Legal Incubators — Helping to Hatch Solo Practices

legal-incubators

This article was originally published in the September 2013 issue of the NW Lawyer, the bar journal for the Washington State Bar Association. — Ed.

Shawn Lipton can see the uncertainty in a new graduate’s eyes, especially those graduates planning to hang their shingle straight from law school. As head of the Seattle University School of Law Center for Professional Development, he knows that that fear comes from three big worries.

According to a 2012 report from the National Association for Law Placement, the number of law graduates going solo increased from 3.5 percent in 2008 to … 5.7 percent for the class of 2010

“When someone goes solo, there are three major fears — I have no idea what I’m doing, how am I going to get clients, and how do I even set up the office?” Lipton said.

In the last several years, as hiring rates have weakened and schools have placed more focus on preparing students to practice, the academic community has experimented with ways to address these concerns of students by blending small-business entrepreneurship with low-bono legal access. Programs to help new solos launch their own law firms with the guidance of the schools that used to teach them are cropping up across the nation.

In Seattle, that idea and discussion started last year with a focus on what the school could best do to help graduates taking the plunge solo right after school. Now, Seattle University is fundraising for the Low Bono Program, a post-graduation mentoring, legal education, and business support program for new attorneys serving moderate means clients. Meanwhile, Bill Becker, an alumnus of the University of Puget Sound School of Law, is building support to launch a private legal incubator, the Legal Services Exchange, based on the business incubator model for startup companies.

Most SU graduates find work with small firms with between two and ten attorneys. That, Lipton said, is the “sweet spot” for graduate hiring, and “we’ve seen an uptick in hiring there.”

Still, 13 graduates from the Class of 2012 self-reported in December that they had opened their own practice, even as two major companies hired graduates for document review projects. Of Washington’s three law schools, SU produces not only the largest number of new lawyers who go directly into a solo practice, but has done so historically, with a high of 21 solos from the 2010 graduating class. This year, five graduates from Gonzaga University reported that they became solo practitioners, and two graduates from the University of Washington launched their own firms.

Nationally, the number of law graduates deciding to open their own firms upon graduation has been increasing. According to a 2012 report from the National Association for Law Placement, the number of law graduates going solo increased from 3.5 percent in 2008 to 5.5 percent in 2009, the biggest one-year jump since 1982. That percentage increased to 5.7 percent for the class of 2010, the highest since 1997.

These new graduates are joining an already massive number of solo practitioners. According to an ABA press release last January, an estimated 435,000 solo law practitioners constitute about 48 percent of private-practice lawyers.

According to Lipton, there are three distinct types of graduates who open a solo practice. There are those who, as students, already have their sights on launching a solo practice upon graduation, and “those numbers have stayed consistent, if not gone down,” Lipton said. “There are people thinking they want to be solo practitioners, but not until they’ve practiced for a few years. Then there are the people [who are] kind of forced to go solo because of the job market.”

That third type of solo — graduates who begin their law firms either as they look for full-time work or as an alternative to the job search — may plan to leverage their experience into a full-time position at an established firm, or, if they become successful, continue with their own practice.

Roads to Going Solo

For those SU graduates who have already launched their firms, the help is a welcome acknowledgement of the challenge of going solo.

“I get all of these fears in different forms just about every day, but it is one of those things you can do, and you have to try it, see if you can do it, and gauge the next step,” said Omar Nur, who launched Nur Law, PLLC, last November in Mukilteo. “I brought lessons that I learned through my prior career and life . . . I’ve started a business before and I know the pitfalls that can happen.”

For Joy Lockerby, Class of 2011, launching the Law Office of Joy M. Lockerby last October was a natural progression, given her previous career working with employers on unemployment issues.

“It was a natural thing to get a business license and start off doing employment and unemployment law right away because of my prior work experience,” said Lockerby, whose business degree from Western Washington University in 1997 had a hand in her confidence. “I was not scared at all . . . we’re a country of entrepreneurs, and starting a business is not difficult to do. You have to own up to the risks involved and be okay with that.”

Lockerby was not one of those SU graduates driven to be a solo practitioner. Rather, her goal, like that of many other graduates, was to start taking clients and leverage the experience into a position at an established firm. But now that her firm is proving successful due to a steady stream of referrals, she is leaving her future options open.

“I thought it would be good to build a book of business and then I would have the option to take it to a firm if I decide to make that career transition in the future . . . I am passionate about being an attorney as a second career and on working on building a law practice, however that plays out — whether as a solo practitioner or at a firm,” said Lockerby.

Lockerby focuses on unemployment law and has made a point of reaching out to other attorneys in her practice area and in the Solo and Small Practice Section of the bar. “My goal is to shorten the learning curve as much as possible . . . I’ve received support from attorneys, both new and experienced, and that has been positive,” Lockerby said.

