How Much it Really Costs to Start a Solo Practice

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A few years ago, I wrote a post I titled Start a Solo Law Practice for Under $3,000. Boy, do I regret that title. Starting a law firm is a relatively inexpensive endeavor, but picking an arbitrary number and trying to stick to it is wrong-headed. I’ve met plenty of lawyers who have done just that, and many of them have struggled to keep their practices afloat — or failed — as a result.

Don’t let that happen to you.

Don’t like where this is going? Was $3,000 already too rich for your budget? Bitter Lawyer has a much-more-reasonable prescription for a $20 law practice!

It really doesn’t need to cost a lot to start a law firm. In theory, all you really need is access to a computer, a printer, and a law library. In reality, there are a few more things you’ll need. And if you don’t plan accordingly, you are going to run into expenses you didn’t expect, probably at the least-opportune moment.

When you set an unrealistic upper limit to your spending, though, you set yourself up for failure. This is especially true if, like many new lawyers, you are starting a law firm out of desperation, not because it is what you really want to do. When you are struggling to pay the bills every month, it becomes easier to rationalize bad decisions, like taking a red-flag client or dipping into your trust account to help you float some checks.

When it comes to outfitting a law practice, it doesn’t pay to pinch pennies. Figure out what you need, then figure out how to pay for it. If you can’t get what you need, don’t start a practice.

So what do you need?

The practical minimum

As a practical matter, you’ll need a bit more than I listed in my post. While it is theoretically possible to meet with clients at coffee shops, draft briefs on the display models at an Apple store, and do research at the law library, you won’t be doing your clients or yourself any favors.

Here’s what I consider the practical minimum:

Office & supplies

  • Office
  • Furniture
  • Office supplies

A serious lawyer needs an office. You need a place to meet with clients, first of all, and the best place to meet with clients is your office. It really does make a difference, both to your clients and your productivity, to meet at your office instead of at a coffee shop. Sharing space with other lawyers can be a great way to have mentors on hand, or at least sounding boards. Officemates often make reliable referral sources, too. And an office is usually relatively free of distractions, at least compared to your couch or a coffee shop.

There are a lot of options, here, from a spare bedroom or basement corner to an office presence options to actually renting your own space. It’s okay to start out working from home, but unless you have a solid plan for running a virtual law practice, you should plan to rent a real office 6–12 months after you launch your practice.

While I strongly recommend getting an office, it is true that plenty of good, successful lawyers work from home. In order to decide what will work best for you, I suggest you spend some time meeting with lawyers who work at home, at an office, and everything in between.

With an office, you’ll obviously need some furniture. Don’t get crap. If I had to guess, I’d say 9 out of 10 solos have no design sense and no business shopping for their own furniture or decorating their own offices.

You don’t need to hire an interior designer — although it wouldn’t hurt — just find someone with decent style to help you pick out some professional-looking furniture and decorate your office. You don’t need to spend a fortune; just set a budget and get some furniture that makes you look good.

Finally, you will need some office supplies, like manila folders and paperclips. Buy what you need. (Oh, and if you litigate, track down some exhibit labels before you need them.)

Professional expenses

  • Licensing
  • Continuing legal education
  • Malpractice insurance
  • Memberships

Licensing is not optional. Neither is continuing legal education, whether or not your state requires it. Budget for these expenses.

Some lawyers decide to go without malpractice insurance. I don’t recommend it. It is a lot easier to sleep at night knowing that, if you do screw something up, you will be covered. Don’t simply get the cheapest insurance, either. If you can, ask around to find out whether the insurer can be trusted to actually help you when you need it.

When you settle on your practice area, if you haven’t already, you should budget for membership in an organization (or two) that serve your niche. You should also budget for at least one conference each year. Conferences are often valuable sources of substantive knowledge, strategy, and inspiration.

Hardware

  • Computer
  • Backup drive
  • Document scanner
  • Printer
  • Phone

For your basic hardware and software needs, my New Solo Technology Shopping List: the Basics is a good starter guide, but I’ll reiterate here.

Get a good computer. It’s hard to go wrong with Apple, Lenovo, or Dell, for laptops or desktops. (For Lenovo and Dell, stick to the business lines, not the consumer lines.) Laptops are much more versatile, obviously, but the choice between laptop and desktop is down to personal choice and how you like to work. My top recommendation is a 13″ Macbook Air and an external monitor.

