General Practice, Solo & Small Firm Division
American Bar Association
General Practice, Solo, and Small Firm Division The Compleat Lawyer
Fall 1997 copyright American Bar Association. All rights reserved.
BY JAY G. FOONBERG
Jay G. Foonberg is a lawyer in Beverly Hills, California. He is the author of How to Start and Build a Law Practice, 3rd edition (ABA Law Practice Management Section 1994)) as well as The ABA Guide to Lawyer Trust Accounts and How to Get and Keep Good Clients. To order these books, call 800/285-2221.
There are two types of lawyers who start a law firm: Those who want to and those who have to. There was a time when deciding whether or not to start a firm was primarily a problem for new and young lawyers. Much of my mail today is also from Involuntary Entrepreneurs lawyers who are considering starting a firm because the firms they had been working for have downsized or merged, and they are having a difficult time finding a job.
Starting a law firm is not for everyone. However, by taking a serious look in a mirror and being honest with yourself while assessing and addressing your strengths and weaknesses, you can maximize your chances of making it. Ask yourself some questions before making a decision.
Do you require socio-economic status? If so, being a self-employed person with your name as part of the firm name may be just the thing for you. Law Offices of Mary Smith looks good on your card and sounds great when the telephones are answered. Clients and potential clients will know that you make the big decisions. They know that the number one person in the firm will be speaking for them. They like it. You will receive much more respect and status than if you go to work for another firm, where it will take three years for your name to appear on stationery or two years before you can sign and send a letter without someone else first reviewing it. Working for some other firm or lawyer may not garner any more respect than working for the post office or the gas company. It may be true that you will be captain of a motor boat instead of fourth mate on a destroyer, but to clients and potential clients, you will be the captain to whom all respect is due.
Do you have high moral values? For some reason, lawyers who take the high road end up happier and wealthier than lawyers who think the road to success is via the low road. The strength to succeed in the practice of law is similar to what it takes to complete a marathon. The strength comes from within. There will be times when you will be tempted to go for the easy buck or to bend the rules for the client in order to get a case or get a fee.
Once a lawyer starts taking the easy way out, it s hard to reverse; the slide downward usually ends in disaster. There s no point in doing something and then living in fear of discovery or blackmail by a client. You have to be able to forsake winning an occasional game by breaking the rules if you want to win the championship. You and your family will often have to do without things that others on a job enjoy.
Should You Fly Solo or with Others?
Are you a loner who truly does not like to depend on, or work with, others? If so, a firm or practice with others won't be a happy experience for anyone regardless of how much money you earn. Not all people can or should work with others. Many of the most important discoveries of science and much of the most important literature of civilization can be attributed to individuals working alone without committees or the approval of others. Some people enjoy being part of the support group for a star. Some people hate it. You might be absolutely brilliant, but nonetheless hated for your impatience or lack of courtesy toward others.
Relationships with partners. If you are going to practice with other lawyers, have you reached an agreement about who will do what kind of work, who is responsible for the marketing, and who will administratively run the store ?
The purpose of practicing with other lawyers should be to compliment rather than duplicate each other. When everyone does everything, the result is chaos as well as wasted energy and money. You can rotate and exchange responsibilities until you learn who is best at doing different tasks. You may learn that none of you can effectively do what has to be done, and it may be necessary to bring in another person to maintain a successful law practice.
A business plan. Are you willing to prepare a written business plan? A written business plan is essential. The business plan forces you to think about and to make hard decisions. Your plan will be your roadmap to success. You may have to detour around unexpected obstacles, but you will know where you want to go. The plan is something you can look at periodically to determine if you are on course. The plan can be prepared with the help of your CPA and another more experienced lawyer who has been where you want to go. The plan will help you chart out where you want to go and how to get there. Just having a plan will be important if you want to borrow money or get credit from a bank. You can always make up a new plan or revise your existing plan if you are not happy with where you seem to be headed. Without a plan, you will flounder and expend energy needlessly.
The mission statement. Can you prepare a mission statement setting forth exactly what you want to do with your life and your career? A mission statement succinctly states in less than 50 words what you really want out of your practice, and where you really want to go. The business plan gets you there. Problem-solving skills. Can you face problems? If it s cold outside and you close the windows, it will still be cold outside. If you can t face problems, don t even think of starting a law practice. Problems are opportunities to correct your course before there is a shipwreck. Running away from or ignoring problems is a one-way ticket to eventual professional and financial disaster.
Budgeting. Can you prepare and stick to a budget? A budget, like a business plan, is a roadmap to where you want to go, with the budget being your speedometer and your odometer. A good CPA is invaluable in preparing a budget and measuring your progress.
Client base. Where will the first clients come from? (Friends, family, former firm, other lawyers, existing clients who will follow you, other forms of proactive marketing?) Without clients, there is no income and no practice. Don t depend on people discovering you. You need a marketing plan in addition to, or as part of, your business plan.
Getting and keeping paying clients is not that difficult if you work at it. My book, How to Get and Keep Good Clients, will show you more than 100 ways to get and keep clients. You have to pick the ones you like and then work at it. Practice development (marketing) is an integral part of making it as a lawyer. Lawyers with clients can hire other lawyers. Lawyers without clients can only work for other lawyers.
