Boutique Law Firms, Small Law Firms, Solo Practitioners

Why Having Clients When You Start A Law Firm Isn't Always The Nirvana You May Imagine

4 tips for starting your own firm.

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Ed. note: Please join us in welcoming our newest columnist covering the world of small law firms, Carolyn Elefant of MyShingle.

Although clients are a law firm’s raison d’être, believe it or not, having a roster of clients on opening day isn’t indispensable to, or even a predictor of a firm’s future success.   Many lawyers — whether they are new graduates, or seasoned government attorneys, or moms re-entering the work force, or low level associates and non-equity partners unceremoniously and unexpectedly given the boot — launch law firms without a single client to their name and do quite well, thank you very much.

Still, wouldn’t it be a whole lot easier to start a law firm with one or two clients already locked in?  Not necessarily….

Don’t get me wrong – the advantages of starting a firm with a couple of clients, particularly those with ongoing work, are obvious.  Most significantly, having clients at the inception of a practice means that you’ll see a steady stream of revenue right away.  As a result, you can build a solid foundation for a sustainable practice at the beginning instead of spending your first year or two scurrying about in constant survival mode.   Even better, since many new solos and smalls (particularly, big law expatriates)  typically slash the hourly rates that their former firm billed them out at by thirty to fifty percent or offer alternative billing structures, they experience an unexpected surge of work from clients who can now afford to use them more frequently.   Sounds like nirvana, right?

Except — even though a couple of clients decided to come with you doesn’t mean that they’ll stay with you.  In fact, many small clients or start ups that go with solos will ditch them when the first round of VC comes through the door.

But even in ordinary circumstances, clients can still leave for a variety if reasons. So many new solos who bring clients along spend an inordinate amount of time servicing them to make sure that doesn’t happen.  Still, often this added level of service comes at the exclusion of drumming up new business. So when work from the original set of clients tapers off — and it invariably does — those lawyers who put marketing on the back-burner find themselves scrambling. And believe it or not, it’s almost harder to start beating doors for new clients after you’ve been in business for a couple of years because by then, colleagues expect you to be self-sustaining and wonder why you’re not.

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Moreover, even though initially the cut rates you’re charging to the clients who came with you seem like big money (after all, even making $150 an hour is more than most lawyers effectively earn at a firm), believe it or not, your new rates may not be high enough.  Although some cases can be automated or handled far more efficiently than by your former law firm, some matters are so complex that they just take time no matter how efficiently you operate.  So you may find yourself devoting all of your time to working for the clients you brought with you — which isn’t all that different from being employed — except without the benefits.  On the other hand, if you want to delegate some of that client’s work to an associate or outsource it to someone with capabilities that match your own, you may not be able to do so at the lowered rates that you’re charging.  But how high can you raise your rates before the client either reduces the amount of work it sends (which again, may not be such a bad thing) or returns to the old firm?

Perhaps the biggest drawback to starting a firm with existing clients is that it’s just too darn easy to get too comfortable.  You get so caught up in the steady paycheck from the client that it’s almost as if you’re employed at a job. But you’re not.  By contrast, when you start out hustling from Day One (and I started with one $1500 client, so I think I know what I’m talking about here!), you never forget how. Starting out without much isn’t easy, but learning the importance of always being on is worth the price.

Still, if you do have the good fortune to bring along some clients when starting your firm, here are some tips to ensure that in a few years, your business is growing, not slowing:

1. Never stop marketing.  Even if your existing clients keep you occupied ten hours a day,  carve out a few hours a week for face time with referral sources and potential new clients. Whether that’s a weekly breakfast or lunch, law firm newsletter, blogging or social media, it doesn’t much matter; what’s important is that others see that you’re out there and keep you in mind for work.

2. Mine Your Clients.  Although sometimes clients will send more work your way, others may not because they figure that your firm may not be large enough to handle it. If you have established clients, ask if there are other matters that you can assist with and figure out how you can do it — perhaps by partnering with other lawyers who have the capabilities your client needs.   Even if the work doesn’t come through, the exercise of collaborating with other lawyers may lead to other new work.

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3.  Delegate. Okay, maybe you can’t delegate your complex legal issues to a new graduate. I practice energy regulatory law, so I “get” how difficult and/or expensive it can be to bring on professionals who can help out with substantive work. Even so, you can certainly outsource administrative and “substance-lite” tasks to personnel with less expertise. For example, a virtual or administrative assistant can set up or format your newsletter, organize contacts and calendar networking events.  A new grad can research blog posts, cite check and proof documents and identify industry events you might want to attend.  One benefit of having a steady stream of revenue is that you can afford to hire people, at least on a freelance basis if not full time.

4. Diversify  Look for emerging yet complimentary areas related to your practice focus where you can expand.  For example, many lawyers with traditional employment clients have gained expertise in social media and privacy law as a natural outgrowth of work for existing clients. They can then take this new expertise to attract other clients. Again, if you’ve got a stream of revenue, you can afford more expensive CLEs and industry conferences to hone your skills and meet prospective clients.

Now, let’s turn the tables — what’s your experience? Did you start a firm with or without clients — and what was your experience? How about those of your colleagues? Please weigh in below.

Carolyn Elefant has been blogging about solo and small firm practice at MyShingle.com since 2002 and operated her firm, the Law Offices of Carolyn Elefant PLLC, even longer than that. She’s also authored a bunch of books on topics like starting a law practice, social media, and 21st century lawyer representation agreements (affiliate links). If you’re really that interested in learning more about Carolyn, just Google her. The Internet never lies, right? You can contact Carolyn by email at elefant@myshingle.com or follow her on Twitter at @carolynelefant.

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