External hard drives make for easy (and cheap) backup. Get one. The Western Digital WD Elements drives are cheap and reliable. If you have a Mac, it’s hard to beat a Time Capsule for wireless backup. Or you could get an ioSafe for near-indestructible backup.

A decade ago, you would get a copier. Now, you are much better off with a document scanner and printer. For a scanner, I still recommend the Fujitsu ScanSnap S1500. Nothing else comes close to its simple ease of use. For a printer, any workgroup laser printer will do. I generally stick with HP LaserJet printers, because they print well and last forever.

You have a lot of options for a phone these days. Many solos just use their mobile phone. That works, but I think it is a better idea to get a separate phone number for your firm. A separate number means you can easily direct it to a receptionist, if you ever need to, or sell it with your practice, if you want to.

To get a phone number, you can obviously go through the phone company, but Google Voice, Skype, Vonage, and Ring Central are all good, popular alternatives that offer increased functionality.

Software & services

  • Email
  • Calendar
  • Document creation
  • Remote backup service
  • Accounting software
  • Timekeeping and billing software
  • Legal research
  • Internet

For email and calendar, the Google Apps suite is still best, and for $50 per year, a bargain. If you want to use Microsoft Outlook, go ahead; Google Apps Sync plugs right in. Microsoft Office 365 also looks like a good option for Windows users.

While Microsoft Office remains the standard for creating and editing documents, there are other options, including Apple iWork, WordPerfect, LibreOffice, Google Drive, and Office 365. If you regularly need to share editable documents with others, then get Microsoft Office. Nothing else will be fully compatible, so you might as well get what nearly everyone uses. If you don’t anticipate sharing documents very often, get what you like.

Backing up to an external hard drive is not enough, especially if you are paperless to any degree. You should have at least two redundant backups in at least two different locations. If your office burns down (with your computer and backup drive in it), you will need a backup to your backup. Fortunately, remote backup is simple, secure, and cheap. Right now, you can’t beat CrashPlan for all three.

Neither accounting software nor timekeeping and billing software are strictly must-have. However, keeping your books on paper and doing your timekeeping and billing with spreadsheets is incredibly time-consuming, and often prone to error.

For accounting software, just get QuickBooks Pro. All bookkeepers and accountants are comfortable with QuickBooks, and it is solid software.

For timekeeping and billing, I haven’t found anything better than Freshbooks. It is easy to use, and nearly makes timekeeping and billing pleasant. Plus, it will grow (to a point) with your firm, if you do grow.

You don’t have to pay a lot for legal research. Most law libraries include Lexis or WestLaw access with membership. Many bar associations include Fastcase for free. There is also Google Scholar. What you need depends on your practice. If you do a lot of litigation in different practice areas, you probably want a premium service. If you have a narrow practice and you have good, frequently-updated treatises on hand, you might be fine with Google Scholar. Get what you think you need, here, but beward of the long-term contracts Lexis and WestLaw usually demand.

Finally, you obviously need an internet connection. Get a good, fast one, especially if any of your software is cloud-based.

Marketing

  • Networking
  • Website
  • Advertising

Budget for marketing. At a minimum, plan to be social. Give yourself a breakfast/coffee/lunch/happy hour budget, and spend a lot of time doing those things with people (i.e., networking).

Get a website — a good one. Don’t worry about search engine optimization, apart from making sure your website shows up when you search for your name. It’s more important for your website to (1) be good-looking, (2) have your contact information, and (3) have a good picture of you on it. Like your office decor, don’t do this yourself. Hire someone competent.

Finally, you might want to jump-start your practice by advertising. If you do decide to advertise, Google AdWords is probably the most cost-effective way to do it. It is easy to get started with AdWords, and you can control your costs.

There are a lot of other things you can do to market your firm. Budget accordingly.

It is going to cost more than $3,000 to start a law practice

I haven’t added up everything I just listed, but I am confident that it adds up to more than $3,000. I’m equally confident that this is not all you will need (or want) as you get your practice off the ground.

In order to represent clients and run a business, you have to have some things, and those things cost money. The amount of money they cost is not important. If you need them, you need them. You just don’t get to decide that, hey, legal research is too expensive, so you aren’t going to do any. Or elect not to buy filing supplies because a stack of loose paper is cheaper.

