In early 2008, I left a great job as a senior associate at one of Wisconsin’s oldest, largest, and most prestigious firms to start my own practice across the Milwaukee River in an office share on Old World Third Street. After a whole lot of work, it’s all coming together. In the past two and a half years, I can’t begin to tell you how many lawyers I have spoken to who have told me that they too want to do this too. But then they list a number of reasons why they aren’t ready yet and may never be ready. I’m sure there are a number of lawyers out there who have the same thoughts, and maybe some of them are reading this blog (maybe even while they are supposed to be working billable hours).
So, rather than focus on new cases or a specific area of law, I am going to devote my month as guest blogger to issues associated with starting a law practice. If my anecdotal evidence is correct, it is likely to have a wider appeal than anything that is substantively narrow.
This first week I will devote to the soul searching aspect of the decision. The “why” aspect.
There are two kinds of reason people start their own practice, and they can be divided into two groups: bad reasons and good reasons.
Bad reasons for starting your own law practice:
1. “I hate my job, and I need a change.” If this is all you can come up with, you may want to just consider a career change. Many of the stresses of practicing law are pretty universal and will follow you when you go off on your own. The criticisms and demands from partners become criticisms and demands from clients. The deadlines are still there, and you are (at least at first) not going to have colleagues helping you out when you are overwhelmed. It’s not that lawyers like these things, but the ones that truly enjoy practicing law just consider them part of the job. So if you really “hate” your job, as you are doing your soul searching, you may want to think about whether practicing law is really your life’s work.
2. “The pay structure at my current firm is unfair.” Anyone who is obsessed with “fairness” in getting paid for the work they do should not start their own law practice. It may be that you are bringing in a lot more money to your firm than you get paid in salary or a draw, but you are earning a certain salary or a certain draw. In other words, you signed up for a quid pro quo (time for salary or draw), and as long as you are getting paid what they said they would pay you, you are being treated “fairly” from my perspective. Contrast that with a client that you spend hours and hours working for and then for some reason does not pay the bill, or pays it very slowly, or tries to cut a new deal with you. These things happen in every law practice, and if you are the kind of person obsessed with “fairness” in getting paid, starting your own practice may exacerbate that frustration rather than eliminating it.
Good reasons for starting your own law practice:
1. “I want to be my own boss.” I think if this is the only reason you want to start your own law practice, it is reason enough to do it. It is an incredibly rewarding to start with a concept and develop it into a reality. Of course, the reason it is so rewarding is that it is such a major commitment and it doesn’t happen overnight. Being your own boss and not having a boss are not the same thing.
2. “I need a different business model to be successful.” This is something that many attorneys don’t think much about, much less law students. The practice of law is a business, and each lawyer within a firm is taking value from and adding value to the business. What you need to look at is whether being a member of a firm is helping or hindering your success. If you want to have flexible fee schedules that would allow you to take a variety of cases and serve a variety of clients, you may very well be better off on your own. This very reason was a large motivating factor for me.
Likewise, there are both good reasons and bad reasons for deciding not to start your own law practice, or at least delaying it:
Good reasons to decide against starting a law practice:
1. “My significant other is not on board.” I was extremely fortunate not to be in this group. After two years of ups and downs, I can’t imagine doing this without the full and enthusiastic support of one’s significant other. If you think you are taking your work home now, that is not going to decrease with starting a practice. One thing you may want to do, even with an enthusiastic significant other, is set up some objective benchmarks at the beginning. For example, if after 12 months, I’m bringing in this amount of money and my expenses are this we are going to go full steam ahead. If not, we are going to reevaluate.
2. “The type of law I practice may not translate to having my own firm.” This is reverse side of the business model issue. You may be in a circumstance where what you do does not lend itself to being a one-person shop. I think the best rule of thumb is that if you can find somebody who is doing what you want to do successfully, you can replicate it. If not, you need to think about why it hasn’t been done. For example, if you don’t know any solo practitioner international tax attorneys, there may be a reason for that. In that case, the feasibility of it merits further investigation.
Bad reasons to decide against starting a law practice.
1. “I don’t have a developed book of business.” This should not hinder you from taking the plunge. If you keep your overhead low, you do not have to bill the same amount of hours you were billing at your firm to make the salary or draw that you were making. Additionally, there are myriad opportunities to seek out legal work through government appointments and legal referral services through the state bar. The bottom line is not to be held back by the fear that you will have absolutely nothing to do.
2. “I don’t have enough start up money.” This is my topic for next week so I’m just going to leave you with a teaser. It’s cheaper to start a law practice than it is to start almost any other business you can think of. Tune in next week for more details.