Cash reserves. Do you have cash reserves or income to get through the first year when your practice might not be able to produce cash? The first year of a practice is especially difficult because there is no backlog of old cases being liquidated and turned into cash. Whatever cash you do get, you will need for the office and client matters. Foonberg's Rule of Cash Up Front becomes a matter of survival as well as a matter of convenience. It does you no good if all your eggs hatch the day after bankruptcy. The first year is critical.
Teaching an Old Dog New Tricks
Are you willing to learn new practice areas if there is no real market for what you do best? The practice of law changes rapidly. Areas of law become obsolete or difficult to enter as large firms and commercial organizations spend millions of dollars to get business and keep others out of competition. Demand for various types of lawyers changes rapidly as the local economy changes.
Nonlawyers are practicing law with impunity in many areas of law. The public is often willing to accept cheap rather than excellent. Many groups provide low-cost and no-cost legal services, often using nonlawyers. Do not be discouraged. Existing and new areas of law are coming into being and growing as fast as old areas become obsolete. Lawyers will increasingly be asked to meet the needs of an aging population; to deal with expanding international trade and immigration; and to develop expertise in the areas of high technology, environmental law, and communications law, among others.
Finances. Can you and your spouse manage to save money when times are good for the slow times that will definitely come? Alternatively, do you spend everything hoping tomorrow will somehow work out (a good way to get into financial trouble)?
A law practice has ups and downs. You may work on a case for years with no cash income and then receive a huge cash fee. It s easy to spend first and save what s left. The road to true financial success and independence is based on saving first and then spending what is left. (I learned this from my little old grandmother, who always had money saved from her regular job as an Avon lady; all the big shots in the family went to her to borrow.) Saving should be as high a priority as rent or car payments.
Responsibilities. If you or your spouse have children or parents who require attention, have you agreed on who is going to do what when there are conflicts of available time? Many marriages end in disaster because each spouse feels they are carrying an unfair share of family responsibilities. This is especially true when both spouses have aggressive career plans. Cases have been lost because a spouse missed a court appearance due to a child-care problem.
It s difficult to give a client your full attention when you are thinking about who is going to meet with the child s teachers or that you might miss the child s tee ball game or school recital. If you can t agree on who is going to do what, hire a third person to take care of your children or parents. In some solo offices, all the staff is hired knowing that child care of the lawyer s children or of other children or parents may be part of their duties.
Wise Pro Bono
Do you have the courage to say no to someone who desperately needs your brilliance, but has no ability to pay? If you cannot limit your pro bono work, you may become pro bono and not be able to help anyone.
If you truly are a caring lawyer (a critical trait in achieving success), it s hard to say no to someone who desperately needs you. You must remember that you have a higher responsibility to be sure your employees are paid and that your family is adequately taken care of. Give 5 percent of your time to pro bono; then, Just say no. It's hard, but in reality you have no choice.
But maybe you really like helping the poor and downtrodden who can't afford to pay. Being a solo allows you to pick and choose the cases and clients you like without criticism from others in the firm. Even though you are cautioned against devoting more than 5 percent of your time to pro bono, you will sooner or later violate that rule because you feel you are uniquely able to help someone who really needs you or because you are fascinated by the legal challenges involved. Being a solo allows you to take on one of these cases from time to time without fearing criticism by others in the firm. (Your family may give you a hard time, though.)
Delegate office management. Are you willing to allow someone else to worry about office management so that you can work on getting and keeping clients and practicing law? A good office manager can be hired for a fraction of what you can bill and earn as a lawyer practicing law. It is totally false economy to wash your own windows, or to shop for hours for office supplies to save $10. Your office manager may not be as brilliant as you, but with the increased income on your part, you can afford the salary and mistakes and have increased profits. Increasing income has five to ten times the value of decreasing expenses.
Trust another person to make decisions about critical office management needs including telephones, fax lines, computer lines, e-mail, answering machines, voice mail systems, desks, chairs, and reception furniture. You can spend an unlimited amount of time comparison shopping to save a few dollars. Let someone else spend their time doing the shopping.
Hiring staff. Are you willing to hire the best qualified person for staffing or do you prefer to hire people you like regardless of ability? Most lawyers look upon the hiring process with distaste. They think of interviewing and testing and reference checking as an interference with billable time. They don t like saying no to an applicant. The easy way out is to hire people you like or who are physically attractive, but this often results in the wrong person being hired for the job. A written job description coupled with discipline can result in the right person being hired.
Work and More Work
Are you willing and able to work long, hard hours? Self- employed lawyers frequently work 50 to 60 hours a week and even more when there is paying work to be done. You must make hay when the sun is shining. (Actually, Global Positioning Satellites, combined with computer controls of combines and tractors, now make it possible for unmanned equipment to harvest at night.) No one said it would be easy. It might be fun and rewarding, but it won t be easy. Most law is time sensitive. Contracts, wills, pleadings, conferences, and court appearances are all governed by due dates. The problem occurs when you have multiple matters, each requiring attention at the same time. On the one hand, you will have too much to do unless you work long hours or turn down work. On the other hand, you want to do the work when there is work to be done. You will not have other lawyers to whom you can pass off the work. Having a larger number of matters will often require long hours over long periods of time.
Help is Available
Check out How to Start and Build a Law Practice. The book asks about 65 questions that you should have on your mind; then answers those questions. After you develop your own practice and clientele, you can change the answers to fit you and your practice, but at least you won t be floundering.