Start Up LLP: Creating Your Own Law Firm
Starting your own law firm: it isn’t for everyone. Some of you may recall that Roxana, of Notes from the Breadline, viewed herself as ill-suited to solo practice.
But many other lawyers do want to strike out on their own. And some attorneys, faced with the difficult legal job market, decide that they have no choice but to hang up a shingle.
The final panel of Tuesday’s conference, Getting Back in the Game: How to Restart Your Career in a Down Economy, was devoted to the subject of how to start and grow your own law firm. Four successful solo or small-firm lawyers told their stories and offered advice.
Read about the discussion — covering such nuts-and-bolts topics as office space, malpractice insurance, and how much it might cost to set up your own firm — after the jump.
The solo practice panel was composed of:
OLIVERA MEDENICA (moderator), Chair, City Bar Small Law Firms Committee;JEREMY SALAND, Crotty & Saland;
CAROLYN ELEFANT, Author, Solo By Choice and myshingle.com; and
ALLA ROYTBERG, Solo Practitioner; Director, City Bar Small Law Firm Center.
If you can’t find a job, should you just start your own practice?
Alla Roytberg said she was “tempted to say no.” You should really put all your heart and effort into starting your own firm if you want it to be successful. It’s not best done as a temporary measure — say, something to do before returning to a job at a large law firm.
Starting your own firm has many appeals: more independence, more control over your work, and more flexibility. You may struggle in the beginning, but in the long run, this is an opportunity for you to do exactly the type of work you’ve always wanted to do.
There is such a thing as starting your own practice by default. It’s not the best idea to start by default, but it doesn’t mean you won’t be successful.
Carolyn Elefant echoed Roytberg’s views. She said she sometimes compares solo practice to the Supreme Court. The SCOTUS is the court of losers; a petitioner winds up there because they’ve lost everywhere else. The Supreme Court is, in that sense, the court of last resort. But who wouldn’t want to argue before the Court? Solo practice is an opportunity to vindicate yourself and your clients — just like appearing before the Supreme Court.
Even if you go solo by default, you’re still making a choice — you’re choosing to stay in law. Why should you give up the intellectual challenge and satisfaction of practicing law just because you’ve lost or can’t get a job with a law firm? You can offer lower rates than the large firm you used to work for, while doing the same type of satisfying work.
Jeremy Saland agreed, but stressed the importance of maintaining a good relationship with the firm you used to work at. You may get referrals from your former employer. For example, in a criminal case with multiple parties, with your former firm involved as counsel to one of them, you might be brought in to represent another party.
What do you need in order to start your own firm?
Roytberg outlined some of the requirements. First, you need to pick your corporate structure. Talk to your accountant about the options and tax consequences. If you think this will just be temporary, it might not be worth it to adopt a complex structure.
Second, you need office space. The most shoestring option is a virtual office. Several companies offer this option. In New York, for a few hundred dollars a month, you can have a Manhattan address, a receptionist, voice mail, etc. If you need to meet clients, the New York City bar association has conference rooms that you can book.
Third, you need to open bank accounts: a business operating account, and an attorney trust account, under IOLA (Interest On Lawyer Account). There are different types of escrow accounts too. Some banks offer these accounts for free.
Fourth, you should think about malpractice insurance. It’s not mandatory in New York, but it’s highly recommended. When you first start your own firm, your costs should be fairly low, unless you’re practicing in a high-risk area (like securities, IP, or entertainment). Insurance won’t be expensive at the start, but the premiums will rise as the years pass (because you’re covered from the time that you started your practice).
Miscellaneous considerations: health insurance, for yourself and any employees; workers’ comp; basic tech tools, like a computer, a handheld device, a database program, and some kind of billing software.
It’s also good to develop a business plan. There’s a sample business plan on the New York City bar association website, under small firm resources. You can measure your progress against your business plan.
Saland emphasized the importance of setting goals in advance. What type of work do you want to do? What financial milestones do you want to reach? What kind of work-life balance do you want to have? You should know the answers to these questions going in.
If you’re starting your firm with a partner, you have more preparation to do. You need to figure out how to divide the revenues and expenses. You need to vet your partner carefully. Does he or she have good credit? Can this person provide financial support for the practice, especially in the lean early years? What kind of contacts does this person have? To succeed in the solo or small-firm world, you don’t just need to be a good attorney; you need to have the ability to generate business.
Elefant sounded cautionary notes about partnership. You and your partner may have different goals. You may partner up with someone who commits malpractice. To test out a possible partnership, you can start off sharing an office space and/or other expenses with someone else, but without becoming a full-fledged partnership; if that works well, then you can take the plunge into full partnership.
How can you generate business for your firm?
For starters, according to Saland, you need to have a web presence. It can legitimize you, and it can drive your business. You can start by posting on Craigslist. You may not land a million-dollar client that way, but everyone has to start somewhere. There are referral services available online. There’s Avvo.com, as well as LinkedIn and Facebook.
