Small Law Firms, Solo Practitioners

Back In The Race: The Freedom Myth

A big draw of being a solo practitioner or a member of a small partnership is the freedom. But how much "freedom" is there really?

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Whenever I talk to fellow solo practitioners at a conference, a mixer or book club gathering, they tend to brag about the benefits of running their own business. One told me about how he regularly conducts a four-hour “client meeting” at the local golf course. Another tells me how she attends a CLE seminar via Skype in her living room wearing pajamas and bunny slippers. And someone else is elated that she is able to work while having time to attend her daughter’s piano recital.

A big draw of being a solo practitioner or a member of a small partnership is the freedom. The freedom to call the shots. The freedom to bill whatever and however you want. The freedom to pick and choose clients and practice areas. The problem is that these freedoms come with responsibilities and additional work, which made me wonder whether these freedoms were real or mythical…

Instead of one boss, you have many bosses. A big impetus for starting your own practice is being your own boss. Or getting away from your old, insane boss. You won’t have to meet a deadline just so the boss can go home in time to watch the ball game. You won’t get yelled at for misspelling “fantasizing” on your brief. You’ll get the year-end bonus that you deserve for billing 2000 hours or closing a contentious settlement deal.

No one tells you what to do, right?  Well, about that….

As a solo business owner, many people became my de-facto bosses. My primary bosses are clients and judges, where disobedience can have grave consequences, both financially and professionally. In theory, when you are an employee of a law firm, your bosses are supposed to be unhappy if your work performance is subpar. But clients can be unhappy for a variety of reasons: you didn’t get the result they expected, no matter how many times you warned them otherwise, or they are upset over the two hours you billed doing legal research when they “could have Googled it themselves.” And if clients are unhappy, they will tend to be slow in paying you, or won’t pay you altogether. Not to mention being a pain to deal with. And in most states, you can’t file a complaint with the labor department for nonpayment of fees.

Less common bosses include: landlords, vendors, banks, bar associations, and chairs of committees where you volunteer.

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Even though you want to specialize your practice, you may end up practicing “door law.” Many have advocated specializing and finding a niche clientele. Now if you choose the right specialty, the work can be fairly easy and lucrative. The problem is that it may take awhile before you find enough clients who need legal advice for cross-border transactions involving dogecoin. Until then, you will have to practice “door law,” which means taking any client that comes in the door.

The funny thing about door law is that solos try not to tell other solos that they do it. This is because it makes them look desperate and indecisive. You may also limit your referral sources from other attorneys because you might be seen as a potential business competitor.

You have bills to pay. In most respectable law firms, an employee does not have to pay for office supplies, staff, or rent. In exchange, you get paid at a fixed rate with a possible bonus. If you’re lucky, your employer will pay for your CLEs, conferences, bar dues, and malpractice insurance.

As a solo practitioner, while you get to keep every penny you get from your client, you have to pay for overhead, sometimes with money you don’t have. Now this is obvious to many, but few realize how quickly overhead expenses add up:

  • Oh, only $500 per month for rent.
  • Only $100 per week for a part-time secretary.
  • Only $200 per month for the Westlaw subscription.
  • Only $100 per month for office supplies.
  • Only $200 per month for the SEO guy.

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Now add in taxes, bar dues, lunches with clients and referral sources, and association fees, to name a few. Next thing you know, you’re wondering why you are losing $2,000 to $3,000 per month on a slow month.

You will spend a lot of time working. And you won’t get paid for it. Every corporate slave envies the solo practitioner because of the freedom it supposedly provides. Go ahead, take Monday afternoon off to visit the massage parlor. You can finish your work on the couch while watching Game of Thrones, right?

I found out that in order to have a profitable law practice, a solo not only has to be a lawyer, but also a manager and a salesman. Doing each requires substantial time investment and does not guarantee getting paid. And very few people are effective at being all three, particularly at marketing themselves. When I wasn’t working on client cases, I was up at night going to networking events and preparing for speaking events.

Now some will say that you can hire an associate, secretary, or marketer to do the above for you. True, but you still have to spend time supervising. You have to make sure that the associate didn’t misinterpret the law or cite incorrectly. You have to make sure that your marketer’s activities are not violating ethics rules.

You will have to help a lot of ordinary people in order to make money. The altruistic allure of solo practice is that you get to help good people in need as opposed to defending rich peoples’ unscrupulous activities. But these days, most ordinary peoples’ problems in some way involve money — specifically the lack of it. If money didn’t cause the problem, the potential client’s lack of money will affect how you will represent the client.

Most solos I know accept monthly payments from clients in lieu of paying a large up-front retainer. But there is a risk that the client will stop honoring the agreement. Typically, the longer the payment plan, the more likely the client will default, particularly if he questions whether his case is winnable.

In order to be profitable and minimize losses, a solo with this business model will have to adopt some form of volume practice. This means an attorney will spend a lot of time working on many client files or will have to farm the work out to paralegals.

For me, the freedom of solo practice was largely a myth. While being a solo practice provided greater freedom and flexibility than a salaryman, I still ended up working a lot of hours — with the risk of not getting paid for most of my work. But I believe that eventually, a solo practice can provide flexibility and freedom while becoming very profitable, so long as the owner sticks with a solid business plan and hires the right people to help run the business.

Shannon Achimalbe was a former solo practitioner for five years before deciding to sell out and get back on the corporate ladder. Shannon can be reached at sachimalbe@excite.com.

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