Similarly, Nur did not plan to launch his own firm straight from law school. But the job search proved so frustrating that he took the initiative.

“My dad was encouraging me to open a law firm . . . I said, ‘you have the whole law thing backward, you don’t go solo, you start working for a small firm or public defender, and then go solo maybe in five years’ . . . After law school, I put my feet to the street for interviews, informational interviews, looking for a full-time job. I had one real interview, I was promised interviews I never received,” Nur said. “I had a friend who had a legal issue with his company and wanted to know if I knew someone who could help, and I thought ‘Well, I can do that.’ After that one, it kind of empowered me.”

But despite their confidence, solos like Nur and Lockerby certainly faced challenges, and it is these challenges that SU and others in the legal community are trying to address. The biggest challenge, Nur found, was finding a place to work. As an attorney who practices business law and criminal defense, having an office was important. “Working from home presents serious challenges. You have to have resources in your home, like a copier, Internet, and computer,” Nur said. “A big thing the law school, or even the Bar, can do is help find workplaces for new solos.”

The easiest thing for Lockerby has been getting and talking with prospective clients. But the hardest part has been “not knowing the logistical details about each step in a case and having to reinvent the wheel when developing systems and forms, and that know-how is something I would probably gain more quickly at a firm.”

Search for Inspiration

With this kind of feedback from graduates, the questions before Seattle University were, “What can we do now that we can do with limited resources? What can we do programmatically with existing staff?” said Diana Singleton, director of the Seattle University School of Law Access to Justice Institute.

Legal incubator programs nationwide piqued the school’s attention, and a discussion about whether a similar model could work in Seattle began. It was helped along when, that spring, three law students won the SU Albers School of Business and Economics’ business plan competition proposing a nonprofit law firm named Populous Legal Services that would resemble a residency program for new lawyers and be a low-cost, moderate-means practice. In August, the Law School hosted Fred Rooney, who launched the original incubator and residency program at CUNY in New York City (see sidebar on page 19). Over the course of two days, Rooney spoke with school administrators, faculty members, and members of the state and county bar associations, as well as members of the WSBA Solo and Small Practice Section, about how to start a residency or incubator program in Seattle.

It was inspiring, and as Lipton described it, “we [saw] what’s going on with graduates and saw a need to get this done.”

SU Low Bono Program

In time for the class of 2013, SU is set to launch its Low Bono Program, its answer to the new solos tapping into a customer base of moderate-means clients. The Access to Justice Institute, which Singleton heads, received the go-ahead this winter from the Law School faculty and administration. The Low Bono Program has three aspects — post-graduate mentoring, low bono-oriented legal education and practice support, and an incubator program providing startup business support, including a stipend to cover initial business expenses, for a limited number of attorneys dedicated to serving clients of moderate means. Singleton hopes to launch the program in this summer; the incubator aspect will be launched as soon as the fundraising is successful. The goal is to raise at least $12,000 to give four new attorneys a $3,000 start-up stipend.

The mentoring and legal education will be for “any alumni who wants to start or have started a low bono practice and could be expanded to any attorney doing this work. The more people doing low bono work who are connected to each other, the stronger the network support can be,” Singleton said.

There are specific business issues that come with helping moderate means clients that the Low Bono Program plans to include in its legal education offerings — fee agreements, securing payment when advance fees are not possible, and getting potential new clients to commit to representation.

“While moderate-means clients may have more income and resources than low-income people, they are still barely able to make ends meet. As a result, there needs to be specific training and support to new attorneys who are serving that population,” said Singleton.

Legal Services Exchange

At about the same time SU began discussing what it could do to help new solos, Bill Becker approached the school to see what role he could play to help. He initially offered his time as a mentor, but soon developed the Legal Services Exchange (LSE) idea, a private business incubator for new lawyers.

Becker, a 1979 graduate of the University of Puget Sound Law School, said his interests as an attorney gravitated more toward business than law. He’s a self-confessed entrepreneur now, and he insists that “having the mindset I have today, if I was coming out of law school now, of course, I’d want to start my own firm. Everybody who starts their own law firm is an entrepreneur because it is a business; it happens to be a business giving legal counsel.”

“[T]he scariest thing for people is feeling they’re doing this on their own . . . they need the feeling they belong “

The Legal Service Exchange, which grew out of Becker’s discussions with the Law School and the King County Bar Association, has five goals: 1) teach the practical aspects of practicing law; 2) provide the infrastructure for new solos; 3) serve middle-class and small-business clients; 4) provide business-management support to the individual solos; and 5) teach the new attorneys how to maximize their value to the client.

