners strike out on their own and do something “new” that the market likes and helps the law firm grow. The new paradigm is often quite helpful for recruiting attorneys to work in the firm as well.
3) You Are in a Very Narrow Specialty in a Well-Defined Practice Group and Confident That Business Operations Will Keep Coming from Some of Your Own Clients (Patent Law, Real Estate Law, Some Types of Corporate Law)
Some attorneys have experience in fields such as patent law where they may be experts in specific types of microwave frequencies, patenting a certain class of drugs, or they could be experts in some type of exotic electronic device. Other attorneys may know how to do a certain type of tax transaction, ERISA work, set up certain types of corporations, do other corporate transactions, or understand the way a client buys and sells real estate.
If an attorney has several years of experience in a certain practice area for a few clients and those clients always need the work, the odds are pretty good that one or more of those clients will follow the attorney if he or she leaves and sets up his or her own firm. I have seen numerous attorneys succeed as solo practitioners with specific skill sets. Personal temperament may play a role in forming your practice. If you prefer to do transactional work and the work is primarily non-contentious so that you are unlikely to be up against powerful adversaries, then the odds are pretty good you might have a successful solo practice.
On the contentious litigation side, many attorneys have had success when they were defending relatively minor employment matters for small clients and/or providing employment advice to companies.
Regardless of what the attorney does, he always needs to have a well-defined skill that few other attorneys have so specialized work is consistently sent his way. The well-defined skill might be as simple as having worked on a particular transaction or type of lawsuit and subsequently offering expertise in that area to others with those same issues or disputes.
4) You Have Substantial Business Experience, Have Already Succeeded in Business, Know What It Will Take to Succeed, and “Know” You Will Succeed
Some people are natural hustlers and just have a knack for business. They may have operated businesses from the time they were teenagers and love business, trading, getting clients, making money, and just have a natural understanding and drive for this. These individuals may read marketing books in their spare time and have an overall love and drive to succeed in business operations.
These sorts of individuals often succeed when they start firms. If you are one of these people, then the odds are you can do well regardless of what might be stacked against you. If you have good business and marketing skills, it does not really matter where you went to law school or how you did there because those skills can take you a long way.
I run across people all the time with great business minds who are practicing law with their own law firms. Some have broken off from them while others started right out of law school. With a good business mind, an attorney can start a successful business practicing law.
The truth is that most attorneys do not have great business minds and often start firms for the wrong reasons. A desire for freedom or independence is different than having a good business mind. A good business mind will generally make someone a better businessperson than a lawyer. A good legal mind will generally make someone a better lawyer than a businessperson.
5) You Are in a Small Town and Will Be One of the Only Attorneys in the Town
My small law firm in Malibu is “moderately” successful because there are not a lot of other options for people who want a local lawyer. People literally walk in the door and call on the phone regularly with various types of work. Sometimes the people actually can afford to pay!
However, the real “heavy hitters” in the town where I work are certainly likely to drive 45 minutes or so to an attorney in Los Angeles or West Los Angeles if they have serious legal issues and are interested in spending a lot of money. Nevertheless, I have a geographic advantage because people searching for law firms locally are likely to find our firm.
The solo practitioner is thus likely to succeed if he or she opens a firm in an area that does not have many attorneys. Being one of the only attorneys in a town is sort of like being the only doctor in a town: People need to use someone and they will be likely to use you if you are one of the only options. I have received phone calls from attorneys who are working in remote towns around the country and are getting ready to retire and want me to find an attorney to help take over their practices. There is a lot of work out there when you get outside of major cities.
Attorneys can be successful in their own practices if they are in small towns or relocate back to a small town they are from. You can definitely succeed if you do this. Larger cities, however, are extremely competitive, and it is often more difficult for attorneys to succeed in solo practices in them due to the competition from larger law firms and the number of law firms and others competing for their work.
6) You Have a Very Wealthy Family (or Friends) and You Are Confident They Will Continually Send You Work
I have seen several attorneys start law firms because they knew they would have friends or family members who could send lots of work. A few years ago, an attorney called me out of the blue and we spoke for some time because he had been fired and had no idea what he was going to do because he was fifteen years out of law school. He told me that he wanted to get a position in another law firm. I asked him if he had any business and he said “no,” but that his brother-in-law had a big company and might send him some work. On a whim, I asked him to call his brother-in-law and speak with him about the possibility of giving him some business. A few days later he called me and told me that he did not need my help finding a job after all.