In my article, I acknowledged that $3,000 is a starting point. $5–15,000 is more realistic, but it will depend on location, practice area, and many other variables.

The bottom line is this: When you start a practice, you are going to spend a lot of money. Spending this money is not optional. You have to spend this money to do a good job, and if you don’t do a good job, you won’t make any money. So get what you need.

Featured image: “Businessman attracts money with a large magnet” from Shutterstock.

Starting a Law Firm

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  • http://www.bryceaschmidt.com Bryce Schmidt

    Good article Sam. I remember reading your original article and thinking that $3,000 was too little to really be able to get up and running. Also, anyone who is thinking of starting their own practice, and has the time to actually plan for it, should try to have several months worth of living expenses saved up before making the jump, unless they have portable business that they’re taking with them. Even then, it is very likely that you’re not going to be bringing in money right off the bat. I had no business that I took with me, and I had to live off of savings for quite a few months before things started to pick up. If I were giving advice to another attorney wanting to start a practice, I would highly suggest obtaining a revolving line of credit. In my experience, having a line of credit meant all the difference in weathering the lean times, and believe me, there will be lean times if you start your own practice.

  • http://www.andrewmitton.com Andrew Mitton

    I do everything in the cloud. Google Apps for email, calendar, and contacts. Clio for practice management. Capsule CRM for business development. WordPress for website. Outright for bookkeeping. I don’t have a paralegal, secretary, and paper files. It works great.

    • William Chuang

      Hiring a secretary was the best thing I ever did for my practice. She answers the phones and receives packages while I’m in court, and she’s great at maintaining client relations. She remembers things about clients and spends time nurturing those relationships. On the flip side, it makes life easier to have her chase after overdue bills. The client can pay, and still retain me in the future without that awkwardness.

      • Randal Coon

        I must totally agree with Mr. Chuang. I was in solo practice for the latter half of my career and if it had not been for my “TINA”, I would never had made it. She was a bit expensive, but when I took a 3 month vacation abroad once, she managed to handle everything perfectly, with a few calls from me during the trip. Of course it was mainly when I was in the office practicing, seeing 10 clients in a day, just dictating who the client was , facts , and what was needed, and I rarely even had to revise her pleadings. I agree, if you are going to be successful in a solo practice, you must have that “partner” in your secretary. If for nothing else, to have someone to talk to in the “lean” times.

  • http://phillylawblog.wordpress.com/ Jordan

    Dammit, Sam.

    I just spent all afternoon writing a post about this, then I drop into Lawyerist and you also wrote one. Now I look like a copycat loser.

    • http://lawyerist.com/author/samglover/ Sam Glover

      First!

  • http://phillylawblog.wordpress.com/ Jordan
    • William Chuang

      Jordan,

      Your article was very, very, very informative and insightful, and should be mandatory reading for anyone thinking about starting a law firm. New lawyers need a dose of reality. Starting a law practice is first and foremost a business proposition, and that gets lost in the shuffle.

      (I should also add that going to law school itself is a business proposition, and a guy once took a swing at me when he sought my advice, and I told him that taking $200,000 in loans to attend a four-tier law school in the class of 2011 was something he should think long and hard about. He called me an elitist, a jerk, etc. He’s still unemployed, has over $2,000 in student loan payments a month, and I’m still trying to help him out but there’s really nothing out there. Someone should write an article about that.)

      William

  • Tracy

    I actually thought your orginial post was good and you could have cut even more costs to bring them way below $3000! I needed under $1000 for the start up. Of course, costs incerase over time, but it can be cheap to get the ball rolling.

    My start up costs included domain name ($3.99); Website design (free — Yola or Wix); Web/professional email hosting with Globat ($54/year); Phone-magic jack device ($39.99) and unlimited local and long distance ($19.95/year); Fax ($43/year) with MyFax unlimited incoming fax with local number; Ring Central $9.95/month for the automated answering system, 10 phone extensions, outgoing fax, etc.; HP color laser printer ($199) and HP all in one ($59); Billing/Invoicing software (35.99); Trust accounting system (free) through Case Fox — which also does invoicing and billing; Google calendaring (free); Virtual office with use of office address and conference room as needed ($60/mo. and $35/hour to use conference room); Advertising on craigslist ($0); Legal research — CEB practice guides (1 year free to new bar passers in CA); Lexis online research ($50/month) for CA and Federal cases/statutes plus Shepherd’s cite checking per their new solo attorney plan which steadily increases over 5 years – ideally as your practice grows). I already had a few laptops (I’m a gadget geek), but I never spend more than $600 on any laptop or desktop and they all still work. Apples are nice, but I don’t think they are practical for lawyers on a budget and trying to start a firm. When I got my first physical office I found awesome cheap furniture on Craiglist (I do have a sense of style). I’ve had a few offices ranging from $500 – $1000 month.

