Small Law Firms, Solo Practitioners

Where Do The Presidential Candidates Stand On Solo And Small Law Firm Issues?

Who's the best option for your small firm?

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Carolyn ElefantNot surprisingly, solo and small law firms are unlikely to have much influence on the upcoming election. After all, solo and small law firms are hardly what you’d describe as a powerful interest group — in contrast to Biglaw firms that have donated considerable funds, primarily to the Clinton campaign. Heck, we can’t even get no respect even from the ABA or the local bar associations, which routinely adopt policies that disproportionately impact us adversely.

Even though the political sphere isn’t much different, when we solos and smalls put on our business owner hats, we can find natural allies in the small business and startup community, which at 28 million strong, are expected to have a big impact on this year’s election. In short, policies on small business can serve as a proxy for each candidate’s likely effect on solo and small law firms.

So how do the Donald Trump and Hillary Clinton stack up on small business matters relevant to solo and small law firms? Let’s take a look…

Clinton’s Small Business Plan

Though I don’t intend to get all political (never a wise decision online) and offer extensive commentary on the merits of each candidate’s proposals, I’ll start by crediting Hillary Clinton for having a dedicated small business website that made my work here much easier. Hillary’s small business proposals of relevance to small firms include:

Student Loan Relief Clinton’s plan would provide start-up entrepreneurs with relief from student loans by granting them a three year deferral on loan payments with no interest accrual during that period and an opportunity to apply for loan forgiveness of up to $17,500 after five years to those who start new businesses in distressed communities. Though the Clinton proposal doesn’t define what’s meant by a startup, in my view, solo and small firm lawyers launching a practice fit squarely within that category.

Cut red tape Clinton will offer state and local governments incentive to streamline the licensing process that delays many small businesses in getting off the ground. This proposal doesn’t really impact solos and smalls since most lawyers, by dint of having a bar license, are exempt from many local business requirements.

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Simplified Taxes Like solos and smalls, small businesses are subject to added cost due to size — in the case of small business, that cost takes the form of the $1100 per employee that companies pay to ensure compliance with federal tax laws, an amount 20 times higher than the average for larger firms. Clinton proposes to create a standard business deduction and quadruple the startup tax deduction to lower the cost of starting a business. While I can’t stand keeping receipts and logging expenses, I’m not sure that a standard deduction could be set large enough to benefit most solos and smalls, except perhaps those just starting out or those who operate virtual practices with minimal overhead. I’m also concerned that the standard deduction would be used as a floor for compliance, with deductions over that limit more likely to qualify for an audit — something that no one wants to endure.

Ensure Payment Clinton has plans to make sure small businesses get paid — though like New York City’s proposed “Freelance Isn’t Free Act” that I covered last week, it’s not clear that this provision will help solos and smalls.

Incubate Finally, Clinton will work to provide incubators, mentoring and training to entrepreneurs and small business owners in underserved communities. This kind of opportunity already exists for solos and smalls in the form of law school incubators that offer mentorship and support to new solos taking on low bono cases.

Trump’s Small Business Plans

Unfortunately, a search for Trump and “small business” yields stories like this one from The Economist reporting on how he’s stiffed small businesses. Still, according the Economist piece, small business owners are “among Trump’s most dedicated supporters” because of his business acumen. Specifically, they are fans of Trump’s proposal to reduce the corporate income tax rate from 35 percent to 15 percent. Others cite Trump’s plans to deter US businesses from outsourcing abroad which would leave more business for domestic companies. Perhaps the latter policy might help displaced Biglaw associates by taking away firms’ option to outsource to India — but no indication that these policies will directly help solos and smalls.

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At the end of the day, all of these proposals are nothing more than promises. Ultimately, the most significant benefit that solo and small law firms can gain from the next administration is a strong economy which ensures that potential clients have the money to hire and pay their lawyers. Vote for the candidate who will accomplish that.

Carolyn Elefant has been blogging about solo and small firm practice at MyShingle.comsince 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.comor follow her on Twitter at @carolynelefant.

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