Think about blogging. Saland has a blog that generates about 400 hits a day, which helps in terms of marketing; readers think that you’re a guru in a given topic. If you do blog, however, update at least once a week or once every other week. Don’t let six weeks go by without updating.
Of course, networking is key. Tap into the network of former colleagues. For example, Saland is a member of a network for former prosecutors under Robert Morgenthau in the New York District Attorney’s office.
What is the ballpark budget for starting your own firm?
The costs are not high, said Elefant — maybe $2,500, plus your malpractice insurance (which can range from $900 to $2,000 a year), plus your health insurance and office space costs (a few hundred dollars a month each).
All in all, according to Medenica, you’re probably looking at about $10,000 for the first year. Join a bar association; your dues will get you a lot. You can get access to some legal research services, useful forms, conference rooms, and other resources.
Roytberg identified additional costs, including a website and business cards. But these are not expensive.
It is not necessary to have full-time support staff when you start out. Elefant mentioned the possibility of working with a “virtual assistant,” to keep your fixed expenses low in the beginning.
How do you figure out what to charge your clients?
It’s a process of trial and error, according to Saland. Try to get a sense of what other practitioners in the field are charging — but don’t compare yourself against a big firm, which will be much more expensive.
It can be helpful to accept credit card payment, Roytberg said. Just be careful not to mix your business funds and your client funds.
And what about collection issues — how can you make sure you get paid?
Credit cards can facilitate this. Elefant also likes electronic billing: you can send invoices to clients electronically, which they can they pay online.
Get a retainer up front, and require clients to replenish the retainer. Give clients predictability about what they’ll pay; then they’ll budget for it. Flat fees can be helpful in this regard. Collection problems often arise when legal fees go outside the scope of the client’s budget — say, a $20,000 matter that turned into an $80,000 matter, with the lawyer failing to keep the client updated on the expanding scope of the matter.
The collections process can be a pain, but you should try to avoid suing clients for non-payment, said Roytberg. They might respond by hitting you with a grievance charge or malpractice case, which is the last thing you need — especially in the early stages of your practice.
Earlier: Breaking Back into Biglaw
Casting a Wider Net: Small to Mid-Sized Law Firms
Career Alternatives for Attorneys: A Panel Discussion
(98) 
Comments
dumbass
I can really see a lot of the BigLaw losers starting their own firm. Yeah, right! They went to BigLaw because they couldn't see themselves as real attorneys. Now they know they aren't real attorneys, so how many do you really think are going to hang out their shingle and be a real lawyer. Answer: Close to zero, but a few might try it, and they almost certainly will be the better for it.
2, you are so right.
http://solopracticeuniversity.com/
Agree with 2. It would be a comedy of errors.
A lot of the unemployable grads from my school seemed to be doing this lately. If you have no experience, and can't get a job because your grades are so shitty, why would you think you can start up a firm?
The kind of person who goes to a big law firm is so risk-averse and complacent that he/she will never succeed in an entrepreneurial environment. Good luck though, because it will be fun to see them flame out.
If you go to Harvard, you can do anything. Harvard readies you for whatever you endeavor to do on the hilly road of life.
wolfpack
What about the glaring elephant in the room - what types of cases can an ex-junior biglaw associate handle competently as a solo practitioner? Two years of doc review and random research assignments hardly prepare you to chair an entire case.
9, lol, but I thought the BIG LAW EXPERIENCE was so valuable and career-enhancing?
J/k
Big Law trains you to be a solo practitioner's secretary. Good luck everyone.
As a former BigLaw litigator who started my own firm (which has become pretty successful, relatively speaking), I can see #2's point. I couldn't really name any corporate or transactional attorneys I know who would be willing to do what I've done.
It does seem a lot more common among litigators, though there are many litigators who were willing to just stay in their own comfort zones (which is a problem when you no longer have a job). Typically those are not the best litigators, either.
Money. Starting a firm takes money. Malpractice insurance. Office space. Letterhead. Form Documents. Office fixtures (desk/chair/cabinets/lights/et al). Web site. Legal research materials (ie. Westlaw/Lexis/LoisLaw). Business cards. Phone book ad. TV ad to run during "All My Children." Health insurance (at least here in MA, where it is required).
I don't give a shit what this guy says start-up costs are; they are substantially more. Office space is a couple hundred a month? Maybe in a strip mall in the middle of Kansas, twenty years ago.
Spent all your money on going to law school? Then you aren't starting a firm.
Drivers are rude.
Such attitudes.
But when I show my PIECE
Complaints cease
Somethings odd
I feel like I'm God.
You stupid dumbshit Goddamn MOTHERFUCKER!!!
"Is that a wise Latina woman schooling a white male? Yes, I think it is."
-- SotomayOR!
yea, you guys are right. big law attorneys should leave the small shitty projects and no-name clients to the solo practitioners. we'll focus on the big stuff that requires real thinking.
glad we're in agreement.
big law associate
Offspring lyrics on ATL? I never thought I'd see the day.
whiner at 13 = Roxana St. Thomas.
