Back In The Race: Failing Twice
When you make a mistake, intelligent people try not to repeat it. But some people just have to learn the hard way.
When you make a mistake, intelligent people try not to repeat it. But some people just have to learn the hard way.
Today’s sorry solo story comes from a large city in the West Coast. Jobless after graduating law school in the mid-nineties, “Donnie” started his own practice. After a few years of breaking even doing small cases and unreliable contract work, he quit to work for the government.
A few years later, he tried opening his own practice again and seemed to be making decent money. But he grew to hate the hustle and the uncertainty. What eventually happened to Donnie?
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In Act One we take the time machine back to the mid-nineties, in a large city, when the job market was somewhere between bleak and dead. I was one of those unfortunate souls who was not able to line up a job before graduation. I knew I was in for the long haul when one-third of my graduating class was at career services the Monday morning after taking the bar exam. Misery loves company. Anyway, nothing fell into place until that November, right before bar results came out, when an alum from my law school with an office downtown took pity on me and started paying me to do research projects. At least it wasn’t wherever the not-so-cool kids were working at the time. Then once I had my bar results, other attorneys in the same building started feeding me work on a case-by-case basis.
A friend of mine started his own solo practice around the same time. He said starting an office was easy and I should do it too. Well, it’s real easy when your wife has a good job with full benefits so you don’t have to worry about health care or food, you have cash to help start your office, and you have equity in your home to serve as collateral for a business loan in case times get tight. I was single, broke, had no assets, and living off of what I could make doing contract work and the $400 a month I borrowed from my parents to help me pay rent. But I was armed with a pager, a business card, and a post office box — the world was my oyster!
Without the capital to open my own office, I needed to do something, so I kept doing contract work for a few attorneys. By the following summer, one of the attorneys I was doing work for said he would keep me busy full-time doing family law cases. He also said that he was going to open a second office, and if I proved myself as a “contract attorney,” he would hire me to run this other office. Of course, “contract attorney” was code for “you’re my employee, but I’m not going to pay taxes for you to be here, so I’m going to break the law and call you an independent contractor because I’m cheap.” I wanted the experience, and didn’t have the money to be principled, so I accepted his offer and didn’t go to the Labor Commissioner. I was at Cheapskate’s office at least five days a week doing all the grunt work. Usually the ex parte appearance at the Family Law Court that was a 45-minute drive from the office — that was mine. The appearance across the street — that was his! So I would leave at 7 a.m. to drive out to the middle of nowhere court, make a 15-minute appearance, get back to the office around 10 a.m., and he would only pay me for the 15-minute appearance. At first I tried to bill him for the full three hours because I was an “independent contractor.” But he never paid for three hours, told me to deduct the mileage on my taxes, and said that if I wanted to get paid for the three hours, I could pack up my stuff and leave.
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By the end of the following year, I was so busy doing contract work for the Cheapskate that I didn’t have time to chase down my own clients. At the end of year one as a lawyer, I made just over $16,000. Maybe I should have been on food stamps on some other type of aid. But who needs that when you have a couple of credit cards!
Next summer, it was clear that Cheapskate’s second office would never materialize. I cut back my time at the Cheapskate’s office to three days a week because I still needed the money and found another attorney in a different part of town who would let me work in his office two days a week (and paying rent by working on his cases for a reduced fee), he’d feed me the cases he didn’t want, and I could bring in my own clients too. We’ll call this attorney the Cowboy. I finally had an outlet to have my own office so to speak. By the end of the year, I made just over $18,000, but I still had credit available on the credit cards! Yes!!! And I was getting just enough cases of my own that I stopped working for the Cheapskate altogether and was spending five days a week at Cowboy’s office.
Since I had been doing a lot of family law, I continued to work in that field. I also branched out to civil litigation, some criminal cases, and even had a few business clients. Even though I had a handful of cases of my own, I wasn’t making a lot of money off of them. Being green, I wouldn’t get enough of a retainer up front and would end the case with a huge bill the client wouldn’t pay. Then I had the option of doing nothing to collect the rest of my fee or suing my client, and the Cowboy warned that the client would probably file a complaint against me with the State Bar. At the time, I didn’t make enough money to afford malpractice insurance and there was no large law firm collection department backing me up. So I basically ate my losses and tried to get a larger retainer from the next client to cover my total fee. But there was a reason I had clients — they weren’t paying other attorneys either or refused to pay a reasonable retainer.
That May, I ended up leaving the Cowboy’s office because he had a substance abuse problem that I didn’t know about. However, his sponsor was also a lawyer and offered me a similar arrangement to what the Cowboy was offering me. The Sponsor knew an accountant who was working with investors on IPOs for penny stock corporations, so I was put on a very small, but regular retainer to advise the corporations on whatever business ventures they had. I decided to get out of family law and spend my time working the business side of law. Compared to the prior two years, this was the life of Riley!