“What happened?” I asked him.
“My brother-in-law said he was sending $1 million a year in litigation to a law firm he did not really like. He said I should stop screwing around working for law firms and set up my own firm. That is what I am going to do.”
A few years later, I called him to check in and see how everything was going and he was doing very well and could not have been happier. His law firm was even expanding and he was bringing on more clients.
If you have someone who will send you a lot of work, starting your own firm is often a great idea. This is especially true when the person sending you to work is a family member or a close friend. In some cases, that person might even be your parent.
The most important thing for the survival of any law firm is having a constant source of work. That work is your lifeline and if a close family member or friend is willing to give you that work, it can often ensure your long-term survival with your own law firm. As a cautionary measure, you should make sure that you always try to expand your practice beyond that one close client.
7) You Are Interested in “Hustling,” Do Not Care What Other People Think of You, and Are Not Afraid to Do Anything (Personal Injury, Representing Taxpayers Fighting the IRS, Workers Compensation, Small Wills, and Anything You Can Get) to Make Money
A good solo practitioner needs to know how to HUSTLE to make money. If you want to succeed, you should not have any fear whatsoever of getting any type of business possible—you need to have no shame. A business needs to bring in money to survive and bringing in money means you often need to do the sort of work you do not want to do and are not proud to do. Your pride should never be an issue when you are building your business. You should start out ASPIRING to potentially advertise on the radio and television. You should have no problem whatsoever making videos telling people to use your services. In short, you need to WANT IT and do whatever it takes to get it.
You should not care what other lawyers think about you. You are building a business and doing whatever it takes to do so. The best marketers are showmen and salesmen and they cannot build a business and get stuff going unless they are out there getting people excited about their services. This is what you need to do in order to make money.
When I am building my businesses, I do whatever it takes. I make videos. I send out marketing pieces. I hustle all I can because this is what is required. Do people make fun of me or criticize me? Of course. Do I care? In all honesty, I used to. But now I measure my success compared to those who are critical of my business-building efforts and I feel good about myself. If you want to build your business, your heart needs to be in it and you should not be afraid to do whatever it takes.
When you look at the most successful people out there, you will generally see that they are never afraid to put themselves out there. If you are like that, it will help you build a business and succeed. Self-promoters and others with “guts” can do phenomenally well with their own law firms.
8) Psychologically and for a Variety of Reasons, You Cannot Get Along Working with Other People or Groups or You Hate Working for Other People or in a Structured Environment
Some people, for a variety of reasons, work better alone. This is just how they are made up. There is nothing wrong with this. They may be uncomfortable taking orders, working in a structured environment, or have difficulty getting along with people and prefer to have their own law firms. This is perfectly fine and is something that works for countless attorneys—and is also a good reason to start a law firm on your own.
Most solo practitioners operating with one or just a few attorneys have a bit of this in their disposition. The structure of a law firm or the inevitable conflict inherent in working with other lawyers is just too much for some people and they are happier on their own. These attorneys may get some training in large law firms and then for the sake of their sanity, work on their own under conditions and in an environment that makes them happy and comfortable.
9) You Cannot Find a Job and You Need Something on Your Resume to Give the Impression You Are Still Working Despite Not Having Much (or Any) Work
This is very common and often a better alternative than having a big blank on your resume after losing a job. If you have some work to do, there is nothing wrong with saying you are operating a solo practice. It is better to have something than nothing—at least if you are operating a solo practice, it looks like your services are in demand and someone is interested in paying you for your work. Having a big blank on your resume often sends warning signs to potential employers because it looks like no one wants you at all.
10) You Honestly Do Not Care About How Much Money, Respect, and So Forth You Get and Just Want Your Own Firm Doing What You Want and How You Want to Do It
This is a good reason to open your own law firm and one of the best reasons to do so. Many attorneys reach the conclusion that they just want to do things their own way and take this route, which is perfectly fine.
B. Top 10 Reasons Not To Start Your Own Law Firm
Without my being overly pessimistic, it is important you be aware that, like most new businesses, most law firms fail. It is one thing “working inside of a business” as an attorney and it is another thing entirely to operate a business. These are two separate skills, just as being a professional basketball coach is not the same thing as being a professional basketball player. They both may understand the game but that does not mean that they could do each other’s jobs. Sometimes it works, but most of the time it does not work. Here are the main reasons that most solo practitioners and new law firms fail:
1) Most Solo Practitioners Fail Because Operating a Business Is Much Different Than Simply “Practicing Law”
Most attorneys do not realize what they are getting into when they “start their own business” and the difficulties they will face.
