Anyone who has considered opening a solo or small firm practice can’t help but worry whether their venture will be successful. Provided the worry does not overwhelm, this can help keep you motivated and focused.
But focused on what? When considering whether they can run a successful practice, law firm owners should look beyond the math and consider the more philosophical question of how exactly they define “success.”
Of course, a law practice is a business and to that extent its goal is to make a profit. A business that is not profitable is not successful even if it provides exceptional service. An unprofitable venture inevitably will fail, definitely answering any philosophical question as to its success….
I’ve written before about some of the concerns facing a lawyer starting a new firm. For example, you need to consider how many hours you will work, how many of those you will bill, how many of the dollars billed you will collect, etc. Only then can you factor in your expenses and arrive at your estimated profit.
Simply making a profit is likely not enough. If you have low overhead, it might be easy for the business to technically be profitable. But having a business which technically is profitable does not necessarily entail being able to support yourself and your family. I think most people would not deem their business to be a success unless they are earning enough to comfortably support themselves.
Assuming a law practice is profitable enough to provide some adequate level of support, should it be deemed a success? Or is there more?
A law practice is a business, but law is also a profession. To that extent, a law practice is dissimilar to many other endeavors for profit. For a professional, being profitable is a necessary but not sufficient condition of success.
My research (i.e., five minutes on Wikipedia) reveals that classically, there were only three “professions”: divinity, medicine, and law – the so-called “learned professions.” The attributes of what it means to be a “profession” influence what it means for a law practice to be successful.
One of the defining attributes of a profession is an occupation in which personal services are provided for a fee. Services are personal in that they are performed by one or more individuals exercising independent judgment.
Professions also are governed by codes of ethics. Don’t snicker. I know that lawyers don’t have the best reputation, and deservedly so. In every area of practice there will always be lawyers who cross the ethical line. Even so, being a lawyer entails honoring certain ethical rules above and beyond some baseline moral code.
A profession also is characterized by specialized training and/or advanced education. Lawyers receive too much of the latter and not enough of the former, but in any event this barrier to entry is purposeful and important.
What all this means is that running a law practice means operating as a professional. This, in turn, means that to be deemed successful, a law practice should provide personal service to clients within defined ethical bounds. In this regard, being a legal professional is unlike selling widgets. The standards for success are different, and more onerous.
Adding in the concept of a “boutique” further complicates matters. “Boutique” is a word that is frequently used but rarely defined. To me, a boutique firm is one which serves only a specialized or niche practice area. Usually, but not always, a boutique is a small firm; however, a litigation-only firm might accurately claim to be a boutique even if the firm has hundreds of attorneys.
A successful boutique, then, might be a firm which has mastered or gets great results in its specialty. Maybe the lawyers are masters of the intricacies of cross-border transactions. Maybe they efficiently process and send hundreds of debt collection letters. Even a “low end,” highly commoditized practice could underpin a successful boutique. If you handle only shark bite litigation (is there such a thing?), and you never lose a case, then I imagine you have developed a successful boutique practice.
Of course, winning and “justice” are relative concepts, and lawyers should question what result the client wants, and at what cost. A successful boutique may be one whose results are not superior, but which provides superior value; i.e., quality of services or results vis-à-vis cost.
All of this is just to say that running a successful law practice generally, or a successful boutique in particular, entails more than merely earning a comfortable living.
I know that it’s always the well-off who profess that they “don’t care about money.” If you don’t have enough, you always care. And especially “in this economy,” any lawyers who have a law practice that is paying their bills and supporting their families are certainly “successful” by any reasonable use of the word. In the real world, this matters most. (This is especially true for recent law school graduates, for whom the first days are the hardest days.)
Still, sometimes I try to remember that a successful legal practice also means a little bit more.
Tom Wallerstein lives in San Francisco and is a partner with Colt Wallerstein LLP, a Silicon Valley litigation boutique. The firm’s practice focuses on high tech trade secret, employment, and general complex-commercial litigation. He can be reached at email@example.com.