“Find any graduate of any law school, and odds are very good they’re going to need those five things,” said Becker.

Like a business incubator, LSE would offer office infrastructure and the business-management support — an office and help writing a business plan. Becker hopes that, by bringing several solo practitioners under one roof, LSE can save everyone money on malpractice and health insurance, though the precise arrangement has yet to be determined. Having a collection of young attorneys under one roof would make mentoring and training easier.

“I believe the scariest thing for people is feeling they’re doing this on their own . . . they need the feeling they belong,” Becker said. “That is really the message of LSE, that you’re not alone.”

Incubators Nationwide

Law schools nationwide have turned to two different, though similar, models to help new attorneys launch their own firms and become practice ready. More than a dozen law schools or bar associations have launched programs based on business incubators or residency programs. The American Bar Association’s Standing Committee on the Delivery of Legal Services has been tracking the development and launch of incubator and residency programs.

Last year, two incubator programs opened in San Diego. California Western School of Law started an incubator program with 15 attorneys in two downtown locations, and Thomas Jefferson School of Law launched the Center for Solo Practitioners, which opened in November and houses nine attorneys.

Also last fall, the University of Utah S.J. Quinney College of Law launched the University Law Group(ULG). Serving a moderate-means client base, the ULG provides relatively simple, short-term legal services and offers flat-rate fee arrangements or hourly rates of $50 to $80 per hour, depending on client income. The ULG currently has a handful of attorneys, but the university expects to have as many as 15 attorneys by the end of the year.

The approach at Arizona State University, named the Alumni Law Group, seems to be the most ambitious residency or incubator program not only because of size (30 attorneys) or cost (up to $5 million a year to run), but because it hopes to be self-sufficient in a couple of years. The firm plans to have four to five litigation and transactional practice groups, each with five recent graduates serving as associates for terms of up to three years, each overseen by a full-time, salaried supervising lawyer. In addition to serving low-income clients at a $125 hourly rate, the firm will do legal work for other parts of the university, including its high-tech innovation center.

Incubators for Social Good — A Model for the Law

Traditional business incubators give an entrepreneur with a startup business not only a place to receive logistical and overhead support (office space, Internet, web hosting) but also access to mentorship and a chance to network with possible sources of capital.

“If we want to see more entrepreneurial solutions to the many social and environmental problems around us, then it makes sense to have a community of similarly intentioned individuals who are able to collectively gather more advice, mentorship, and resources than they would on their own.”

SU alumnus Brian Howe, class of 2009, not only started his own law firm upon graduation, Vox Legal, but his own business incubator, HUB Seattle, located in Pioneer Square.

“At graduation, it would definitely have been interesting and valuable to have an incubator to join,” Howe said. “Having someone to help talk through billing clients, time-tracking software, client-attorney agreements, expectation setting, bookkeeping/taxes, interns, and the myriad of other things that a new attorney faces would have been invaluable.”

At HUB Seattle, Howe has taken the business-incubator model and focused it on social purpose enterprises. HUB Seattle has partnered with the Bainbridge Graduate Institute and Social Venture Partners to launch a Center for Impact and Innovation in the heart of downtown Seattle.

“If we want to see more entrepreneurial solutions to the many social and environmental problems around us, then it makes sense to have a community of similarly intentioned individuals who are able to collectively gather more advice, mentorship, and resources than they would on their own,” Howe said. “Having an incubator environment is more efficient for both entrepreneurs and investors, as well as a lot more fun.”

Just as Howe has put a social purpose twist on the traditional business incubator, he sees how the model could apply to the legal profession, with some caveats. “Most traditional incubators provide funding and resources to a multiple teams of individuals,” he said. “It sounds like you’re looking for solo attorneys to pool resources together. That’s very different than a traditional incubator. If each solo attorney is going to wholly own her own practice, then it requires a lot of thought around what resources to share and which ones to keep separate . . . Sharing resources isn’t easy, but if the lawyers approach it with a belief that more can be done together than apart, that there is an abundance of resources and clients, and have a clear conflict resolution mechanism — then the effort is well worth it.”

(image: http://www.flickr.com/photos/graibeard/4082255623/)

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  • http://www.seattlecriminal-law.com/ Cristine

    Hopefully more law schools will feel the pressure to get on board with the business side of law. If they don’t, we will continue to see a rise in young lawyers working in areas outside of the legal profession. My best advice to young attorneys looking to go solo is to find a niche and a mentor.

  • Conor

    The Chicago Bar Foundation’s Justice Entrepreneurs Project, and incubator program, recently hatched (?). http://www.chicagolawbulletin.com/Articles/2013/11/15/Chicago-Bar-Foundation-Incubator.aspx