When attorneys speak with me about starting their own law firms, one of the first things I ask is how much money they are currently making. If an attorney is making $200,000 a year, this is a good income. The attorney often figures: “My billing rate is $400 an hour. If I just bill 500 hours on my own, I will make as much money. Even if the attorney could bill the same amount of money to clients working on his or her own as he or she was billing while working inside of a law firm (the attorney actually would not be able to do this), this flawed business logic misses the following:
In addition to this $200,000 a year, the attorney is generally getting:
- An expensive and nicely built office to go to each day
- A group of other attorneys to bounce ideas off of each day
- A phone system, Internet, computer, and other “electronic support”
- Secretarial, paralegal, and word-processing support
- A group of other attorneys who go out and gather work for the firm and bring work in each day
- Reviews to keep the quality of the attorney’s work product up
- A “big name” that allows the attorney to have credibility in the marketplace
- Paid vacation, paid sick time, and other benefits
- Bonuses paid for productivity
- Health insurance
- Management to make decisions about such things whom to hire, whom to fire, where to get office space, what phone system to use, how to review people, how many people to hire, where to open and close offices, how to pay people, when to slow the law firm down and when to grow it, whom to hire to get clients and more.
- A copy room, copiers, paper, toner, fax machines, and so forth.
- Westlaw, Lexis, a law library, and other research support (maybe even a librarian).
- IT staff to run servers, keep the computers running, and monitor the attorney’s emails.
- Payment of the attorney’s payroll taxes, workers’ compensation insurance, 401(k) plan, and other benefits that can add up to 15% or more of the attorney’s salary.
I could list for pages the amount of support, benefits, and other things that go into making a law firm successful and productive. The point of this, though, is that paying an attorney $200,000 a year often costs the law firm $400,000 to $600,000 a year when everything is figured in. In some cases, the law firm cannot make this work and will end up losing money even if the attorney is billing 2,000 hours a year at $400/hour ($800,000) and the law firm is paying the attorney only $200,000.
“How is this possible?” you may ask.
Without sufficient business acumen, the expenses of the business can quickly get ahead of the income, and eventually, the firm collapses. This is what happened to Brobeck; Finley Kumble; Mudge Rose; Howrey & Simon; Dewey LeBeouf; and many other once-great names in the legal profession.
Operating a business is difficult. There are scores of moving pieces to be familiar with, to understand, and to know how to manage. You need to continuously stay informed so you can make decisions that keep the business alive and profitable. You also need to set reasonable and attainable goals and recognize that the substantial majority of businesses fail within the first year. It is rare for any business to last more than five years. It is rarer still for any business to ever gross more than $1 million.
It is important to determine the amount your business needs to make to be sustainable. I used to run an asphalt business and I had crews working seven days a week and sometimes 24 hours a day. I had all sorts of trucks and equipment and spent a lot of money and time operating the business. If I brought in $100,000 a month and was able to clear $10,000 or $15,000 from an operation that size, I thought I was doing pretty well and I worked very hard for that money. I determined that a profit margin of 10 to 15% is very good for any business!
If you are a solo practitioner and gross $2,000,000, you still need to pay for office space, a secretary, a paralegal, copiers, a bookkeeper, vacation days for employees, and more. The expenses quickly add up. Most businesses fail because the people who started them do not know how to keep track of their expenses compared to their income. If you make $200,000 a year after grossing $2,000,000 a year as a solo practitioner with a small law firm, this is good! But it is not easy and the odds are probably stacked against you by 95% regardless of how successful you think you are going to be.
“I will keep my expenses low and make more money!” you say.
You may … but this is all easier said than done. Practicing law is a completely different exercise than running a business. Running a business requires you to watch the money all the time and make a series of “daily” strategic decisions about the best places to deploy your resources so that you make money and do not lose it. Running a business requires that you have first-rate customer service and do other things very well to succeed. It is nearly impossible to succeed when you do not know how to operate a business well.
A few years ago, I met a highly credential guy who used to be an attorney with a large law firm and had a book of his own clients that generated a few million dollars a year. With his book of business, he was making $400,000 to $500,000 a year at his law firm and he decided to open his own practice. He went to each of his clients and told them that if they gave him a retainer, he would work on only their matters at the new firm that he was planning to operate out of a shared office he was renting.
