As a business consultant to solo and small firm lawyers for the past decade, Jared Correia has helped lawyers deal with many law practice…issues. In his column, “Law Practice Confidential,” he will be answering real questions from real lawyers. To send Jared an anonymous question, use the form at the bottom of this post.
Q: Hi. I have heard varying answers to this question: Do you believe that it takes at least three years to build a law practice starting from scratch? I have also heard it may take 3-5 years and that a solo practice should be abandoned after five years. In my case, I was an in-house “service lawyer” with a niche practice. My prior employer’s competitors have not shown interest in hiring me either in-house or as an outside counsel. Potential clients with small companies (or who are themselves self-employed) have been few and far between, and most of them are not clients I want, due to wanting very discounted rates of my already reasonable fees or contacting me once they are in trouble after “handling it themselves.” I started my solo, virtual law practice in April of 2016 and see no good reason to give it more than one year. If I let clients choose me, I will have bad clients and/or bad clients who will not pay reasonable fees. Do you agree that giving my self-employment one year and a lot of my savings is enough?
A: Sometimes being a consultant is serious business. It’s not all about hanging out in the champagne room and booking flights on private jets. In fact, sometimes it sucks to be a consultant. The two main ways it sucks is when you have to tell someone to give up on their business and when you have to say “it depends.” You might think that those are mutually exclusive responses, but they’re not.
Yes, the common answer is (and this is true from my experience, as well) that it takes 3-5 years to get a solo or small firm law practice to a profitable stage. I’ve heard it put another way too: that after five years, most businesses, if you keep running them, will become profitable. Launching a law firm flat-footed is not an easy task; and, to do it, you kind of have to be like Tim Robbins with the rock hammer, and also a little bit like the Incredible Hulk. The push and pull between immediacy and long-range planning is ever-present.
Of course, that’s not a hard and fast rule. And, in certain circumstances, it is permissible to give up on a solo or small firm practice after just one year or less. Then again, I have seen middling (some would say, failing) law firms being dragged along for upwards of seven years before taking a dramatic upturn. I’ve also seen fairly successful law firms with a couple decades’ worth of steady growth just crash and burn. So, it’s impossible to say when a law firm will flourish or falter. There is no definitive marker present outside of the post mortem when everybody has the benefit of 20/20 hindsight.
If we were speaking in the context of a formal consultation (and, feel free to call me—the contact information is below), I would ask pointed questions to suss out what you are doing now, which would allow me to discuss methods whereby you might revise those processes to achieve better results. Since this is, however, a one-way conversation, here are some things to think about.
- If you’re trying to pick up work from your prior employer’s competitors, that may be a tough sell. Reformatting your brand so that you’re part of their team (if even for limited projects) is not an easy thing to do when you were once the enemy. On what grounds are you engaging these folks? What’s your pitch? Why were they your first choice for generating business? Had you/have you considered seeking work from your former employer on a contract basis?
- Discounted fees are not necessarily throwaway fees. Even if you’re charging reduced fees, you may be able to offset that with volume. Is there a service package that you could sell as a product to small companies or individuals? If you get in early with these folks, you might find a small percentage who become successful, and who could support your law firm into the future with steady streams of higher-revenue work. If it’s a question of volume, it’s then important to find an effective way to reach out to businesspersons who screw up on their own and then decide they need a lawyer. Do you offer for sale a set of policies and procedures when someone, or some company, has blown that obligation?
- What specific marketing angles have you tried? What do your campaigns look like right now? Have you abandoned any, or tweaked any, over the last year? What are your platforms? How do you measure market penetration, or return on investment? If you’re not getting regular business as a new law firm, your full-time job is getting to the point where you are getting regular business.
- What’s “a lot” of your savings? Is it a lot percentage-wise, or just a lot in the context of a dollar figure that you feel uncomfortable with? Can you reduce your overhead, meaning you reduce the amount of revenue you need to intake? Have you run revenue projections, and set some of those up as fixed goals for you to meet?
But, here’s my real answer: You should get out because your business is going to fail.
And, the reason it’s going to fail is because you’re not fully invested in it. The tone of your question indicates that you already have one foot out the door, and you’re never going to succeed that way. I don’t know whether this was the case from the start, but I suspect it was. You can’t waffle on this proposition. To quote the great Ron Swanson, you need to whole-ass one thing. And, in this case, that one thing is your business, especially in the start-up phase.
In my experience, the most significant difference between solo and small firm entrepreneurs who fail, and those who succeed, is want-to. Look at dudes like Steve Jobs. Every entrepreneur has a nobody believes in us story, but that’s not quite true: successful entrepreneurs unfailingly believe in themselves, even when they’re a party of one. And, if you are unwilling to accept that burden, then yeah—go back and get a job.