You rent office space only to meet clients and you pay by the hour.
“The kind of person who goes to a big law firm is so risk-averse and complacent that he/she will never succeed in an entrepreneurial environment.”
This is silly. The kind of person who goes to biglaw is virtually everyone who is given the opportunity. For the most part, the people who don’t go are the people who don’t get it.
There's a couple of things they don't teach you in Harvard Business School, one is how to cope with defeat, the other is how to handle a shotgun, I'm going to do both right now.
Russ Cargill
16 - doing a lot of big stuff and real thinking while trolling legal tabloid comments?
Comment removed by moderator.
MOAR BAREBACK
Since I left Biglaw and went solo, my client list has not gotten smaller. It's just gotten more selective.
did anyone else lol when you read you could get office space for a few hundred bucks a month? ha!
16, the most senior lawyer is the lead doing the real thinking. In your world, that would be the senior partner. You, as an associate, are not doing any real thinking, though the work might still be challenging your intellect.
Good luck making conforming changes from singular to plural, or cite checking footnote 78 of the brief.
The ship be sinking...
Oh, and by the way, 16, you're a bloody wanker.
I refer my residential real estate closings to Ass & Lobster, LLP.
I have gone this route recently, and it is fun. Whatever happens, I am my own boss and control my situation.
I would like to work at Ass & Lobster, LLP. @29, hook me up with an interview?
24 = awesome
Is 30 a real, non-ironic poster??? Its been a long time since I've seen anyone actually post under their own name, and not as a stupid avatar like PE. Thanks Frischa for actually contributing something.
2,
Puh-leaze. People went to biglaw for the salary and "prestige." The minute David Lat bestows a prestigious adjective on solo practitioners a bunch of YLS and HLS (etc) students will be starting their own firms. Add in a few high level judges and law professors saying solo practice is where it's at and you'd have a stampede of new solos.
Everyone knows law students (and lawyers) are into mob mentality.
To: All of the people cracking about the cheap office space
Advice: read the damn article - they explain in detail how it can be done by establishing a virtual office.
Takeaway: smugness doesn't hide the fact that you're an idiot
Frischa is obviously using this site to troll for clients. If he handles personal bankruptcy, this might not be a bad idea.
People who go to biglaw tend to be the type that are great at doing the legal work but don't have the social skills to hustle for clients.
Also, maybe not in Manhattan, but in most of the country you can get office space for a few hundred a month at a co-op or subletting space in a larger office.
The idea of becoming a sole practitioner is usually just naive escapism for most young lawyers after they get grilled for missing an objection in a set of responses to interrogatories or miscoded a "hot doc"-
if you cannot hack it at a larger place, you probably can't hack it at a small place where you need to do everything- most successful attorneys will be good whether they are at a large firm or working at their own place, because they are good at what they do - bad lawyers will be bad where ever they are, and if you need to piss away money to hang a shingle and find that out, you are really sad.
38 is the classic example of the biglaw doc reviewer who has no concept of solo practice and would fail miserably at it. There's not much miscoding of docs or missing objections when you're settling a personal injury or drunk driving or pulling title for a house closing. Being a good technician is much less important than being able to network to get clients. No one's going to pay you hundreds of dollars an hour to draft interrogatories. It's a volume business and 99% of the work is cookie cutter stuff any decent paralegal can do.
2 - I think you're right on the money
7 - you're half right - that's probably true for plenty of biglaw people but not all - many of them have had golden handcuffs for years and have been complacent and are frustrated with their jobs and their lives and just have been making "good enough" money so that the balance hasn't tilted where they feel like, what have I got to lose? So they haven't let their entrepreneurial spirit loose, and in this economy many will see a real opportunity and run with it. With years of legal practice and a little creativity and courage, they will be able to do better outside the biglaw environment.
Don't make the mistake of lumping all biglaw people into one basket - there are too many lawyers who hide for years because they are good lawyers and chicken s*** to try something new. And the wave of the future is... new. But many of these people are smart and we underestimate them to think they can't succeed elsewhere.
That said, the seminar at the bar association cleared out before the solo panel. Obviously dozens of people just aren't up to the work of starting a new business. Fine, but many more are and that's a good thing. High risk high gain.
Kash, when I think of you the ship be rising.
Roxana, you light up my life.
Virtual or no office ftw, depending on client needs. Don't understand the need to pay thousands a month to be able to sit in front of a computer to work. Meetings are the only thing that would be an issue, and that can be worked around.
Biglaw = Epic Fail
"Some of you may recall that Roxana, of Notes from the Breadline, viewed herself as ill-suited to solo practice."
Roxana is ill-suited to life. Sorry, but someone had to say it.
So, frischa - Is Sotomayor smart or dumb?
A telephone conversation:
"Hello, client. I'm calling to confirm our meeting in the alley. My office? No, I don't have an office; I can't afford one. [silence] Hello? Hello?? OK, we can meet at the Starbucks across the street from the office building with thirty different law firms in it. [sound of phone hanging up]."