About half of his clients agreed and he ended up getting a series of retainers totaling $1,000,000 for the year and thought he was doing extremely well. However, after one year he lost almost all of his clients. For whatever reason, he was not servicing them in the same way and they were not as happy, he did not know how to operate a business and made mistakes, his clients wanted the name of a larger law firm, and so forth. Unable to pay his bills, he ended up becoming a “financial adviser," essentially, a stockbroker. Incredibly, just a few years after being a highly paid and respected partner in a major American law firm, he was approaching his old clients “hat in hand” asking them if they were interested in purchasing the latest hot stock or mutual fund.
This cautionary tale—and I have several of them—should show you that running a business is far different than working inside of a law firm or succeeding there. Even if success is realistic, it is not easy for even the most talented of attorneys.
When you are operating your own business, you are responsible not only for doing the work (and getting the work done) but other things such as:
- Motivating employees
- Keeping work coming in
- Keeping expenses down
- Keeping clients happy
- Making sure clients pay their bills
- Recruiting employees
- Firing employees
- Dealing with vendors all-day
- Advertising and promoting the business
This multitude of responsibilities is huge and something that is far, far more extensive than sitting down at a desk and doing work or sitting down at a desk and doing work plus trying to generate business. None of this is easy. This does not mean that it is impossible; it just means that the skills necessary to be a successful attorney (inside a law firm, for the government, or in-house, for example) are far different than the skills needed to succeed with your own business.
Take something as simple as getting clients to pay their bills. Most solo practitioners and attorneys with small law firms will tell you that they rarely collect 80% of what they bill. Clients are “fickle” and when you do not have a large name behind you, it is often difficult to get them to pay their bills. Attorneys run the risk of not getting paid all the time, and it is even more difficult when you have your own law firm.
“I will require everyone to have a replenished retainer at all times!” you might say. Good luck with that. This might work to some extent depending on your practice area; however, this generally will also reduce the number of clients who are interested in hiring you.
2) Most Solo Practitioners Start Their Own Law Firms Because They Do Not Have Any Other Options
It is common for attorneys who cannot get jobs (for whatever reason) to become solo practitioners. For example, this happens when attorneys cannot get jobs because:
- They graduated from a poorly ranked law school.
- They graduated from law school during a very poor economy.
- They went into the wrong practice area at the wrong time and got laid off (some practice areas do well when the economy is doing very well. Others prosper when the economy is doing poorly).
- They are too senior and law firms will not hire them.
- They are too small of a geographic area to have any other options.
- They were formerly in-house, with the government or with a public-interest organization and law firms will not hire them.
- They have a bad reputation, have had “issues” (malpractice, legal problems, ethical problems, suspensions, etc.) that make employment with a mainstream law firm difficult or next to impossible.
- They have substance abuse problems (drugs, alcohol, etc.) that so clearly affect their performance and availability for work that they cannot function inside of a structured legal environment that demands any sort of accountability.
The point being: Most attorneys (but not all) who become solo practitioners do so due to the fact that other people will not hire them. People who get divorced, or hire personal injury attorneys, and so forth do not know this, of course. But attorneys from most law firms and most companies do.
There is nothing wrong with starting a solo law practice, and I am not trying to denigrate attorneys who have done so (I did as well). Nevertheless, most attorneys who do this are doing so because of the lack of options and are putting themselves at a distinct disadvantage because they generally no longer have access to
- The largest clients
- The most important and challenging work
- Clients willing to pay a lot of money
- Support systems of a large law firm
- Training and the company of other sophisticated attorneys
- The ability to spin off client work to a variety of other attorneys in the law firm
- A steady, reliable paycheck
The majority of attorneys who start their own practices do so because they have to and not because they want to. I have spoken with thousands of solo practitioners throughout my time as a recruiter and virtually every single one of them became a solo practitioner and started his or her own law firm because the attorney had to as opposed to wanting to. Law firms, in-house counsel, and others who hire attorneys know that a solo practitioner is likely doing what he does because he or she had no other options. This means there is (sadly) a stigma attached to being a solo practitioner because it often carries the message that “I am doing this because no one wants me.”
There are two sides to every story, including that of a solo practitioner. Many do become very successful, take on important civil rights and other cases that change history, make huge incomes with personal injury cases, and experience profound success far beyond what they would have in a large law firm. This is the “positive side” and for those who succeed (or even come close to succeeding), nothing can beat being your own boss and making an impact. Some of the happiest attorneys out there are solo practitioners and many even end up building large, successful law firms. There is absolutely nothing wrong with being a solo practitioner when you succeed. The problem is that most solo practitioners become solos because nothing else materializes for them and the world knows this.
