3 Charts That Show Solo Practice Doesn’t Pay Like it Used To

From Lawyers, Guns & Money, two charts that are pretty sobering for around 40% of the lawyers in America (and half the lawyers in private practice in America):

Inflation-Adjusted Earnings of Solos

Earnings-of-solo-practitioners

Solo Earnings Compared to Average American Salaries

percent-of-average-salary

Solos v. Partners

This one is an unsourced chart I found on Reddit:

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Meanwhile, let’s not forget that law school just keeps getting more expensive. It’s tempting to attribute the drops in these charts to the flood of new lawyers, but according to Paul Campos in the comments on LG&M, that’s not the case:

Another thing that’s striking about these income numbers is that they include almost no new graduates. Over the past five years less than 1,000 graduates per year have listed themselves as solos nine months after graduation, so new and recent graduates make up a trivial percentage of the 350,000 or so lawyers who are running solo practices. In other words, these income numbers are for experienced lawyers.

What do you make of these charts? Would you still advise someone to go solo?

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  • Landon Ascheman

    I thought advising someone to go to law school was malpractice?

  • Paul Spitz

    Part of the problem is attorneys who price things like they are running a dollar store. For example, I happen to know of a lawyer that is offering to do website terms of use and privacy policies for about $75…each. I can only imagine how bad the work product must be, but crap like that drives down prices for everyone else.

  • andrewshumate

    To me, the problem is centered around two issues. First, solo attorneys make up the bulk of the bar of attorneys who take on conflicted cases from the public defender’s office. Those cases pay an extraordinarily low rate. Second, there are a substantial number of solo attorneys who primarily do it as retirement jobs, and thus don’t really care how much they are making in a given year. Personally, I opened my solo office 2 years ago and am doing better than the average, according to this graph. That’s surprising, because I really feel like I’m still getting established.

  • Harry Hackney

    Coincidentally just after I read this, I got an email from a client for whom I’m handling an appeal. The appeal was necessitated in part by an “inexperienced” lawyer who hung out his shingle immediately upon graduation from a third tier school. The same lawyer was handling a related but separate case for the client. The email mentioned that the client has paid that lawyer less than $2500 for a fairly complicated negligence claim against a title company. I know that the lawyer has prepared and filed the complaint and handled at least one hearing on a motion to dismiss in a neighboring county. The case has been pending 2 years and he’s been paid under $2500?! I guess you get what you pay for. The appeal has so far cost a lot more than that. But guess who the client is happier with? Hint: it isn’t the young guy who billed nothing and did nothing. I submit that Mr. Spitz’s comment is on point. You can’t make any money if you don’t charge for what you do.

    • Mike V.

      Because F.S. Law and Florida Atlantic are practically the Oxfords of state schools….shame on those who hang their shingles that graduate from third tier schools!

  • Jamie Sutton

    A lot of the earlier comments are somewhat disingenuous. Yes, there shouldn’t be a race to the bottom because of pricing. But more Americans than ever are in the “gap” where they make too much to get free legal services from Legal Aid, but not enough to actually afford an attorney. Lawyers have largely priced themselves out of the shrinking middle class.

    And as technology advances make things more efficient and easier to do and understand, you simply can’t expect the same rate. Terms of use and privacy policies? Can literally be created by machine algorithmics in a few seconds and a handful of clicks. Is that as good as a bespoke lawyer handcrafting each and every term? No, probably not, but as a consumer I’m not going to pay a $200 dollar hourly rate for something that we’ve taught a machine to do in thirty seconds. But I might be willing to pay $50 or $100 bucks to have it looked over just to make sure it fits.

    • Paul Spitz

      I guarantee your machine cannot do as good a job on website terms and privacy policy as is necessary. I guarantee it. Every business operates differently. Every company collects and uses information in a unique way. If the client doesn’t understand the question your machine asked it on DNT signals, can the machine rephrase the question? I doubt it. This is basically economic darwinism. I got an(other) inquiry from someone who tried to go cheap by buying documents on Clerky to start up his company. Naturally, he did it wrong. He also overspent, while underspending, because he bought a stock option plan document for his company even though he’s the only person working there. And he’s going to have to pay a real lawyer – not a machine – to fix it.

