Be Cautious With Outsourcing or Expanding Your Practice

solo-attorney-expansion-staff

The life of a true solo attorney can feel overwhelming when your caseload is full (or beyond full).

For new solo attorneys, that can lead to thoughts of adding some staff or another attorney to help carry the load.

But before you take the plunge, make sure you consider all the short-term ramifications.

A temporary surge in business may only be temporary

The most frequent thing I hear from other solo attorneys that are about to add, or have recently added, an assistant or another attorney is that they just had too much work to handle. That is an extremely good problem to have. But it may only be a temporary problem.

It is extremely easy for me to misread the tea leaves in my practice. My firm is 100% litigation, which means that case activity will dramatically ebb and flow. If all my cases blow up at the same time, I’m in for a long week. If they are all dormant, I’ll spend my week taking my kids to the park and working on marketing.

Either way, those are random fluctuations. Even as a litigator, you have some control over your cases—which means you can control the ebbs and flows to an extent. So if you find yourself overwhelmed, part of it could be that you can do a better job of evening out your case activity.

I’ve had my own firm for two and half years now, and while I understand the ebbs and flows better, I still don’t feel like I have a great handle on them. Which is one reason why I have consistently hesitated to even add a virtual assistant (or anyone else). My caseload supports adding an assistant. Heck, my caseload right now probably would support another attorney. But my intake could go cold for the next two months, and then I would need to fire them by Christmas.

So before you consider outsourcing certain tasks or adding another employee, ask yourself if you really understand the daily ebbs of your business. If the answer is no, then you probably want to hold back on expansion.

You are the best person for many tasks

I have written countless posts on the importance of client intake for a solo attorney. If you can do it well, you will succeed. If you cannot, you will have a tough time surviving.

There are plenty of days where I spend the majority of my day handling client intake and working on active cases early in the morning or late at night. It drives me crazy. But I’m also 100 bazillion times better than anyone else at handling client intake. An administrative assistant would not have the same knowledge as I do. They would also not have the experience of talking to hundreds (thousands?) of consumers with debt-related problems.

Sure, I could potentially hire a part-time (or full-time) attorney to focus on intake and signing up cases. Even if they were paid a percentage of new cases, I know the right questions (and the wrong answers) better than they do. And it would likely take years for them to catch up.

It’s the same thing with cases. There are attorneys on the other side that can still give me pause before I do something. When they send a young associate to deal with me, not so much. Even when I know they are watching from the sideline, I approach a case much differently when I am dealing with a recent grad versus a cagey old veteran.

Yes, there are obviously ways to make it work. But too many solo attorneys assume that adding another attorney is the equivalent of doubling their work capacity. But not all attorneys are created equal. And if you’re a successful solo, that is especially true.

You may likely tread water/lose money in the short term

You have to spend money to make money. Starting on the low end, in terms of expense, let’s say you hire a virtual assistant to answer all calls and handle intake. Let’s say it costs $600 a month. That’s probably too cheap, but just stay with me.

With that new free time, will you actually generate an extra $600 worth of work? If the answer is yes, that’s probably not good enough – because then you are breaking even. If, however, it allows you bill another 10 hours a month at $200-$300/hour then it probably makes sense. But especially with client intake, you have to consider if that person will continue to sign up the same of cases. If the answer is no, then you are spending money to turn people away.

If you hire another attorney, do not underestimate the amount of time you will need to spend supervising them and training them. That time will likely surpass the amount of time you save by having them do certain tasks. In other words: in the short term, you will likely not free up a ton of time. Which means you probably won’t bring in much more. Which means you have to support another person on the same income (roughly).

At a minimum, you have to assume that it will take a significant amount of time before you are able to increase revenue to a level where you can pay them and perhaps pay yourself more. You should also assume that you have to extend yourself financially for the first few months (at a minimum). So before you bring someone on, make sure you have healthy cash reserves and/or available credit to keep the lights on (and to pay yourself).

Bringing someone on can absolutely be the best thing for your practice. But make sure you are prepared for, and that you can financially handle, the short-term impact.

(photo: http://www.flickr.com/photos/gerardstolk/6545172929/)

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  • http://constructionlawva.com/ Chris Hill

    Randall, this mirrors my experience over the last 3 years as a construction litigator. I have often thought I needed more help, but the feeling inevitably passes and I end up glad I didn’t hire someone that I’d have to either lay off or just support mine and the firm’s detriment. There are so many tech tools that allow me to run my practice with one member, me, that I’ve not had the major temptation to add another salary to the bottom line.

    • Randall Ryder

      It’s a tough call either way. I tend to think that any solo expanding within three years of starting their firm is perhaps a bit trigger happy.

  • http://samglover.net/ Sam Glover

    I did a lot of experimenting with hiring. I hired an employee, worked out a profit-sharing arrangement with another lawyer, hired assistants, and more. In the end, I concluded that I probably would have been better off staying solo.

    There are a couple of exceptions, though. I’m glad I hired a virtual receptionist, and I am glad I hired an accountant. Hiring a new lawyer as a full-time employee was great fun, but not a great financial decision for my firm.

    Plus, remember that people aren’t just numbers on a page. Once you hire someone, you are going to feel responsible for them. You may keep them on long after the books show they aren’t making you more profitable. It’s definitely not something to be done lightly, because it’s not all that easy to reverse.

    • Randall Ryder

      I’m glad you hired me too. But I’m pretty sure I torpedoed the firm’s finances.

  • http://www.walterslegalservices.com/ Lynn Schmidt Walters

    All good points. A litigation practice in particular will have inevitable busy and slow times. Another great option for solo practitioners is to get to know a trustworthy freelance attorney to call on during the busy seasons.

    • http://samglover.net/ Sam Glover

      This is great advice. For a while, a friend of mine from law school was looking for odd legal jobs. She was someone I knew to be very smart and capable, and so I was able to send her discrete projects when I needed overflow capacity. It worked really well, and I didn’t have to worry about extensive training or overhead.

      If you can find someone like that, a contract lawyer can be a huge asset.

      • http://www.walterslegalservices.com/ Lynn Schmidt Walters

        Thanks, Sam. Locally (in MN) the Minnesota Freelance Attorney Network, http://www.freelance-attorneys.com, is a great place to start for anyone interested in connecting with a freelance attorney.