3) Most Significant Clients Will Almost Never Use a Solo Practitioner
Once you become a solo practitioner, very few large clients will ever hire you. Most decent-sized companies that can afford to pay high legal fees will generally always choose a larger law firm to represent them. The name of the law firm carries a lot of weight and shows the opposing side that the client means business. If you are a solo practitioner, then your odds of working on matters as large as you were working on when you were inside of a law firm are very slim indeed.
If a decent-sized client (or even an important individual) uses a solo practitioner for a matter, then he or she might look like a fool to the other side. The other side will interpret this as “weakness” and think that the client cannot afford an attorney with the resources of a larger law firm with teams of attorneys, paralegals, and support staff. There is very little incentive for large clients to ever hire solo practitioners because large clients need the resources that only large firms can provide.
Even very wealthy individual clients use large law firms for divorces, trusts and estates work, and other personal matters. People who are worth millions of dollars generally keep company with other very wealthy people and all of these folks know the “legal hierarchy” and therefore do not use solo practitioners for important matters.
An exception to this is that solo practitioners may work on “safe” parts of sophisticated transactions and other matters for larger clients. Many smaller real estate developers have trusted relationships with solo practitioners to do work for them. Many very wealthy people also often use solo practitioners for work in this way.
4) A Significant Number of Solo Practitioners Need to Do Contingency Work and Make a Large Portion of Their Money from Such Work
The majority of solo practitioners earn a significant portion of their money from contingency work (especially personal injury). Not all do, of course, but the majority have some involvement in this sort of work. Even on the transactional side, solo practitioners often have a contingency role. For example, if a corporate attorney is working on a deal, he or she may take a small amount of equity in exchange for waiving or lowering fees. A real estate attorney may take a small amount of equity in a deal/project in exchange for a fee when the project sells. Large law firms do not do this, as they would rather “get paid now” rather than hope to get paid later.
Solo practitioners spend their days negotiating with clients and there are few clients who walk through their (office or spare bedroom) doors who do so not expecting a deal or asking the attorney to take a reduced fee, delayed fee, or contingency interest in a case. Most of these solos end up doing this work because they need to and do not have a steady stream of clients willing to pay them by the hour. This results in an income for most solo practitioners that can fluctuate wildly from year to year and certainly is not conducive to such things as getting a mortgage and buying a home.
5) Your Skills Will Generally Rapidly Deteriorate as a Solo Practitioner
Because most solo practitioners do not attract large clients, they generally spend the majority of their time working on matters for smaller clients. These smaller clients typically run out of money faster, negotiate rates aggressively, fail to pay their bills on time and fail to pay for the sort of thoroughness (in-depth research and so forth) that wins cases and deals. Thus, solo practitioners end up doing inferior work to what they would do in a large law firm. As a result of consistently working for shallow-pocket clients, the work quality of solo practitioners rapidly deteriorates to the point where they do the minimum amount of work necessary on each matter, thus limiting their professional experience and development, in turn making them into poor attorneys.
I have hired solo practitioners who formerly worked in large law firms to work in my law firm. In some cases, these attorneys may have graduated from top law schools at the top of their classes and had a few years of experience in large law firms before being thrust out on their own. With no other attorneys in their law firms, they developed horrible habits that often are close to irreversible. They take shortcuts, are sloppy, and become eager to do things quickly rather than with a high level of quality (and then get paid as much as possible for their poor work product).
Large clients not only want a good name doing work for them, but they also want a good work product. Attorneys coming from large law firms with good pedigrees may think that they will not develop poor work products by going solo, but this is simply not the case. Without peer review of work, these attorneys almost always end up developing poor work products because they are no longer working on sophisticated matters and are forced to cut corners on the matters they do work on.
6) If You Are Starting a Law Firm with Others, This “Union” Will Rarely Last
Many solo practitioners quickly bring on others to work with them and start small law firms. Others may leave a law firm with a few trusted attorneys and start a law firm this way.
These "partnerships" rarely last.
They typically break up for financial reasons and disputes about money. Like a marriage headed for divorce, each party wants to get more out of the relationship than the other. If there is not enough money, attorneys have no qualms about leaving the firm to find the money somewhere else.
