Small Law Firms, Solo Practitioners

Why Do Solo Practitioners Make So Little Money?

Many solos don't succeed because they don't want to be entrepreneurs, according to columnist Shannon Achimalbe.

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I recently read Paul Campos’s article The Collapsing Economics of Solo Legal Practice. He states that the average compensation for solo practitioners has declined sharply over the last 25 years. He also suggests that the median solo practitioner is earning less than $35,000 per year (and this statistic does not include new attorneys).

But that can’t be true! All the solos and small-firm partners I know are making at least $100,000 per year. I mean, how else are they paying for their BMWs, their stylish clothes, and the vacations they post on their social-media accounts?

Assuming Professor Campos is correct, why do median solo practitioners (and those below the median) make so little? I plan to cover some of the main reasons why in future columns. But today, I want to start with what I think is the most fundamental reason: they don’t want to be self-employed entrepreneurs.

We’ve heard ad nauseum about many people going to law school because they had no other options. If they were like me, when they graduated college, the only jobs that were available were commission-only sales positions with “unlimited income potential.” So we thought about law school. We read all of the “How To Get Into The Top Law Schools” books at the bookstore. We read the Princeton Review and the U.S. News rankings, where we learned that 90% of graduates obtained employment nine months after graduation and the average starting salary would be $120,000. And if we didn’t like being a lawyer, the law degree is a flexible asset that can be used to transition into other high-paying careers.

Looking back, it’s amusing how the law school message changed as we advanced. During our 1L year, we were told not to have thoughts of transferring because the top students would get substantial scholarships and a shot at a job with the top firms. During our 2L year, we were told to network with attorneys in order to get an interview with a mid-sized or specialty firm. During the first semester of 3L year, the career development staff told us to look for jobs on Symplicity. And in the final semester of law school, we were invited to seminars where local solo practitioners would share their “rags to riches” stories and give advice on starting our own solo practices.

At some point after graduation, most young lawyers hit the wall of unemployment. Some are unlucky right out of school and are unable to find a job at all. Others are able to find a job but get laid off or fired a few months later. And others get sporadic document review or contract jobs, but these positions rarely lead to anything better. These people are typically unable to find a solid attorney position for months, if not years. Frustrated, they vent to career coaches about their predicament.

They are usually told to start their own solo practice for a number of reasons. Setting up a solo practice is relatively inexpensive. It supposedly fills the unemployment gap and does not stop you from looking for a job in the meantime. You also get to learn business development skills, which is crucial later in your career. Finally, it is better than doing nothing.

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Setting up a solo practice means starting your own business and becoming an entrepreneur. Being an entrepreneur means having a certain mindset, including the willingness to take risks and work long hours for no pay. The problem is that most people go to law school with the goal of working at a law firm after graduation. They tend to be risk-averse and don’t want to be entrepreneurs.

Without the entrepreneur mentality, they will lack the confidence to market themselves effectively. Most of these people tend to go to networking events, sit in the corner most of the evening, have some small talk with a few people, exchange business cards, and then never hear back from them again. They don’t want to purchase the tools necessary for a successful practice.

Another problem for those who don’t want to be entrepreneurs will be that they will be distracted and will spend too much time looking for a job. They will spend hours looking for postings at job sites. If they find a job opening that interests them, then they have to spend another hour or two customizing their résumés to get it past the robo-recruiter. And don’t forget time spent researching companies, employers, and preparing for and attending interviews.

Finally, those who don’t want to be entrepreneurs will not devote the time necessary to develop a solo practice. These people will write an article only if it will impress a potential employer or if it is certain it will be published at a reputable journal (again, to impress a potential employer). But they will not write it to expand their knowledge base and skill set. They will not write it if it is likely that it will not be published anywhere. Similarly, these people would prefer to spend time with those who will help them find a job as opposed to people who can refer potential clients.

No one should be criticized for wanting to be an employee rather than an entrepreneur. While Americans lionize entrepreneurship, most went to law school because they didn’t want to be businesspeople. If the majority of law students wanted to start their own law firms immediately after graduation, then few would attend overpriced and overhyped law schools like Yale, Harvard, and Stanford. The problem is that there are very few legal employee positions and it will stay that way for a long time.

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But the successful solo practitioners typically start their firms by choice and have a focused entrepreneur mentality. It makes it easier for them to handle the many obstacles that lie before them. I didn’t have that mentality and I’m ok with it.

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 by email at [email protected] and via Twitter: @ShanonAchimalbe.

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