Then in October, the investors’ money dried up and the companies that had me on retainer filed for bankruptcy. Since I had stopped soliciting family law clients, I had no clients at all. I didn’t want to go back to family law, but I needed to eat. Fortunately for me, a friend of mine just started to work at a law firm that handled disability retirement cases for public employees and they needed another attorney. So I closed my practice and went to work for this other firm in November. I was up to my eyes in credit card debt and felt like I didn’t have anything to show for the past three years. But I was on to a new beginning and I wanted to leave this part of my career for good. Closing my first solo practice was easy — I was broke. This concludes Act One.
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Intermission time. It’s interesting to know that law schools were pumping out jobless graduates even in the mid-nineties. Because of this, I would think that middle-aged lawyers would be sympathetic to today’s graduates.
Donnie was more of a contract attorney rather than a solo practitioner. This isn’t unusual for most new attorneys forced to hang a shingle. It takes a number of years before a solo practice starts to make something resembling decent income, so you have to do something on the side to pay the bills. But a lot of times, if you focus too much time on contract work, that can take time away from other business development activities.
As Donnie’s story shows, when you are broke, you have to take what you can get. It is unclear how he was getting his clients, but he was taking the clients that other attorneys did not want. And the attorneys he was working for had some serious problems.
Now on to Act Two.
For Act Two, we will skip ahead to the mid-2000s. I ended up staying at the retirement firm for 18 months before a public retirement system offered me a job. After close to five years at the retirement system, I decided I wanted to be my own boss again and open my own office. I had a list of things I made sure of before I decided to open my own office again. First, have enough capital on hand to cover operating expenses for the first 12 to 18 months, including malpractice insurance and general liability insurance. Second, have a good business model and make sure there was a need for my services in my area. Third, line up referral sources from other attorneys. Fourth, get a large enough retainer from clients to cover my services. And fifth, try to enjoy myself.
This time things were so much better! Since I had enough capital to cover operating expenses, I could wait for the right clients to come in. I could pick and choose my clients rather than take everything that walked in the door. I could say no to a client who claimed not to have enough money to pay my retainer but could afford that new Mercedes that he pulled up in. I was getting referrals from other attorneys and networking all the time rather than spending my hours working on someone else’s cases. There was a good demand for my services in my area and not a lot of competition for it.
Why did I decide to close this office after a year and go back into government service?
Networking gets to be a drain. It’s non-stop. It’s going to bar association meetings. It’s free presentations for senior groups or other lawyers. It’s writing free articles for local publications. It’s advertising. It’s meeting after meeting to drum up more business. It takes a lot out of your day. You have to hustle 24/7. You just don’t go to work and find 30 people there waiting to throw money at you.
The lack of a stable income bothered me. For every month that I did great, there was another month when things were lean. I never felt like I could spend money in the bank on a new suit or a small vacation because I might need that money to meet expenses for the next month. Every month there was a question of whether the next month would be the month where the wheels came off. The uncertainty of where my next client would come from started to wear on me.
And referrals come and go. I had an attorney who was sending me good paying clients because she wanted to focus on bigger cases then retire. Then she didn’t retire, and stopped sending people over. I spoke to her last month. She’s still working full-time and debating whether to retire. My friend who started his own solo practice in Act One even said he would refer clients to me, and sent me three clients right out of the gate. He was doing well, he had an associate now and three support staff. But after the first three clients, he didn’t send any. When I decided to close my office, his staff attorney called me a traitor and a douche because now they had no one to send these cases to. I called my friend on his cell phone just to hey, what’s that all about, and he refused to call me back. I haven’t spoken to him since. And when you start doing well, people take notice and they often stop sending you cases because they think they can keep the client and replicate the success you’ve had.
I’ve been back with Big Government for nine years. I’m managing almost 20 attorneys in my office. I settled down, started a family, and enjoy the stability that government work brings. I really enjoy my life and my career. I’ll never open my own office again.
Stability. That’s what it all comes down to, isn’t it? While there are ways to deal with unstable income, it can get problematic if you have a family and bills to pay. Now, if you are lucky follow a solid business plan, you can eventually have a stable practice. But how many lawyers know how to set up a business plan? Not very many. And who can they trust to set one up for them? Even less.
Donnie turned out alright, and for that I give him an “A-“. He is genuinely happy and he has a respectable position in government. It is unclear as to whether his solo practice experience helped him land his current position. Since he did not respond to my follow-up questions, I have to dock him a bit for lack of participation.
I want to thank Donnie for sharing his story to serve as a warning to others. If you want to share yours, you know how to reach me. Happy Thanksgiving!
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.