Tom Wallerstein

Ed. note: This post is sponsored by NexFirm.

So you’ve decided to make the jump. Persuaded by the 10 reasons to leave Biglaw, and aware of the 10 common mistakes made by lawyers who launch their own firms, you have decided to hang your shingle.

What can you expect in your first few years running your own law firm? Here are 10 things that might surprise you….

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Tom Wallerstein

Last week, I was having a business lunch at Michael Chiarello’s Coqueta overlooking the San Francisco Bay. (Those who know me won’t be surprised that I managed to combine a business meeting with some good eats. I’ll save my restaurant review for another time, or you can read it on OpenTable.)

Anyway, my lunch was with a partner at Leason Ellis, a thriving IP boutique in New York. The firm is a boutique in that the lawyers are specialists in intellectual property; as far as I know, that is their only practice area. But within that subject matter, they have both a litigation and transactional practice. Conversely, with limited exceptions, my own firm has remained a litigation-only boutique since it was founded four years ago. We handle a wide range of subject matters, but only do litigation within those subjects.

What are the pros and cons of running a litigation-only shop? Why haven’t we added a robust transactional practice as well?

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Tom Wallerstein

Next week my firm will celebrate its fourth anniversary. I can’t believe it has been that long. It seems like yesterday that I was sitting at my desk at Quinn Emanuel, thinking about cases worth millions of dollars but still too small to be economically handled by traditional Biglaw firms. I wondered if I might try to serve a growing market hungry for less expensive but still high-quality litigation. Not long thereafter I was conspiring with my partner over the details, drafting business plans, and conducting informal marketing surveys.

As my firm approaches its fourth anniversary, it’s interesting for me to think back to my early plans and consider what worked, and what did not. What happened as I predicted or hoped, and what was unexpected…

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Tom Wallerstein

Starting a new firm is daunting. Many lawyers focus on their expenses, and are pleasantly surprised that the overhead and other necessary expenses are less than they expected. But the real difficulty arises on the other side of the ledger because accurately projecting income can be so elusive.

If you’re starting with guaranteed clients, then making projections is easier. But otherwise, you really can’t project your income unless you know the extent to which your business plan in general (and your business development plan in particular) will succeed.

Even if you can accurately project how much potential business you will have, it’s still easy to slip by overestimating your expected income…

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Tom Wallerstein

I’m pleased to announce that the reports of my death have been greatly exaggerated. To the contrary, I survived my surprise three-week trial. It wasn’t a total surprise, of course. I had been expecting a trial, just not one that lasted more than a week.

Not that I’m complaining. Frankly, trying cases is a whole lot of fun. I’ve written before about my passion for trials and the competitive aspect of litigation generally.

That internal motivation is crucial for me. Trials usually require demanding hours, and that is the least of it. Beyond the mere number of hours spent working, I often find trying a case to be exhausting. Not just physically, but mentally and emotionally as well. Whenever you’re not on center stage, say, conducting a witness examination, you are paying rapt attention, thinking and calculating and strategizing. Sustaining that over time, day after day, can be difficult. You have to give your all, and then some. And when even more is asked of you, fate will decide the rest…

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Tom Wallerstein

I try to approach new relationships without an express agenda. In my experience, business has always come from relationships indirectly, and unexpectedly. Looking back at my firm’s engagements with 20/20 hindsight, it is undeniable that positive relationships led to the work. But that was impossible to predict looking forward.

For example, lunch with a casual acquaintance became a friendship and led to a very lucrative engagement when he later developed a conflict. I could not have predicted at the time how the lunch would later lead to important business.

In fact, had I approached the lunch with a strict agenda, I never would have formed the friendship or subsequent business. Instead of meeting with the goal of developing business, I met with the goal of having a nice lunch. It is a well-known irony that sometimes it is easier to get something when you stop trying so hard…

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Tom Wallerstein

When I graduated from law school, one of the perceived benefits of working in Biglaw was job security. This manifested itself in various ways.

First, firms rarely, if ever, conducted true “layoffs;” i.e., reductions in force based more on outside economic factors than qualitative assessments of the affected employees. The rate of hiring either accelerated or slowed, but rarely reversed.

The “no layoff” tradition was to some extent rooted in a genteel culture, but more directly based on pure economics. Most Biglaw firms had more available work than they could handle at any given time. If work slowed, partners nonetheless were confident that it would pick back up…

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Tom Wallerstein

I recently attended a reception for prospective students who had been admitted to the University of Pennsylvania Law School. It was a great event which was graciously hosted by superstar Penn Law alum John Wilson of Shearman & Sterling.

I’m a huge fan of Penn Law for too many reasons to list here, and I tried to convey some of my enthusiasm to the prospective students. (Had I known at the time, I would have included Penn’s distinguishing and commendable compliance with ABA transparency standards.)

I remember when I had attended the admitted students reception prior to committing, way back in 1996. At that reception I met then-Dean Colin Diver, who asked me what other schools I was considering. I told him, and added that I had not yet heard back from Stanford, my top choice…

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Tom Wallerstein

Lawyers love to give advice. They seem to have an opinion about everything. Lawyers even love giving advice to other lawyers, if for no other reason than they like to gratify their egos. Thus, there is no shortage of advice for junior lawyers about how to most effectively practice law, nor is there any shortage of advice on how to establish and run a small firm or boutique legal practice.

Often, however, the advice is easier said than done.

For example, many scoff at those who fall victim to some version or another of a “Nigerian scam.” We especially shake our heads when the victims are lawyers. But ignoring seemingly obvious scam emails often is easier said than done.

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Tom Wallerstein

My six-year-old is never satisfied. If I offer him a piece of candy, he asks if he can have two pieces. If I tell him he can watch a 30-minute TV show, he asks if he can watch a 90-minute movie.

As annoying as that can be, I have a grudging respect for his persistence. In my opinion, his attitude exemplifies the kind of approach I think makes for a successful lawyer, not to mention running a successful business.

Refusing to be satisfied pays dividends in terms of your professional development. At the same time, the instincts of a six-year-old may be counterproductive. For example, when a case resolves unfavorably, our knee-jerk reaction is to blame forces beyond our control. You lost because the jury got it wrong, or the judge didn’t understand something, or the client didn’t tell you something. The words come out like an angry stream. There are a dozen rationalizations for why it was anyone’s fault but your own. Hopefully, when the heat cools down, and you find your mind, you will ask yourself what you could have done differently.

But I think what is less common, yet equally valuable, is going through this exercise even when a case resolves favorably. There is always room for improvement, and a post-mortem debriefing always makes sense. Rather than being satisfied with reaching a great settlement, or a great victory at trial, it behooves you to consider not only what you did right, but what you might have done differently….

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