      • Jamie Sutton

        Jamie Sutton here again, from a guest computer.

        You’ll find no argument from me, like I said, a bespoke lawyer handcrafting each and every term is obviously going to do a much better job. But no one will pay them to do it.

        My main point is really not technological at all. It’s that the guild style monopoly over the practice of law is going to be over sooner rather than later whether we like it or not, and if we don’t adapt to client demands for efficient, transparent, frequently flat-rate, and convenience, then lawyers are going to continue to lose out.

        In other words, even if you are absolutely one hundred percent right and the “new” Legalzoom type providers are objectively lower quality? They’re still going to put the traditional legal model completely out of business.

        And as someone who monitors these things very closely, for every “I bought documents online for 99 bucks and now I’m in deep trouble” there’s hundreds or thousands of other people for whom “good enough” was… well, good enough. So it’s not a matter of “which does a better job” it’s a matter of “which one does the market demand”.

        Personally, I think the best model will be a combination of using algorithms and other technological tools that improve efficiency, combined with human review and oversight.

        • Paul Spitz

          I don’t do every agreement from scratch. There are terms I’m happy to customize for clients — for example, a 3-year vesting plan for stock instead of the standard 4-year plan. I also use some document automation tools to speed up assembly, so I’m not typing in names and numbers repeatedly. In addition, I recognize that the value of some deliverables is driven by the market, and not by the formula of my hourly rate multiplied by the time spent. I also emphasize that I’m not selling documents. I”m selling the legal services — knowing what someone needs, helping put it together for them, and advising them on what they are getting.

  • Joseph Dang

    I’m halfway through my 3rd full year as a solo and I’m above those averages, only halfway through. Starting a 99% contingency practice with paydays 1-3 years down the road after client signup.

    Would I advise someone to go solo? No. Being an entrepreneur is hard, and it’s different than being a good lawyer. It’s not for everyone. I spent hundreds of hours learning how to market a practice before actually hanging my shingle. So I wouldn’t advise someone to become a solo, they need to make that decision on their own.

    But I would tell them, your #1 job is to market your practice. Job #2 is to be the best lawyer you can be. The two are not mutually exclusive.

    • your #1 job is to market your practice. Job #2 is to be the best lawyer you can be.

      “Sorry, your honor, I couldn’t make it to the hearing because I had to market my practice.”

      Nope, doesn’t work that way. Marketing is important, but your #1 job is to be a good lawyer. That’s not to say marketing or business stuff aren’t important. They are critical, obviously. You don’t have a law practice without clients or a business plan. But any time there is a conflict, lawyering wins.

      • Joseph Dang

        That line of thinking is why solos struggle to make more than my friends who didn’t even graduate high school. And I specifically said the two were not mutually exclusive because of arguments such as this.

        If your #2 job is to be a great lawyer, are you a great lawyer if you miss a court hearing? Of course not. Marketing doesn’t have to occur during court hours. Block time for the stuff that needs to be done such as court hearings. A lawyer’s #1 job is to market the business. And I’m chuckling you think my statement advocates skipping a court hearing to work on a blog post.

        Call it 1A and 1B if you like, in whatever order you wish, if that removes the friction.

        You can’t be a great lawyer if you don’t have any clients. It’s harder to be a great lawyer if you’re worried about paying your bills, feeding yourself etc.

        So yes, it absolutely works that way. My #1 job is to feed myself, my family, and provide a safe place to sleep. How do I do that? Market my practice to potential clients. Sign them up. Kick arse for them. In that order.

        • Bryan Scheiderer

          Sam, up until about a year ago I would have agreed with you, but now, Joseph wins. I am re-starting a solo practice (for the third time) after a term as county prosecuting attorney. 22 years in practice. We are in business–we have a license to practice law that allows us to engage in the business of delivering legal services. Joseph is not talking about the one time a judge calls you to court and you have to put aside your marketing project, Of course you will go see the judge. But, if this is happening regularly, then something needs to be adjusted so that the business owner can focus on the business. I enjoy your site, you have lots of good info, keep up the good work, but if you want to help solo’s, help them realize that business v. law is not a zero sum game.

