Like many lawyers, the author of I Just Want to Practice Law decided to start his own firm after he failed to land a job. According to his launch post, he had about $3,500 on hand when he started, so he decided to work at home, spending just a few hundred bucks on the essentials.
His budget left him about three months to start making money:
The point is, I don’t have money for anything right now … It really is bare bones. It is a weird feeling walking into the courthouse wearing my only suit, and knowing I am in poverty but having to pretend I am not.
As it turned out, he took down his shingle on day 103. Billing at $60 per hour (this is less than contract lawyers from India charge, FYI), he totaled up just over $5,600 in billables, but collected only about $400 of that. He took a job as a prosecutor.
I Just Want to Practice Law is a narrow but candid window into the life cycle of this solo practice. I don’t have all the facts, but I think I have enough to point out a few mistakes and comment on how the blogger in question could have avoided them.
Find a mentor
I can’t find any mention of a mentor on I Just Want to Practice Law. You need one. Or three. A mentor can help answer questions about the law and advise you on how to do about starting a successful law practice. Both are invaluable.
If you are serious about being a good lawyer and serious about having a successful practice, you cannot do it in isolation. Find experienced lawyers who are willing to answer your dumb questions. (Don’t forget to send a thank-you gift now and then.)
When I started my law practice, I sought input and advice from a ton of people, and two or three solos were extremely generous with their time. They shared forms, let me ask dumb questions and bounce ideas off them. With their help, I eventually became a decent lawyer. Without their help, I think my firm would have foundered in just a few months.
Plan for the long haul
Three months is not nearly enough time to find out whether a law practice will succeed or fail. Three years is closer. My own law practice didn’t truly turn the corner until a little over two years. And just before it turned the corner, I was about five dollars away from taking down my own shingle.
If you only have three months of expenses in the bank, you are going to have to call your firm a success or failure when that money runs out. And it will probably run out in three months, because the chances of you bringing in any real money when you are starting a firm out of law school are slim. That’s even more true if you are billing in advance. Most clients will probably take longer than you hope to pay you — possibly even three months longer.
Besides, the number one most-important rule of starting a law firm is don’t half-ass it. Spending “a few hundred dollars” probably doesn’t cut it, unless that includes some decent-looking business cards and a healthy budget for coffee, lunch, and happy hour with potential mentors and referral sources. You have to spend money to make money. This is just as true for solo practices as it is for any other business.
You also have to spend time to succeed at law practice. It takes a while to build a referral network. In 9–18 months, you should begin to feel the push of momentum if you have been actively networking. Three months is barely enough time to get started.
Get paid up front!
Speaking of billing in advance, getting paid up front is a no-brainer. I realize that if you are facing imminent starvation and value your time at only $60 per hour, you are probably taking any client who will put an X on your retainer agreement, but those clients are also the least likely to pay you, so you need to get their money up front.
If you demand flat fees, demand them up front and in cash (or with a credit card). If you are billing by the hour, demand an advance payment for at least half the amount you think the representation will cost, and tell the client when you expect the next payment.
My first client stiffed me $750. I still have the bounced check, and I pull it out every now and then to remind me why I insist on getting paid up front.
Don’t rely on your firm for income right away
The absolute best position to be in when you start a firm is married with a spouse whose job pays the bills and provides the benefits. That way, you don’t have nearly so much pressure to succeed on a short timeline. Second best is a spouse or partner who can at least absorb some of the slack if you have a down month.
If you don’t have that — I didn’t, at least not at first — you need some extra income. While you get your firm going, your income is going to come in fits and starts. Some months, you will make money; others you won’t see a dime. Until the highs and lows even out a bit, you need a cushion.
In my case, I was able to rely on unemployment for the first few months of starting my own firm. If you aren’t eligible for unemployment, you will need to get a part-time job. Get a job waiting tables at a bar or working retail. Make it something that doesn’t require any real critical thinking and doesn’t have any promise of upward mobility. You need to stay focused on your practice, not tempted to start a different career.
If that sounds unattractive, the final option is to take on debt. You probably won’t be able to find anyone willing to give you a small business loan right off the bat, so it’s really down to credit cards or personal loans. Get a generous line of credit, because you are probably going to use it. At one point, I was $10,000 in debt (if that sounds like a lot, I know lawyers who regularly carry lots more as part of their business model). That was the turning point. The next month, I had paid it off and had $10,000 in my bank account. But without that line of credit, I never would have turned the corner. Since then, I try to keep my credit card balance under a thousand, but I have definitely needed it to absorb the ups and downs of my income.
Above all, hang in there
If you work hard, you will probably succeed. You just have to keep going. Keep serving clients to the best of your ability. Keep getting your name out there to potential referral sources. Keep chugging along. If you run out of money, find some to keep your doors open while you find new clients.
Take inspiration from Paul Graham’s classic speech to startups.
So I’ll tell you now: bad shit is coming. It always is in a startup. The odds of getting from launch to liquidity without some kind of disaster happening are one in a thousand. So don’t get demoralized. When the disaster strikes, just say to yourself, ok, this was what Paul was talking about. What did he say to do? Oh, yeah. Don’t give up.
Tens of thousands of lawyers have succeeded before you. Just hang in there, do your best, and don’t give up.