46 - get with the program - have you ever heard of a virtual office? as for meetings, the bar associations have free meeting space for members and many clients are happy to meet in their own homes (no commuting) or a neutral conference space. and only an idiot would say, "i can't afford an office". a good marketer would say "I have a virtual office to keep my billing rate as low as possible to save you money"
47 - "sarcasm." Look it up.
Still, I would imagine any number of would-be clients (mostly on biz side, as opposed to divorce/PI) would be wondering if they were getting involved in some fly-by-night operation with an officeless firm.
It amazes me that so many seemingly smart people are content making money for other people. Times like these are perfect for starting a solo practice. Clients want lower fees, so they are abandoning expensive firms. While "Big Law" is handing out pink slips and cutting salaries, small firms are getting more work.
I have a virtual office to meet my virtual clients for my virtual practice. They pay me in virtual dollars.
7 - You're full of shit. Some people go BIGLAW for a couple of years simply for the money.
I'm not a risk averse sort of person. But I need to be able to survive, pay some bills, and save some money.
I'm currently a second year associate. And I plan on going solo within the next two years.
Sounds crazy, but I don't care. Yes, even if that means personal injury cases, employment discrimination, small contract disputes, criminal law...
Yes, law schools - particularly the good ones - are crawling with people who have absolutely no social skills or entrepreneurial ability. Yes, I agree that most BIGLAW types could never hit the pavement and drum up business. But that's not a universal rule.
Lots of my peers from law school looked down on the fact that I wanted to go solo and work small law. Like it was sacrilege. But who gives a fuck. I'm really looking forward to it.
46/48, I don't think "sarcasm" means what you think it means.
Simple: Just add water.
39: You fail to appreciate that there are many solo and small plaintiff shops that handle securities, consumer class actions, antitrust and employment cases. I work at a five attorney firm and we do all of the above (S.F.). Not every solo does P.I. or real estate closings. Here, it is all hands on deck from the senior with 25+ years experience to the most junior with 3. If you don't know what you're doing and if you can't pull your weight, you have no place in solo/small shop litigation.
49 - 100% in agreement with you
I actually did this... explaining my absence from the boards for many months. Comments are too short to leave anything of substance. But if I can succeed, any careful litigator can.
1. Budget - plan on 18 mos. b/f you turn a profit. That means either (a) substantial savings, or (b) a line of credit from your friendly banker. (b) is a MUST have. It's easy if you have a carefully-thought-through business plan.
2. Office. NO on the virtual office. There's prestige associated with having a downtown office address where you are every day. Check out subleases on Craigslist. I paid ~$1100 for a corner office on the 22nd floor in (sorry, it'll give me away) Boston. I got a sweetheart deal, but they're not that unusual.
3. Business. Takes 18 mos. to really get it going, more or less. I kept names and phone numbers of EVERY client at my old office. Called/wrote/e-mailed them when I set out on my own. Took ~9-12 months, but I think the budget analysis won them over in the long run... I'm ~40% cheaper than big firms.
4. Business, cont. I took a bunch of dog cases at first. Some generated revenue, some didn't. Most ensured that (a) I had grateful clients, and (b) they'd refer business to me. That's been positive. Think of the bar lawyer referral services... Great source of leads.
5. You need ~4-10 yrs experience before you do this, IMHO. To be brief, you need to know the basics of litigation (how to obtain an order of notice, standard discovery objections, pragmatics of the cost/benefit analysis). Not the best idea for a newbie lawyer - spend 2-3 years in some scut-work firm before starting on your own.
56 - do you think your suggestions apply specifically to a litigator going solo/starting a practice? I've read more materials that suggest it's more like six months to turn a profit, but some take longer or are profitable right away, so your estimates are higher than I've seen (I wouldn't be doing litigation, which is why I'm asking)
52- well done.
YOU SPOILED F'ING SELF-ENTITLED BIGLAW, DOUBLE IVY PIECES OF CRAP. I LAUGH AT YOUR DOWNFALL ALMOST IN THE SAME WAY THAT I LAUGH AT THE DOWNFALL OF BIGLAW.
USE YOUR HEFTY STIPENDS OR SEVERANCE (WHICH AMOUNTS TO WHAT MOST PEOPLE MAKE IN A YEAR) AND TAKE A CHANCE.
ONLY THE STRONG SURVIVE AND IT IS IRONIC THAT THE COUNTRY'S SUPPOSED BEST AND BRIGHTEST CAN'T FIGURE OUT HOW TO SUPPORT THEMSELVES
GO ASK MOMMY AND DADDY FOR MONEY
SURVIVAL OF THE FITTEST
59 HERE ATTENTION CHICAGO ATTORNEYS
FURTHERMORE, I HAVE NICE OFFICE SPACE FOR $600 AND THAT INCLUDES INTERNET. IT IS IN A BUSINESS CENTER THAT HAS OFFICES ALL OVER IN THE SUBURBS. THIS IS GOOD FOR BUSINESS. I SPEND MAYBE 5 HOURS PER WEEK IN THIS OFFICE AND A SIGNIFICANT AMOUNT OF TIME MEETING CLIENTS IN SUBURBAN OFFICES THAT ARE PART OF THE PACKAGE.