Having watched this process play itself out throughout my career, it is safe to say that the odds of most partnerships succeeding are very rare indeed. They do work and can work, of course, but most do not. They do not work because not everyone contributes equally. Large law firms have intricate processes and methods (developed over decades) to determine how the “spoils” of their efforts are to be divided. New law firms generally do not have experience in setting up and handling these types of processes and the firm ends up imploding.
7) Law Firms Provide a Structure That Is Conducive to Success Compared to Being a Solo Practitioner
Law firms have a whole series of processes in place that makes them successful.
- They put an emphasis on billable hours to ensure the work is done or “created” so that bills and salaries get paid.
- They reward partners disproportionately according to who brings in business and have systems in place to extract the maximum amount of money from them for the lowest cost.
- Their marketing strategy for a variety of practice groups insulates them to some extent in different economic climates (to keep billable hours and work coming).
- They have finance, human resources, marketing, and other departments that make the firm function.
- They constantly push out poor performers and bring in high performers.
Regardless of how you evaluate it, large law firms are built to succeed and have all sorts of internal processes designed to ensure success. Solo practitioners have none of these things and that makes their success far less likely. They tend to bill fewer hours and to spend more time on “lower value” administrative and other matters than attorneys in large law firms.
8) Solo Practitioners Are Generally Much Less Respected by Judges, Clients, and Other Attorneys, Putting Them in a Difficult Role
For the reasons outlined above, by going solo, attorneys are generally putting themselves in roles where they (and their clients) are likely to be less respected by other people of influence within the legal world. Solo practitioners thus have a more difficult time being effective advocates than lawyers with large law firms.
Judges and opposing clients generally have far more respect for larger law firms than they do for solo practitioners. They know:
- They are less likely to appeal adverse rulings.
- They are less likely to come up against them again.
- Their client is likely not as influential.
- They are likely to miss important matters in litigation, deals, and so forth and can be taken advantage of more easily.
- They are never likely to be hired by solo practitioners.
Very few important clients would ever allow a solo practitioner to be involved in their significant legal matters. Regardless of whether the solo practitioner can do the work, clients know that solo practitioners are not likely to be taken as seriously by the other side.
9) Once You Become a Solo Practitioner You Can Almost Never Go Back to a Large Law Firm
Unless the solo practitioner has unique skills (patent prosecutors with electrical engineering degrees, certain types of real estate and corporate attorneys) or significant business (generally in excess of $500,000), the odds of a solo practitioner ever going back to a large law firm are extremely slim. Namely, large law firms believe that: (1) the solo is doing this because he has to; (2) the solo does not like working with other attorneys (or cannot get along with them); (3) the solo may come to a large law firm and leave again (taking the large law firm’s clients with him); and/or (4) the solo practitioner’s skills have deteriorated to a level where he is no longer suitable for a large law firm.
Regardless of how you spin it, the solo practitioner rarely is going to be welcomed back to a large law firm. Even if a solo practitioner has a good book of paying clients, the solo practitioner is rarely going to have clients who are paying the same rates they would have to pay to a larger law firm; therefore, the work is not “portable.” While solo practitioners sometimes do go back to work inside of law firms, it is quite rare.
10) Solo Practitioners Generally Make Far, Far Less Money Than Large Law Firm Attorneys
In my experience, what happens to most solo practitioners is that they spend a significant portion of their time trying to negotiate how much and how soon they will get paid for whatever they are working on rather than doing work. I have seen solo practitioners negotiate with a client for two hours on the phone about attending a hearing for a client, drive two hours round-trip to pick up $1,000 in cash before attending a 15-minute hearing, and then spend another hour negotiating to get $1,500 to file a two-page motion. The work of many solo practitioners is often more style than substance and more about negotiating with clients about money than anything else.
Because solo practitioners spend so much time chasing down clients who will pay them and waiting to get paid various “contingency” checks, it becomes very, very difficult for them to make money. Without large clients willing to pay ongoing hourly rates, solo practitioners often spend their time trying to get people to pay them and not practicing law.
Conclusions
You can succeed by owning your own law firm. While there is a lot to learn and understand when deciding to have your own law firm, the most important point is that you always need a source of work. As long as you have work (and plenty of it), and try to hone and not weaken your legal skills, you will do well. Most businesses (solo law firms included) fail because they do not have enough clients buying what they are selling. Finally, you must have the temperament and disposition to “hustle,” to go out and make sure you have a constant stream of work. In my opinion, no one should start a law firm without considering all of the pros and cons delineated in this article and making sure it is the right choice for him or her.
