How to Succeed as A Lawyer - A Great Read
If you've not seen this great letter, How to Succeed as A Lawyer (Roland Boyd), that was first published more than 40 years ago in the Texas Bar Journal, then put down what you're doing and read it now. On the surface, the letter simply dispenses tips from a father to a son on how to succeed as a a lawyer, but the subtext gives us a look at a forty year legal career rich with integrity, satisfaction and optimism. For example, Boyd writes:
The only limit on the amount of success you can achieve [in law] is your time and energy. And the thought that will give strength to finish when the hour gets late and going gets rough, is that irrespective of how it might look to others, you know you are fighting according to the accepted rules of the game.
These days, our profession spends so much time discussing the business of law, making money and managing (the clients, the paperwork and everything else). I cover those issues at MyShingle as much as anywhere because they're basic survival skills without which solo and small firm lawyers can't function. But when we focus all the time on the business of law, we lose sight of the higher purpose we can serve as lawyers, the changes we can make and the people we can help. If you read Boyd's letter, you'll be reminded of what brought you to law to begin with and why despite the stresses and the problems, you still want to stay.
BigFirm Associate Salaries Are Really Small Potatoes When You Do the Math
At least one small firm lawyer isn't very impressed by the recent news that first year associate salaries at some firms will increase to $135,000. In a listserve post, attorney Robert Hughes noted that:
Let's see. $135,000 per year equals $2600 per week divided by about 90 hours per week equals $28.85 per hour. What a deal. I pay contract lawyers this much. I rate in the top 1% of law firms nationwide in my payrates. Hooray!
So if you've turned up your nose at small firm practice because you thought it couldn't match a large firm salary, you may want to think again. $135k a year is plenty of money (which you might really need if you have family or loans). But how long is that kind of pay worth it to you?
Some FAQ on Solo Practice
Below, a reader writes in with advice on some frequently asked questions related to solo practice. The reader's questions and our answers are interspersed below. Readers, since I've only started one practice, after all, I'm the first to admit that I'm not an authority on all ways to go solo. What I've learned from blogging here and meeting other solos is that there are as many routes to success as there are shinglers. So please write in and send comments that reflect your own unique experience.
(1) My spouse and I have set one year as our goal to start the firm - we want to save at least six months of expenses before we take the leap. Is that realistic or do you think it will take more time to get up and running? How much capital do you think one needs to get started?
Though I've seen other numbers, saving to cover six months of expenses seems reasonable. Sure, you could wait until you've got a year's worth of expenses covered, but as I advised this reader, there's always a tradeoff between waiting and getting started. You don't want to start out on the wrong foot with insufficient savings but at the same time, you don't want to put a firm on hold permanently as you save and build up clients.
In terms of capital, it's relatively easy to start a small firm on a shoestring these days. I'm guessing that you and your wife have at least one home computer that's powerful enough to be transformed into a work machine. And with computer prices falling, you can even purchase a decent laptop as a second office machine for $1000 or less. You'll also need to pay malpractice, the cost of which will depend upon your jurisidiction, state and practice area, but can probably be located for $200/month or less starting out. Other expenses would include business cards, stationary, phone service (here, you can use a cell phone if you already have one), and potentially office payments (see response to Q. 4) And then there's health insurance if you and your spouse will both be self-employed.
One suggestion I'd make given that both you and your spouse are considering a firm is that you stagger your start up. For example, if you are both employed, you could leave your position and hang the shingle, while your spouse would continue to work for another six months to a year. You'd have the benefit of insurance coverage, plus your spouse's earnings could go into the firm. Perhaps, thereafter your spouse could leave or cut down to part time. This would give you both the ability to get your practice started with some set revenues still coming in the door. Then, you could work to wean yourselves off your spouse's salary to full dependence on law firm income.
(2) Did you have clients lined up before you started? If so, how far in advance did you start discussing your move with prospective clients?
I had one very small client lined up before I left my firm, but it was a unique situation. My firm had given me six months notice to find another job and because I needed the cash, I stayed on at the firm as long as I could rather than tried to negotiate a lump sum severance. In any event, during that six month grace period, another attorney referred me a small client who I signed on while at my firm with the understanding (that I made known to the client and the firm) that I would take the client since the matter was so small. Not the best way to go about things, but at least I was forthright and as I mentioned, the client was so small that the incident was soon forgotten (actually, even after I left the firm helped me out with a mock moot court to prepare for the argument). But other than these kinds of quirky and unique situations, you can't really do much in the way of directly soliciting clients until you leave the firm (see this prior post). What you can do, however, is to be sure to provide top rate service to clients whom you'd like to take and make yourself indispensible to them so that by the time you announce your departure, there's no question that they'll choose to come with you.
(3) Are there any resources you would suggest that I review/read before making the move? Anything that you think is a must read?