IF YOU WANT TO SHARE IT WITH ME FOR $300, REPLY ON THIS BOARD AND I WILL GIVE YOU AN ANONYMOUS EMAIL TO CONTACT ME.
MY ONLY REQUIREMENT IS THAT YOU ARE COOL AND NOT LIKE THE BIGLAW A-HOLES I USED TO WORK WITH.
51 – Right on.
49 – It’s the easiest way to pay off the student debt, and save a little to start your practice or do anything else you want to do.
2,3,5,&7 – Wrong, you hatas. The people who owned you in law school would own you in their own practice as well. The winners in law school were smart, driven, and capable. This is a deadly combination, and would probably do better as a group against the people who did worse in law school as a group. There are a lot of reasons we go into big law (see comment to 49 above). You only get one chance to try it out of school. It’s not nirvana and I’m not getting great training, but I know I made the right decision. It’s nice getting a fat paycheck in the middle of this economic wasteland. School loans: paid off last year (1st). House: paid off this year (2nd). Next year: a little pile to have the freedom to try something new.
I worked in big law. I worked in fortune 500 in house. I worked in small (25 lawyer firm).
I now run a solo in a resort town outside a mid-size city. Life. is. fucking. great. My time in biglaw was among the worst of my life, in retrospect.
But don't do it until you are at least 6 years into practice if you do litigation. At least 10 years if you are doing real transactional work--i.e., drafting custom contracts that actually transfer assets of material value, not just cookie-cutter software licenses for bigco vendor contracts dept.
Frankly, solo litigation is easier to get going, because litigation is just less value add and not as hard to develop skills in. Sorry litigators. I have done both types of work in a commercial setting, and the transactional skills were much, much harder to develop.
If you go off too soon on your own, you risk ending up not developing decent work habits that a good law firm might help you develop, if you find a good mentor.
"The people who owned you in law school would own you in their own practice as well. The winners in law school were smart, driven, and capable."
Go find a client who can and will pay. Then strut, little lawyer.
I started my own firm 17 years ago after getting fired from a big firm for being a pain in the ass. They went bankrupt. I didn't
I would be very appreciative if commenters could weigh in on 62's view that significant "apprenticeship" experience is important before going solo. 62 recommends 6 years experience under someone for litigation and 10 years for transactional. This seems like a daunting length of time. And what if one has no choice in the matter? In other words, it is dismaying for those who have been unable to get hired in the first place or have been let go during the slowdown. Thank you for any input.
I recently started my own practice after having spent years at Biglaw firms in SF and NY (the firm dissolved, I went solo rather than tag along with others). My practice area is transactional and the person who said that you need at least 6 or so years of experience is right. Even then, if you were the type who liked to manage juniors rather than do the work, you won't be able to pull it off.
I also caution against virtual offices. I rent a nice office in a business park, surrounded by potential clients and with plenty of space to have a good work area, an area to meet clients and an area to store books, etc. Having an office to go to is very important, for image, functional and mental reasons.
My total expenses per month are about $2k, which is everything from rent to insurance to telecom. I charge about half the rates I was being billed at by my last firm and I'm well on my way to profitability in my first year. Depends on what the rest of the year looks like, but I've already covered all costs for the year with the billings I've collected and there's every indication that business is getting better.
Like others have said, going solo was the best decision I've made in my professional life. I make less money but my stress level went from near 100 (on a scale of 0-100) to about 10. I do what I want, when I want, how I want and only have to be concerned with pleasing my clients. No more jackass partners, office politics, etc. I don't miss the money at all.
$2K per month is NOT accurate
West LA office:
Class A space (on the Westside):
$4000 / month (that's el cheapo somewhat respectable space)
1500 square feet
Office expenses (equipment/telecom/supplies/Lexis Nexus subscriptions, etc): $1000 / month
Malpractice Insurance per year:
$125 / month - $167 / month
Car Lease/Car Expenses:
$400 / month
1 secretary:
$3000 / month
TOTAL: $8,567 / month
Let's say $9,000 / month
66,
How many years did you practice before you went solo?
67
What solo needs 1500 square feet??? I'm in an office sharing arrangement in a nice area of LA with 400 square and some shared conference/copy space for less than $800/m. Sure it's not as nice as my old office, but it's a good start, and I'm already making more money than I was at my old firm.
And $3000/m for a secretary??? I have a part-timer and that works fine for a WHOLE lot less than that. I've trained her on the law, pay her hourly, and I'm out less than $500/m.
Your post sounds like BigLaw mentality trying to fit into a solo practice. That approach is certain to fail.
And sure it's nice to throw your car in there for tax purposes, but it isn't what I'd call a "business expense" as was contemplated in the article - you're going to have a car regardless of what you do, so that's a fixed cost.