    I didn’t get insurance initially and was just very careful about the types of cases I took and clients I dealt with. As I made money, I later got the office spaces, malpractice insurance and now pay for a college student assistant at $10/hr. College students are educated and willing to work for less than a professional secretary so if budget is a concern, try college students.

    • ItsTimeForAChange

      Tracy, did you have an office, and if so, how much was your rent? I live in a big city with big city rental rates. I am still thinking about this and haven’t made the jump, yet. I’m not sure I’ll have enough portable business.

  • http://www.lawfirmmarketingmastery.com/ Christopher Small

    Good article. You covered the nuts and bolts of starting a law firm well.

    But you missed one critical factor. A factor that I think the most money should be devoted to.

    Marketing.

    If you don’t have a marketing plan and a marketing budget, if you don’t have clients, you don’t have a law firm. The stuff that’s discussed above can be worked out over time. But making money cannot. Find a way to get clients and you have yourself a law firm.

    • http://lawyerist.com/author/samglover/ Sam Glover

      Way to not read the post. At all.

  • https://www.facebook.com/shamimlaw Shamim

    Realistic

  • Greg

    Good article.

    I also read the original blog about starting a law practice for around $3,000 and was a bit incredulous. I am on the cusp of “hanging out the shingle” and I find it interesting that the expenses that weren’t mentioned in the original blog were the ones I found out about on my own and thought “can you really open a practice without these?”

    Overall great blog post and useful. I also have struggled with some of these expenses such as do I hire a professional web designer or do it myself? Can I get by with Google Voice or do I need a dedicated landline?

    One thing I discovered about Google voice is the fact that as I’am sure many of you are aware, Googe records any and all conversations that take place through Google Voice. We are all aware of the Professional Rules regarding client liability and this throws quite a monkey wrench into solo’s who plan on cutting costs by wanting to only use Google Voice rather than a dedicated landline.

    • http://lawyerist.com/author/samglover/ Sam Glover

      No, it doesn’t.

      • http://mtnebolaw.com/ Greg

        So, it’s alright to allow a third party record your confidential conversations, potentially between corporations with whom they compete then turn around and use said information to their advantage in future litigation that may involve your client?

        Just curious what you think about this issue, more particularly as to safeguarding client’s confidential information (especially corporate trade secrets) and the challenges using Google Voice may present in that context. I’ am also aware that the non-free Google Voice is not allowed to record your conversations but the free version does.

        I just thought if someone is going to pay for a service then might as well have a dedicated landline with more features than the paid version of Google Voice.

        I suppose if all your doing is family or minor criminal law cases this may not present as much of an issue, although I still believe there to be issues regarding client confidences there as well.

        • http://lawyerist.com/author/samglover/ Sam Glover

          Your phone company isn’t a third party that records your voicemails? Your email provider doesn’t have access to your emails? Your archival storage facility doesn’t have direct access to your client files? Your paralegal?

          There is nothing wrong with hiring a third party to do things related to your files. You do it all the time.

          • http://mtnebolaw.com/ Greg

            Sam,

            I see what you mean with your point regarding third parties. I promise I’ am not trying to belabor this point but I feel it merits attention. You are not comparing apples to apples as your paralegal has an imputed duty not to disclose client confidences the same as the attorney does, can the same be said about Google and other “third parties?” If you understand the inner workings of the beast called Google, you’ll see that they are constantly gathering, storing and analyzing data from every industry in order to gain a competitive edge over their competitors in the marketplace.

            Another key element here is access. While a phone company may record your conversations and store them can they access them? I know the answer for my service provider is a no, but that can’t be said for Google Voice. I represent large company’s who do not wish to disclose proprietary information to unknown third parties on a regular basis. Confidentiality is a must and Google Voice simply cannot provide this for me and for that reason I choose to go with a service provider who will build out my own personal server to store my voicemails, texts, etc… and who safeguards access to them. I have an access code and am notified whenever anyone attempts to access my client’s data or requests access.