I'd recommend some of the books listed in our OnLine Guide. I'd read Foonberg just because his book is a rite of passage, something that almost all prospective solos read. But truth be told, it's seeming a little dated, even the recent addition. The ABA's Flying Solo book was just updated; it's a collection of chapters on different aspects of solo practice (including one by me on "How Not to Be Lonely). And of course, I recommend the MyShingle OnLine Guide (especially the various state bar manuals) because they're all pretty recent. Finally, check out some non-law marketing books as well like those recommended by my fellow blogger Matt Homann of Non Billable Hour and also magazines like Inc. for entrepreneurs, because, after all, you're going to be one as well.
(4) I'm thinking of working from home, at least for the first year. Do you have any views on whether office space is necessary from the get-go?
There's a constant tension between lawyers who advocate home offices and those who don't. Some, like Grant Griffiths who runs Home Office Lawyer is a fabulous example of a home office lawyer who's on the cutting edge of technology and professionalism. Yet others (including Foonberg) believe that home offices don't convey a sufficiently professional image.
Leaving aside the long term, however, a home office in my view is the best way to start out. By working from home, you'll save at least $5000 a year (assuming $400 a month rent which isn't even feasible in all places) and thus, relieve some financial pressure. If you're concerned about appearances, rent virtual space with a mail drop and hourly office space. Or you can meet clients down at the court house or at their offices. As you build your practice, you can decide whether you want to remain at home or move to an office.
In my case, I started out in a virtual office space with a fancy Pennsylvania Avenue address. Within a year, I was busy enough to justify full time space and lucky enough to find an affordable sublet right near the White House in DC. But after my second daughter was born, I found that I didn't have time to make the office commute, so I returned to the home office/virtual space arrangement.
(5) I realize that rates will vary based on factors such as practice area, jurisdiction, etc., but do you know what the range is for professional liability insurance? Also, do you have a ballpark on the cost of health insurance?
I'm guessing that you should be able to find professional liability insurance for $200 a month or less, but this depends on practice area. Some fields are riskier than others. My advice on liability insurance is to shop around; the bar recommended provider is not necessarily cheapest. Also, play around with coverage amounts and deductibles to find something within your range. Just be sure that your plan offers defense costs so you don't have to worry about hiring counsel if a client ever brings a grievance.
I have less of an idea of the cost of health insurance since I've been fortunate to have coverage through my spouse. I know that there have been periods when he's worked as an independent and we've turned to COBRA which wasn't cheap but was less than paying full freight out of pocket. If you're young and healthy, there may be reasonably priced plans or HMOs. I don't believe that the bars offer health insurance packages but I've heard that Chambers of Commerce might have some leads on cost effective packages. Readers - if you have any answer to this issue, please write in and let me know.
Why Solos Should Run the Government
This article, Allee Offers Business Experience, Acumen, Mary Beth Smetzer, reports on a Fairbanks, AK solo Rita Allee who's running for City Council and touting her skills as a solo as the characteristics that qualify her for office. Says Allee:
"I feel practically my whole life's experience, education, business experience and background in Fairbanks makes me real suited to serve in this capacity," Allee said. "I think I can be a help and have considerable business acumen having run my own business since 1978 with tight budget constraints. You have to say 'no' more than you can say 'yes,' regrettably when it comes to financial issues."
Business experience and the ability to operate within a budget may seem common place to most of us solos, but they're rare qualities in government. Maybe more solos should run for office!
You Gotta Know When to Fold...
While you may never find an ideal time to start a firm, hopefully, you'll realize when it's time to stop. The attorney described in this article, Attorney Loses License Again, Kevin Eigelbach (9/21/05) apparently didn't so now the bar's stopped his practice for him. Attorney Gabbard of Kentucky has been suspended from practice for 21 months for neglecting two cases. Gabbard, who'd never had a complaint before and even won a pro bono award, claimed that his wife's illness prevented him from carrying out his obligations which probably was a consideration. But given the amounts paid in these cases - $950 in one and $450 in the other, I'm wondering whether after 2 decades of practice, Gabbard just couldn't get himself motivated for the amount of money involved. That doesn't excuse his conduct of course, since for his clients, those amounts may have been substantial. But for me, the lesson is that if you can't get yourself going to handle smaller matters, then don't take them to begin with or farm them out and take a break. Better than a forced respite from practice.
Update: See Lisa Solomon's comments on this story below, pointing out the impact that illness can have on a solo practice and more importantly, the need to get assistance when that happens.