I agree that $2000/m is doable and reasonable, give or take $500.
66 here. 68, I practiced for a bit over 10 years in large firms before going solo. I think that at about year 7/8 you have enough under the belt to make it work.
67, you have rich tastes. 1500 sq ft is way more office than is needed. I have 700 sq ft (a reception area and an office) and it's more than enough. I could easily make do with 500 sq ft. No one goes to a solo to be impressed by office space. The key is to make it professional, make it efficient and make it centrally located to where your prospects are. My rent is app. $1000 and I'm in a tech business park in the Bay Area.
I think 67 is talking about a litigation office of more than one person. That $1k equipment/telecom/lexis number is way out of line with what I pay. I pay about $100 a month for my phone/fax/voicemail/internet, another $75 for cell/blackberry and supplies are pretty minimal. I have two computers (laptop and desktop), a good printer/scanner/copier, a network and very workable software (Worldox as a document management system, RTG for time/billing) and all of that was under $3000 to purchase (no monthly fees, other than whatever maintenance is needed on the hardware). I don't need Lexis, as I'm not a litigator.
The malpractice amount is also significantly off. I have securities coverage and my premium is about $4k a year (call it $350 a month).
I don't have a secretary and as 69 pointed out, your numbers reflect a Biglaw outlook, not a solo outlook. I have part time admin help for the billing and other small admin stuff but I don't need a secretary to type or run redlines or the like, as I do that myself. If I ever have big jobs to process I can go to the center in my office park and that would get charged to the client.
I'm not sure why you would try to include the car as a monthly expense for a solo...
So here's my numbers:
Rent: $1000
Telecom: $175
Insurance: $350
Website/various other supplies/expenses: $100
Admin: depends on the month, anywhere from $0 to $500.
$2k a month is the number that has been pretty consistent for me in the past year.
My concern relates to the nuts and bolts of solo or small firm practice. Although I have a good job and do not expect to be fired, some other lawyers and I have toyed with the idea of starting our own law firm. We have all the necessary legal skills to make it work and we have some clients. We probably would start with three to six attorneys, maybe more. Of course, we worry that some clients would not follow us, and that our business could dry up after a year or two, but, personally, my biggest concern is that none of us knows how to manage a law firm. In fact, few if any of us would want to manage a law firm even if we knew how. Who wants to spend all day preparing budgets, overseeing accountants, hiring and firing secretaries, paralegals, and file clerks, shopping for insurance, negotiating leases and software licensing agreements, managing IT personnel, etc? And if you manage to do all that, how can you still find the time to generate business and practice law? Are there affordable management consulting firms that can advise sole practitioners or small firms on how to do these tasks efficiently and cheaply? Or, better yet, are there companies that actually perform these tasks efficiently and cheaply so that sole practitioners and small firm lawyers don't have to do them? If there are, I reallly would like to hear some names. I searched the internet for this type of consultant and found no obvious candidates.
this is the most useful and interesting thread I've read on ATL in months.
Because when you think START-UP solo practice, you think Class A premium Westside LA office space and $12,000 worth of computer and office supplies as a must! Damn 67, LOL!
You better take yo azz to BestBuy/Staples/Costco! Not to mention garnering a discount of some sort maybe direct from the manufacturer :)
The biggest barrier for a low/mid-level biglaw associate trying to do this is that they don't know enough about the practice of law.
Biglaw associates are not lawyers in the sense of counselor and advisor, they are administrative secretaries with diplomas that allow high billing rates.
5 years of doc review, editing privilege logs, and asskissing doesn't prepare you for the burden of managing an entire litigation top to bottom. Similarly, years of redlining prospectuses and putting closing docs in binders doesn't give you anywhere near the experience needed to effectively counsel a client in strategic business decisions.
I like pickles and pickled beets!
For those who are thinking of starting their own offices:
the biggest hassle of running your own office is dealing with employees (secretaries, paralegals, law clerks, associates). Employees are a HUGE pain the butt.
That is, unless you decide to work entirely on your own.
Many of us associates are perfectly capable of running things on our own, and we're not all risk-averse wimps. The big hurdle in my mind is clients. If I knew I'd start off with some good clients, I'd leave BIGLAW today.
I did my 5 years of time in Mega Law (and, for all of you elitist weenies out there, I also graduated from a top-5 law school), and then transitioned to a small, elite firm to gain real experience--well before the meltdown. After two years or so, I decided to start a small firm. The first 18 months were grim. We had to tap credit lines, pitch family and friends, and forsake our Cipriani lunches (egads!). Eventually, things started to turn around. We're now flourishing on both the transactional and litigation sides.
No one is going to give you business as a 1-6th yr. Biglaw associate with no real experience in a solo practice. Also, folks are aware of the phenomenon of recently laid-off associates trying to start small firms. Get some real experience first, in a small shop or the government. But eventually, the combination of Biglaw cachet, real-world experience, and tenacity, will pay off.
Good luck.