            As far as I know, Skype does not record, analyze or have access to your client’s data as they are simply a facilitator, unlike Google. For this reason, I believe them to be a safer option.

            Part of the Google’s service agreement when receiving their “free service” is that you agree to allow them to use your information and data and they essentially “own” anything they touch. Bottom line, your client’s information is not safe or secure while in Google’s hands.

            • http://lawyerist.com/author/samglover/ Sam Glover

              Look, I don’t really care if you use Google Voice or not, but I do think its important to be accurate. Google is not recording all your calls. It does not claim ownership of your data, and nobody at Google is browsing your voicemails.

              Your mis-reading of the terms is common, but it is wrong.

  • Nate Russell

    Whoa whoa… you said:
    “While it is theoretically possible to meet with clients at coffee shops, draft briefs on the display models at an Apple store, and do research at the law library, you won’t be doing your clients or yourself any favors.”
    The first two are kinda funny, desperate, zany things to suggest and guffaw at the thought of… but how on earth is researching at the law library tantamount to typing a brief out at the Apple Store?!

    • http://samglover.net/ Sam Glover

      I was pointing out impractical things, not “funny, desperate, zany things.”

      • Nate Russell

        Look, your point was that these options would not be doing your client or yourself any favors. That’s not true with #3. One can lease an office and acquire computer equipment for a doable cost that will eliminate any need to meet clients in coffee shops or conduct confidential work on public machines. Most lawyers will never have the resources of their own law library. As such it’s more likely you’ll do a disservice by not researching at a law library at some point (when your own subscriptions don’t cover an issue).

        • http://samglover.net/ Sam Glover

          My point was that using a law library as your primary resource for legal research is just as cumbersome and silly as it would be to use a coffee shop as your conference room.

          Most lawyers use a law library only when it makes sense, which may be every few months or (for me) a few times a decade.

  • jameshartlaw

    Hi Sam,

    I agree with a lot of things you mentioned in your article, with the exception of one paragraph:

    “Get a website — a good one. Don’t worry about search engine optimization, apart from making sure your website shows up when you search for your name. It’s more important for your website to (1) be good-looking, (2) have your contact information, and (3) have a good picture of you on it. Like your office decor, don’t do this yourself. Hire someone competent.”

    This was certainly true when I started my first website back in 2005. There were just no free or low cost tools out there to help us get it done.

    However, in this day and age of WordPress and premium themes, a solo lawyer starting out can get a very nice website and also rank well on the search engines for practically nothing (i.e. $200-300). In addition, this provides a young lawyer starting out with an excellent opportunity to research and learn about their practice area by contributing relevant, fresh content in the form of articles and blog posts to their website.

    And most web designers are using wordpress as their platform anyway. After getting some steady work and cashflow – that attorney can upgrade if they want.

    But great content here – good work.

    • http://samglover.net/ Sam Glover

      However, in this day and age of WordPress and premium themes, a solo lawyer starting out can get a very nice website and also rank well on the search engines for practically nothing (i.e. $200-300).

      I strongly disagree. Some lawyers may be able to get a “very nice website and also rank well on the search engines” for less than $300. Most who try that will end up with an ugly, poorly-performing POS.

      • jaredsbanz

        I agree that WordPress-based sites are a great, cost-effective way to get started, but I strongly disagree that you can simply throw a site up and immediately perform well in the search engines… It is either going to cost a lot of time to build up your content and social media or money to have someone do the work for you. That said, I think it’s a worthy investment.

  • http://lawyerdup.com Richard Wagner

    just stumbling upon this now…jumped over from the post where it says you could start your own practice for $3k but never mentioned how you would attract a single paying client. at least this post mentions marketing, websites and AdWords, but doesn’t begin to explain what a money pit all that is

  • Stone Gossardish

    Seems off the top of my head you’d need between 20 and 50k cash to make a legitimate run at starting and sustaining a practice so it can last long enough to actually make some money and become viable.

    • http://samglover.net/ Sam Glover

      You might be in the right ballpark.

      It doesn’t all have to be in the bank, though. You’ll have fees before long that can help defray the ongoing startup costs.