More on Katrina Related Small Firm Impacts
As a follow up to this earlier post, it's been three weeks since Katrina and solo and small firm practitioners are starting to contemplate the consequences and plan for the future. This article, Many Small Law Firms May be Gone, Adrian Angelette, reports on small firms' biggest problem - loss of clients. From the article:
The task of restarting a law practice will be particularly daunting for one-lawyer offices or small firms whose clientele was made up largely of New Orleanians who evacuated. Many lawyers will also have to cope with files and equipment destroyed by wind or water. "A lot of lawyers lost their clients. I'm afraid many solo practitioners and small firms will be forced to leave the state," Baton Rouge Bar Association President Greg Bodin said. "There are probably a number of small firms that � have already moved once. How can they afford to move again?"
Say Nay To the Naysayers
Editor's Note: Recently, I've been receiving a number of inquiries seeking advice on starting a practice. I'm going to try to address as many as I can, as quickly as I can, in what will hopefully be a regular "Questions & Advice" column. If you send me an email with a question, try to eliminate any identifying information so that I can use it in a column. I'll get in touch with you prior to posting, but it will make my job easier if I don't have to reformulate questions. With that, my first question topic is how to handle the naysayers, particularly when you're a relatively new attorney.
Reader Question: I am not happy with my current position and for three months have been working on this idea of starting my own firm. I feel confident in my abilities to competently represent clients in my practice area, even though I've only been practicing for just over one year (it's a field where I have personal experience and which I worked in during two summer law clerkships).
My plan is to begin in a home office, use web-based case management software, and digital phone - all of which will make it easier to move when I (hopefully) can afford a "real" office. I am single so I do have think about things like paying for my own health insurance, meeting my rent, paying my student loans, and putting food on the table.
I was quite confident in my ability to do all this by the end of this calendar year. But a colleague who started her own practice as the same age as I am advised me against it, saying that it's harder than anyone can imagine to get clients and to manage your own practice.
Now, I'm scared. Even though I do not doubt my legal abilities and even though I know I can and am willing to work for hours each week and I get so excited just thinking about my own practice, I'm back tracking from the idea. I know that success can't be guaranteed, but now I wonder whether I should wait until I have more money saved up or I have my own client base I can take with me to a new practice before I go solo.
MyShingle Response: You're right that success as a solo can't be guaranteed, but your letter shows that notwithstanding just a year of practice, you've got what it takes. First, you're confident of your abilities which is a prerequisite to starting a firm. When you start out, you simply don't have time, as you do when working for others, to obsess endlessly over whether you're capable of handling this or that case. You'll be too busy marketing, meeting potential clients and managing a new practice to constantly second guess yourself. Second, you're excited about starting a firm and with that kind of passion, it's going to be difficult to fail.
In terms of starting a firm, there's really never an optimal time financially. When you're young and single, you may have only minimal savings and be saddled with student loans (which worst case, can be deferred for a time), but at the same time, your living expenses are pretty basic. You may have the flexibility to take on a roomate, you can qualify for cheap health insurance and you're still accustomed to living on a student's budget. As you age, you'll probably have more savings, but you might have a mortgage, a family to support and child care expenses, all of which are more difficult to downsize.
Youth brings other advantages to starting a firm. Retirement still looms far off so you don't have to fret about skipping IRA payments for a couple of years. And if for some reason, your practice doesn't work out, you'll be sufficiently junior to find another position.
In terms of building up a client base, generally speaking, you'd have to remain at a firm for a pretty long time before you can lure firm clients to your new practice. Chances are, junior associates don't get enough time with clients to make them their own. The one client related benefit that working for a firm provides is that it gives you time to market and network on someone else's dime, for example, by writing articles or attending conferences sponsored by the firm. But if you've already been practicing in your field for a year, chances are, you've laid enough of a groundwork with regard to networking and meeting potential referral sources.
Your plan to keep start up costs low is wise. If your financial situation is shaky to begin with, the last thing you want to do is saddle yourself with overhead so that you feel pressured to take on anything that walks in the door. I don't know what health insurance will cost you (investigate COBRA costs and other plans that might be offered by groups you belong to), but you can probably purchase decent malpractice insurance for a couple of hundred a month (please don't skimp there). Add up your costs to get a sense of what you need to take in each month to get by. And don't forget that in addition to finding your own clients, you may be able to handle per diem assignments for other attorneys or court appointed work to make some money while you establish yourself. After examining the numbers, maybe you'll decide to hold off another six months or a year if you feel that the extra money you can save will buy you leeway. Or maybe you'll decide that it won't make a difference and you'll stick to your original plan.
As for the colleague who's got you rethinking your plan, consider what she, as well as others have to say. But then, like any good lawyer, consider all the surrounding evidence. In the case of your colleague, you might try to probe further to figure out why her practice failed and what you could do differently which might be a productive discussion. But if this lawyer isn't willing to engage in that type of productive discussion and only wants to complain about the obstacles to going solo, just thank her and walk away. Many lawyers who've had a hard time getting a practice off the ground will advise others against it because they can't stand the idea that you might succeed where they failed. Likewise, lawyers working at firms who don't have the gumption to go out on their own may also be quick to point out your folly. It's hard to be objective in giving advice, we all bring our own baggage (myself included - after all, I am a happy solo!)