Here is a question though, suppose you've worked for a year during law school doing transactional work with a small firm essentially doing everything an attorney does with the exception of signing the paper AND you're familiar with running a successful business, is it really necessary for transactional work to have x amount of years experience after law school if you intend to start a practice fresh out of law school? Prior to lawschool I worked for 5 years in lawfirms as a legal assistant/paralegal which is not the same granted, but I didn't come straight to lawschool with no experience and I have no intention of working for a large firm regardless if they'd take me. Any thoughts?
79-
Not even close. As a paralegal or even junior associate you have never run a deal, counseled a client about the real world impact of the choices you are presenting or negotiated against skilled counsel. You may be able to handle entity formation but there is little chance you could serve as competent counsel to a client in a transaction.
80- I appreciate your thoughts. While I have actually negotiated with opposing counsel deals from start to finish and counseled clients about the impact of real world decisions, no one can truly say whether or not someone is capable of starting their own practice fresh out of law school. Its obviously been done before so its not impossible. However, it appears the most accurate answer to my question is that it depends on the person as everyone is different and without seeing my resume and background, you can't really assess whether I would be competent counsel. Thank you for the insight, your thoughts have been very helpful.
81- are you also 79? If so when have you negotiated and counseled? It sounds like you are still in law school.
82- o I am no longer in law school, however while working for an attorney during law school I would be for example on the phone with the client counseling and my supervising attorney essentially just sat in the room and listened. I was merely just trying to see people's opinions about starting a practice where you have experience, but not necessarily the type you get while working for a large firm after law school. In all honesty, 80 did a great job in helping me realize that there is no way to really judge whether certain experience is sufficient and the opinion is based on the joe schmoe attorney and not individuals.
83, you may have some interesting experience but a year working for a lawyer while in law school is not going to get you anywhere near the level of experience you need.
Retired partner here: I was at a birthday party last night with a lot of folks between 55 and 70. I spoke with a very nice woman, whose son had just graduated first in his class at a top ten law school. He had accepted a job with BigLaw, only to find out recently that he has been deferred for at least a year. The woman was so upset I thought she was going to lose it right there. She didn't know what her son could do now, what with loans and no job prospects. She kept looking at me as if I could offer her son a job right there. I'm retired, and my old firm is laying off attorneys and deferring first years just like most of the other firms out there. I just wished her luck, then offered to get her another drink. Within the next hour or so, I noticed that she was totally smashed, having told virtually everyone at the party the same story and drinking new drinks at every stop. I truly felt sorry for her son, but welcome to the real world. I didn't think she wanted to hear about opening a solo practice, but that is a real option for her son, only not the one he wants to hear about right now.
Check out this d-bag of a HLS professor: http://dailyahole.com/2009/06/21/harvard-law-professors-are-assholes/
I recently left a big firm after 4 years to open a small litigation law firm with a friend. It turns out to be a great move, as we started generating new business right away and become profitable in the third month. Sure, our clients are not big name companies, but we handle a diverse arrange of work, from personal injury, to contract dispute, to federal appellate work (yes, as lead counsel. We would never get to argue a federal appeal case even if we were junior partners at our previous firm).
My advice is that you must have a business plan, and think about how you can distinguish yourself from other small/solo firms. It helps that we have exceptional qualifications that would allow us to work for any large firm, which helps attract business. Also, we target a specific type/segment of companies/individuals for business (thanks to our personal connections). Finally, you need to have MONEY. We saved up a lot of money so that we can survive for 12-18 months without any income. The expenses have been about $3K-$4K a month.
62 here again, commenting on 79.
Thinking about it some more, it is not really enough to have negotiated and drafted hundreds of contracts to be a fully-formed transactional attorney, you have to have seen what happens *after* the contracts are signed.
Following what happens to clients when deals go well is instructive. Watching deals go to hell, though, is unbelievably instructive.
I learn fifteen times the number of things from deals that go bad relative to the successes.
And having opposing counsel try and use contract language against you in a large-dollar post-close lawsuit is an experience you simply must have before you can consider yourself fully "blooded in" as a transactional lawyer. After that, you will bring a level of care and attention to contract language you simply don't have absent that experience.
It was about ten years into practice before I had seen enough deals and the aftermaths to speak with some justified confidence when advising clients. Those years made law a panorama, not just the 2-D photos of law you glimpse during school and early practice years.
If you are unable to get that many years with someone else's work to help you develop experience, you must do the other things I did in my first ten years: read a lot of "how to" materials. Not academic stuff, but practice-oriented "get-shit-done" guides produced by other practitioners.
And collect forms materials like a OCD sufferer. In ten years of practice, I saved almost every form I ever encountered. If I only had hard copies, I filed and boxed them with an updated index. If I had electronic copies in MS Word, I saved those in an electronic database of my own creation, again with an updated index. After ten years, I had a form for almost any legal situation of almost any nature. I use that every single day in my legal practice. That database is the most valuable tool I have. I am not talking about just the closing binder from your deals. I mean *everything* you encounter.