  • Randall Ryder

    I advise some attorneys to go solo. I advise other attorneys to think really hard about whether they are ready to run a business and practice law. Percentage wise, I’d say about 10-25% of attorneys that want to go solo are actually prepared for it.

    Our job is to counsel our clients and advocate for them. If you do that, that’s the best marketing in the world. If your primary focus is on marketing and churning clients, you may get more clients in the short-term. But in the long-term, you will develop a reputation as an attorney that is more focused on making money/churning cases than helping clients. And that is not a recipe for success in the long-term.

  • Alex

    I’m pretty skeptical. The data are tax record data come from Professor Barton at the University of Tennessee Law School. Maybe in middle of nowhere Tennessee the average solo earns $50K/year, but I find even that a stretch.

    Just for the basic arithmetic to work, a lot of solos have to be below the poverty line. That’s one solo earning $150K/year and 2 solos earning 0/year. For every solo earning $150K/year, are there really two solos earning zero dollars? Jesus. I think a lot of solos are above $150K/year. The data are surprising enough that I want to know more before I put too much stock in it.

  • EarlyMedievalSerf

    I’m a solo in a major midwestern market. I’m in my 3rd year of solo practice but I’ve been practicing for well over a decade. I never had any intentions of becoming solo; it just kind of fell into my lap after my partnership track turned into a layoff after the firm lost its largest client.

    Very briefly, here’s my story: I netted after expenses about $80k both my first and second year which I thought was pretty good. However, the last 12 months have been awful. My P/L statements show a 37% drop in gross income and get this, a 51% drop in net income as some of my rent and advertising expenses increased.

    I made more money as a 2nd year associate at a medium sized firm in the early 2000’s than I’m making now. I’ve spoken with a number of other solos over the past few months and most seem to be in the same financial situation I’m in now, it’s like the spigot was turned off 12 months ago and it hasn’t been turned back on.

    I have a mixture of flat fee, hourly and contingency rates. New flat fee cases have practically dried up (bankruptcies, foreclosures, lawsuits are way, way down) and the hourly rates are difficult to get paid on after the retainer dries up. The only bright spot of my practice is that some of my contingency work is promising but at this point, if the trend continues, even that income won’t be enough to offset what has been a truly miserable year.

    What is the cause of my financial hardship? First of all, 50% of my practice involves consumer and small business debt and now that the economy is going well, there’s not a lot of work.

    The other half of my problem is that there are just too many attorneys and not enough paying clients. A former boss described it as the same large group of lawyers all fishing the same small pond. Every filed lawsuit, every criminal DUI case, every traffic ticket generated produces dozens and dozens of letters in the mail. The airwaves and electronic bits over the internet are dominated by a few large players who will spend more in one month advertising more than most of us gross in an entire year. I know of one attorney with a relatively small shop who advertises BK online and spends something like $100,000 a month on google ads,. which is really only about 1,500 – 2000 clicks a month at the going rates. And this firm is just trying to steal market share from the even bigger shops who spend all their money on the airwaves.

    Long term and looking into the future, I’ve been trying to convince some of my other solo colleagues to get together and form a firm. The chart above only confirms my previous knowledge that partners at most firms large or small do better than your average solo eking out a living. I assume the greater income comes from the billing of associates time; and indirectly through the prestige of being a ‘partner’. It’s a lot easier to compete for business when there is a team of attorneys supporting you rather than just some solo slob looking to score a retainer.

    But it’s tough to convince a bunch of financially struggling but extremely competent and hard working attorneys to tie themselves to a bunch of other sinking ships! So we all just struggle separately. I’m honestly not sure where I’m going to go from here, I can’t live and pay my household bills and student loans off $46,000 a year BEFORE paying all those wonderful self-employment taxes and then paying my student loans. I’ll never go work for someone else, but I’m strongly considering doing something other than practicing law.