Going solo in the face of negative advice, a shaky financial situation and no clients is scary. I'd question your judgment if you weren't having doubts. But to my mind, what's scarier than starting a firm in your circumstances is waiting for the right time, for enough money, enough clients, enough knowlege and enough support only to have the opportunity to go solo pass you by.
Best of luck and let all of us at MyShingle know how it turns out!
I'm A Law Star
What They Don't Teach At Harvard Law School
The Harvard Law School newspaper put out a career guide which included all kinds of articles like Why Not to Be A Government Lawyer (as a former FERC attorney, I've got to agree with that one), the downside of biglaw and careers in public interest. Sorely missing from the list of possibilities is the one that's My Shingle's raison d'etre: starting your own practice. Maybe to figure that one out, you need to have graduated from another Boston area school like Alice of a Mad Tea Party who's just revealed her identity as a recent BU law grad who's gone solo. (hat tip to Denise Howell for the link).
To Disclose or Not to Disclose, That Is the Question
This article, Is Mandatory Disclosure of Malpractice Coverage a Good Idea? Ann Sherman, Small Firm Business (9/19/05) writes about the debate over mandatory malpractice disclosure rules taking place before many state bars across the country. Below from the article is an excellent summary of the pros and cons of mandatory disclosure from Bob Weldon of the Washington State Bar Association and Lee Sexton, a criminal defense attorney.
WELDEN'S ARGUMENTS IN FAVOR OF MANDATORY DISCLOSURE:
• Having malpractice insurance may be a material fact to at least some clients or prospective clients, so lawyers have a fiduciary and professional obligation to disclose whether they have a policy, in case the client does consider it important.
• In the handful of states that have had disclosure rules for some time, there has been no marked increased in either premiums or claims made since the rules were adopted. Also, in my state of Washington, people are amazed when we tell them that lawyers aren't required to be insured. So requiring disclosure wouldn't lead to an increase in claims, because the public already believes lawyers are insured.
• Clients need a neutral third party, such as the state bar, that can be a resource to find out if an attorney carries professional liability insurance, because most are not comfortable asking their attorneys directly.
• Mandatory insurance won't be the next step because insurance companies don't want to have to insure the risks of all practices, and the state bars and supreme courts don't want the insurers having power over who can practice law.
• A state bar association can post consumer information on its Web site and explain the responsible reasons why lawyers may choose not to have insurance, such as self-insurance or the inability to get insurance in a particular area of law.
SEXTON'S ARGUMENTS AGAINST MANDATORY DISCLOSURE:
• If the general public was in an uproar over the lack of disclosure, that would be one thing. But it's not. So why raise the level of consciousness about how much money clients can get if they sue for malpractice?
• In effect, the ABA model rule requires lawyers to paint targets on their backs. Nothing forbids a potential or existing client from asking me whether I am insured. But then I get to decide whether or not I really want a client who's curious about my insurance. Under the ABA rule I wouldn't find out whether the client checked.
• By reporting insurance coverage to the state bar, the issue is publicized and the public then wants to know why lawyers don't have to be insured. The logical next step is for the state to make insurance mandatory.
• A lawyer who chooses not to add the cost of insurance to his or her overhead, and who might otherwise be a fantastic lawyer, is stigmatized for being uninsured. By implication the client is advised to go elsewhere.
• The rule is misleading clients because liability insurance policies are claims-made. That is, the insurance company will only pay on the claim if the lawyer has insurance at the time the claim was made, not if the lawyer had insurance when the underlying act took place. If the lawyer no longer has insurance by the time the client actually realizes that the lawyer has committed some kind of negligence, the client is effectively out of luck. Telling the bar that you "intend" to maintain insurance isn't an enforceable promise that you will do so.
The MyShingle View
As my readers probably know, I strongly believe that all attorneys should have malpractice insurance as I've stated here and here. And clients should have some mechanism of discovering whether an attorney is insured or not. I'm not sure that the best way to inform clients is for attorneys to volunteer the information if only because that can be awkward (by analogy, most attorneys don't usally tell clients that they're a member of the bar; it's simply presumed). But as with bar membership, a client should at least be able to obtain information on whether an attorney has malpractice through a bar website.
One thing that did trouble me in reading over the list of malpractice pros and cons is the possibility that mandatory disclosure could lead to higher malpractice rates. Weldon states that there haven't been "marked increases" in Washington where mandatory disclosure is required. I hope that there won't be a large cost to something that can benefit consumers.