If you run across a CD in the back of, say, an employment law treatise, copy the forms on the CD into your private collection.
Even before my database was as complete as it is now, that database paid dividends early in my career. People thirty years into their law practice came to me and asked if I knew something about issue X. I could almost always find a sample form and an informational memo in my database. That is a huge leg up on things and will help you develop a reputation as someone who can do things.
If you work at a firm, create your own shadow file of forms files, separate from the firm. Make it yours--keeping in mind any IP issues or client confidentiality concerns (cough cough)--and keep it at a place where you can access it if you are fired without warning. (That is, KEEP IT AT HOME, not the office!) And don't spread it around that you have the database. Other lawyers will want copies of it---especially if they are considering canning you and know how valuable your body of collected works becomes over ten years of practice.
When I had a big run in with an asshole partner at a firm, one guy at the firm started asking if he could look at my database and materials because it "sounded interesting". Yeah, right. He wanted to copy it all, because he thought he would lose access to it. Trust me, keeping quiet about the forms files and database and its contents is a smart move.
Finally, when starting off on your own, consider a book by the ABA called "Starting a Law Practice" by a guy named Foonberg. Some of what he says is obvious. Some of what he says is dated. But much of what he says is timeless and utterly essential.
Frankly, even if you intend to work for another lawyer, much of what Foonberg tells you will help you in that job too. His main point is that, in the end, all you sell as a lawyer is your wits, and until you have your own clients, you are at career peril.
70, you write:
"The malpractice amount is also significantly off. I have securities coverage and my premium is about $4k a year (call it $350 a month)."
But that's because you have the securities coverage. The original post (emphasis added):
"When you first start your own firm, your costs should be fairly low, UNLESS you're practicing in a high-risk area (like SECURITIES, IP, or entertainment)."
wow. interesting thread. So, just skimming through the responses, I'm guessing, as a recent grad, starting your own practice w/o at least 3 to 10 years of experience is a bad idea ? If so, what then would prepare you to successfully go solo ?
90 (and the others who asked about going solo right out of law school, or with fewer than 3 yrs experience: read Carolyn's book, Solo by Choice: How to be the Lawyer You Always Wanted to be (link is in the post), which has a whole section on soloing out of law school. Read every single post at Elefant's blog, MyShingle (link also in post). Join Solosez (listserve for solos and small firms run by the ABA; open to non-ABA members; http://www.abanet.org/soloseznet/index.html ).
89, 70 here. My post was in response to 67, not the original post. 67's post disputed my original post's statement that $2k was my monthly budget.
91- Wow, some positive advice for the adventurous....thank you very much for that. It's extremely refreshing considering some of the other comments on here.
As for monthly costs of operating solo, I live in the NYC area (in the 5 boroughs) and am considering a solo/semi-virtual practice, working from home at least initially, and figure costs could be significantly less than $2000 per month, believe it or not (yes, in NY) - figuring no rent, hiring contract lawyers on an as-needed basis, then with initial malpractice insurance at $200 per month or less, bar dues at $200 per month or less, some new technology at $200 per month... you get the idea. I'm just talking out of the gate - I'm sure that things would get pricier as the practice grows.
I second the suggestion to read Carolyn Elefant's book Solo By Choice, it's really amazing and will give most people thinking of starting their own practice by themselves or with others, whether after years at a big firm or right out of school, courage and perspective. It's probably easier solo'g after years at a firm (in some ways) but these times require actions that aren't always the "easy" way to do it, and lots of courage, and some risk taking. At least as a solo one can keep one's costs down.
71 - you sound like you're thinking things through well but you MIGHT consider simplifying a bit more and going smaller at the beginning, to keep costs down - that might not be the way to go but it struck me to consider it, at least, to lower risk.
For those in NYC/east coast that don't think a virtual firm will work, please go to www.axiomlegal.com to see a virtual firm that has succeeded right in your backyard.
For those in NYC/east coast that don't think a virtual firm will work, please go to www.axiomlegal.com to see a virtual firm that has succeeded right in your backyard.
I've only ever read posts about law school on this site, and I was hoping (expecting?) that the non law school related posts would have more mature/insightful comments (more befitting professionals).
While there are a few here, the overall tone of these comments is more appropriate for middle school than adults in a professional field. I guess I shouldn't be so surprised, since so many of you display a remarkable inability to think for yourselves (thus all the worship of hierarchy and the continual policy of allowing Vault and US News and World Report Rankings to do the thinking for you). Many of you are, no doubt, fantastic biglaw trained monkeys.
I guess this is an excellent illustration of the difference between intelligence (the kind that gets you into those high ranked schools and law firms) and wisdom (the kind that would keep you from making the sorts of comments routinely made on this website, the kind that would allow you to recognize that rankings and pay aren't everything in life and may lead you to actually have a more happy, fulfilled existence).
Yay 97 - I too wish that the abovethelaw comments were more mature - I usually wince a few times when reading any comment string, but you'll find some nuggets of wisdom strewn amidst the junk