Frequently Asked Questions
Should I Start My Own Law Firm?
Lawyers who want to start their own business have to evaluate the pros and cons of starting their own practice. Owning your own business may give you complete control over the business and all of its assets, but operating one comes with its own set of challenges.
The majority of lawyers who start their own businesses believe it is all about "practicing law". However, they do not realize that besides dealing with legal issues, they will also need to deal with staffing, finance, accounting, and marketing of their law firm. You must evaluate your skills and attitudes before starting your own law firm.
Despite the appeal of going solo practice, you should weigh the pros and cons before starting your own law firm.
The Pros of Starting Your Own Law Firm
Freedom and Control Are at Your Fingertips
You can become a new business owner and set your own priorities when you start a business. You have more freedom and flexibility as a small firm compared to a larger firm. Although you would have more freedom, it does not mean that you would be working fewer hours. In contrast, you would have to work harder than ever. However, you would be directly reaping the rewards of your labor if you did so.
Taking on Interesting Projects
As a consultant, you may begin with any client, but as time goes on, you may be offered more interesting projects. In addition, you can focus your practice on a particular area of law if you wish.
Costs of Starting Up
Thanks to technology and cloud options, starting a law firm is becoming more affordable. A home business can be started for as little as $3000 if you decide to practice there. Attorneys that start their own practices tend to avoid the cutthroat politics and ambiguities inherent in large law firms.
The Cons of Starting Your Own Law Firm
Never Work at a Large Firm Again
In most cases, you can never return to working in a large law firm again, unless you have specific skills that make you an invaluable member of the team. This is due to the negative perception that solo practitioners' skills are no longer good enough, they are unable to work with others, or they do not have the skills to work in a large firm.
Prepare Yourself By Doing the Legwork
As a business owner, you have to handle everything from soliciting clients to finding employees, finding an office space, and keeping your accounts. However, few lawyers have the entrepreneurial mindset needed to create successful law firms. Make sure your overhead costs do not exceed your cash flow until the new law practice can afford them.
Lack of Mentorship and Isolation
Lawyers who want to go solo have to deal with the loss of camaraderie with other attorneys, especially when they were previously part of a larger firm. As a result of your relationships, you could rely on your support system. A smaller firm may require you to develop a new support system and to look for mentors.
How To Start Your Own Law Firm?
Starting your own law firm can be intimidating. If you wish to start your own law firm, you must follow the below checklist:
Create A Business Plan
Creating a legal practice requires an in-depth business plan. Creating a mission statement, understanding your competitive advantages, and planning financials and marketing strategies are all part of this process. You can then plan for the future based on an understanding of what your business will look like.
Your plan should include a summary of the location, the focus of the practice, as well as goals and objectives. A startup budget and a monthly budget will be necessary, as well. Conduct market research on potential clients and the capital needed for the first three months to operate the firm.
Select A Practice Area
With your business plan in place, you will need to identify the legal areas you plan on practicing. Choose the position that is the best match for your strengths and weaknesses.
Today, it is rare for a lawyer to provide a generic practice. Your credibility and network will be enhanced if you choose a clearly defined practice area.
Choose A Firm Name
Your practice may be named after you or based on your expertise. Consider using a name that reflects your expertise but is not misleading.
It violates the Rules of Professional Conduct, for example, if you use the words "and Associates" when there are no associates in your firm. A sole practitioner's practice is also in violation if "Group" is used.
Establish Your Own Entity
Determine the organizational structure based on how you intend to manage and run the firm. For example, sole practitioners can choose sole practitioner, professional corporation, or single-member LLC, while multi-member firms can choose a professional corporation, partnership, LLC, or LLP.
Choose a Location
Your practice area will have a lot to do with your ideal location. Before selecting the right place and office space, consider different locations and options. You may want to rent a space, share an office space, or work from home. You can save money, pool resources, and feel less isolated if you share an office space.
Office Furniture, Equipment, and Supplies
An office will need office furniture, supplies, and equipment, such as printers, computers, business telephones, files, office furniture, reception furniture, and staff furniture.
Establish a Network
Consider ways to attract new clients if you do not already have a client base. An effective referral network is the first step in this process. Make every effort to build relationships with local lawyers and seek out opportunities for referrals.
Become a Member of Local Organizations
In order to form a network, lawyers can join a lawyer association in their area. These associations utilize a listserv, which is an email list management software that contains members' e-mail addresses. A mentor who has experience can show you the ropes and mentor you.
Create an Online Presence
Lawyers can no longer survive without technology. A telephone book is no longer a place where people look for lawyers. Google does the job for them. People looking for credible information about a business usually check out the business website first.
Make a Financial Plan
Keeping your law firm's books can be stressful, especially if you handle it yourself.
- Pay your expenses and deposit payments from clients into a separate business bank account. The account could be an operating account, a trust account, or an IOLTA account. A Lawyers Trust Account (IOLTA) is a trust account in which the lawyer accepts and holds funds from third parties for the purpose of advancing costs and fees.
- You should also put money aside for taxes, business registration fees, and other licensing fees when planning your finances. Check when your state's various business tax obligations are due. Make sure you have allocated enough funds to meet these obligations.
- Calculate the marketing and advertising costs for your business, including business cards, your website, brochures, and announcements.
- In addition to professional liability insurance, property and casualty insurance is also essential.
- Identify your billing method - whether to charge by the hour or fixed rate, rates, billing cycle, and payment terms. Compensation must be considered when hiring full-time or part-time staff.
How Much Money Do You Need To Start A Law Firm?
There is a continued decline in jobs in Big Law as the legal landscape changes. Law school graduates are increasingly focusing on opening their own firms rather than seeking employment. By cutting costs and implementing the right technologies, you can start a company for under $3,000 if you adopt a DIY attitude.
Office and Licensing
Working from home will cost you almost nothing. However, you will need an LLC and liability insurance. LLC costs can range from a few hundred dollars to thousands of dollars depending on which state you live in. A typical attorney gives between $400 and $600 in liability insurance per year, but they can pay as little as $200.
On the safe side, we are thinking about $1,500 to begin. Additionally, if you do not wish to use your home office address, you may need to use a mail service.
How about shared office space? Startups and small companies that do not mind working together can lease portions of floors in buildings from companies like WeWork. Personal office spaces are often out of reach for most people, with rent in New York reaching 74 cents per square foot. Shared offices are a more affordable alternative. Rent is usually $220 to $450 per month for these spaces. It would be wise to weigh the cost against the benefits before choosing this option.
Where Will Your Clients Find You?
Search engines are used by 96 percent of potential clients to find legal advice. In other words, you must have your own website. Having a web presence is crucial to inviting potential clients to find out more about your company despite the network connections and word-of-mouth referrals you have.
With free tools such as Wix, it is possible to create a responsive, mobile-friendly website. However, you can consider hiring a professional if you are not interested in spending the time. Many service providers allow you to host your website and purchase a domain for less than $100 per year.
Adding up the totals so far: You could expect a total of $1,600 if you work from home. If you share your office space and pay a web designer, those numbers will go up.
Practice Management Software
With a cloud-based solution and a smartphone, laptop, and Internet access (which most of us already have), you can set up a paperless law firm in minutes.
Lean tech stacks are offered by cloud-based platforms. Smartphones are essential for mobile operations, and laptops are useful for office use. You can also use a tablet to read documents on the go, as they will be easier to read on a tablet than on a phone.
Firms may also find it difficult to keep track of their finances. Clio integrates with both Quickbooks Online and Xero, which are both great cloud-based packages. Xero Starter costs $20 per month, while Quickbooks for the Simple Start package costs $120 per year. Whichever package you choose, make sure that it suits your needs. Payments can be accepted directly into your Clio account with Boutique and Elite subscriptions.
Regardless of whether your office is paperless or not, scanning and digitizing paper will always be required. It is beneficial to have a dedicated scanner, and the Fujitsu ScanSnap can scan directly into Clio without having to go through the middle step.
Clio features a convenient design, affordable pricing, and award-winning customer support.
Attorneys would be required to store, encrypt, and backup their data on-site without a cloud-based practice management system. All of these functions consume time and energy, and all run their own overhead costs.
Summary of Costs
One-time fees:LLC: $1,000 (approximate; varies by state)
(Optional) Web Designer: Rates will vary
Annual fees:
Liability Insurance: $500 (approximate. Ranges between $400–$600 on average)
Web Hosting + Domain Name: $100
Clio (Boutique): $708
Maintain LLC: $200 (approximate; varies by state)
Quickbooks Online: $120
Microsoft Office 365 for Business: From $73 annually
(Optional) Shared Office Space: $2,640 (approximate; ranges between $220-$450)
Starting and running your law practice from home with Clio Boutique for the first year will cost you about $3,000.
