Costs scare many sole practitioners or small firms from hiring additional lawyers, but if planned properly, experts tell ABA Journal Podcast moderator Stephanie Francis Ward, the extra help makes a practice much more profitable.
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Stephanie Francis Ward: It’s often hard enough to support yourself in a solo practice or a small firm. So the idea of hiring another lawyer, even if it means that person can make you more money, can be terrifying for some. Today at the ABA Journal, we’ll be discussing the hows and whens of when the time is right for small firm and solo practitioners to hire a new lawyer.
I’m Stephanie Francis Ward and joining me today are Selwyn Gerber, a CPA based in Beverly Hills, California; Laura Mann, a New Jersey self-practitioner; and Edward Poll, a Venice, Calif., coach, certified management consultant, author and speaker on law practice management. His work can be found at LawBiz Blog. He’s the author of Growing Your Law Practice in Tough Times. He’s based in Venice, Calif. Ed, let’s start with you first. Can you give me some scenarios about when the time is right for a solo or a small firm to bring in more lawyers either in a full-time or contract basis?
Edward Poll: Well, I start with a basic philosophy that lawyers should be doing two things and only two things. They should be marketing for new business and they should be doing the lawyering, because only they are licensed by the state to do so. So if and when they are doing the lawyering in and the marketing, it’s kind of tough sometimes to do everything at one time.
Obviously you’ve got to do the marketing because you’re the only one who can decide whether or not you want to represent that particular client and whether you’re confident to handle that particular matter. Once you get the client, you then have to do the work. And it’s a continuing cycle. At some point, hopefully, you become too busy. That’s one scenario where you want to hire someone else, somebody who can come in and do the work for you, while you continue to do the marketing to bring in more work.
Another scenario would be when you can’t keep up with the work that you’ve got. The third scenario may be when you want to avoid mundane work; you want to get more sophisticated work. And there yet has to be mundane tasks, like contract review and so forth that has to be done in any given manner. So, you can bring in less experienced lawyers for example, to do that kind of work while you stay at the higher level, do the more strategic work and so forth. Or, you can do the work that required greater skill, for example, being in the courtroom. Being in the courtroom is a lot more technically required, a lot more greater skills required than doing contract review, in my opinion anyway.
Another scenario, when you want to expand into a new practice area or into a new geographic area. These are scenarios that, at least off the top of my head, are times you want to bring in a new lawyer.
Stephanie Francis Ward: I want to pick up on something you said about lawyers doing business development and marketing. What if you’re a solo and you hate doing business development and marketing? Does it ever make sense to bring in a lawyer who maybe is better at that than you?
Edward Poll: Well, the answer is yes, but–there’s always the “but”–you are the product. And you really cannot “hate marketing” and be successful unless you’re in a larger firm that merely feeds you the business and you become so skilled in a technical area. For example, you become so skilled in tax work or you become so skilled in patent filing or what have you. And there are others that continue to feed you the work. But I’ve seen too many examples where the lawyer who does not do the marketing is the lawyer who is on the short end when the firm breaks up.
Stephanie Francis Ward: Yeah. Laura, you’re a solo practitioner, can you tell us–now, my understanding is you haven’t hired someone full time, but you bring in contract lawyers sometimes, is that correct?
Laura Mann: That is correct.
Stephanie Francis Ward: Okay. Tell me how you decided to do that, what went into your decision.
Laura Mann: Well, I think a lot of it was the timing and the circumstances, most of which Ed had mentioned. Where I am slowly building my practice, I have been an attorney for a number of years, but I just started my own practice about 4½ years ago in an area geographically that I was relatively new to. So it was really starting from scratch and building my own practice.
So I started out as what they call a true solo. I didn’t have any staff, it was just me and I had to wear all the hats. And you know, as the practice grew, thankfully it did and has and has continued to do so. When it got to the point where I felt that I could be earning more money if I had somebody helping me and doing some of the work that I either don’t like to do or don’t have time to do, then I could hire them to do some of the work and pay them on a contract basis and then bill them out to my client for the fees as set forth in my representation agreement. Then it was a win-win. I was able to give somebody some work, get some more done and make a profit on top of that.
Stephanie Francis Ward: Okay.
Laura Mann: I wasn’t to the point where I could afford frankly, both financially or in terms of have enough work, to hire a full time or even a part time employee, but I did have a need for additional staff.
Stephanie Francis Ward: Selwyn, can you give me an idea, if a lawyer client came to you and said, “I am thinking about bringing on more lawyers, what do you think in terms of what my numbers are?” Can you give me an ideal generally about what sort of advice you give someone who is thinking about bringing more lawyers into the practice?
Selwyn Gerber: Sure. Look, first of all we’ve got to get the philosophy. In certain cases you basically trailed your growth. In other words, you hire retroactively, you hire when the business comes in. And if you have the capability or the internal fortitude, you hire in advance of work that you hope will come in, and you take a chance. So, that is the key. If you’re conservative, you’re going to be basically behind the eight ball. You’re always going to be hiring for work you already have in, which creates additional pressure obviously for the start-up practitioner, but at least relieves some financial pressure. It creates work pressure to substitute though. So that’s the first thing: Are you going to be somebody who is behind the eight ball, who is going to hire when the work comes in or in advance?
The second point is what is the point of a hire? Is it going to be somebody who is part-time, somebody who is flexible or variable cost that you pay as you go or is it going to be somebody who you are going to be seriously committing to some upfront dollars? And what kind of reserves do you have? It also has to do with what kind of positioning you have in the marketplace. For somebody who is a business getter who gets out, gets business and is confident, it makes sense to go out and do it. For somebody who is more conservative and someone who is not a business getter, they divide lawyers into what they call “minders” and “grinders” and “finders.” If you’re not a finder, it’s going to be pretty hard to go out there and go out on a limb with some new hire.
So, there’s a lot of factors that get taken into account. We generally advise caution, that’s our general position. So everything that means to the lawyer is, you know, what they have to do.
Stephanie Francis Ward: It sounds like, say a lawyer gets paid a decent size judgment or settlement or has a huge job. Take some of that money, reinvest it perhaps and maybe hire someone part time or on a contract basis so you have them and they’re ready to go when the work comes?
Selwyn Gerber: Depending on what your position is in the marketplace. As was alluded to earlier in the conversation here, if you’re the founding lawyer in the firm who has the ability to go out and be a business getter, then it’s not so risky to lay out some bucks and get the talent ready so when the work comes in you can handle it properly. But my general experience in our firm is people tend to be more cautious in that and I don’t fault them at all, especially in these times.
I think with the surplus of lawyers around, sometimes the conservative thing is “go out and get the business first and then scramble to get it done.” That is factually what I think happens most of the time.
Edward Poll: One of the things you said triggers something I need to address if you don’t mind.
Stephanie Francis Ward: Please do.
Edward Poll: You said a lawyer gets a big judgment or a settlement and takes some of that money and reinvests it into the firm. One of the things I find in my experience and this is particularly true, or even true perhaps is better said in the larger firms. Where you get your compensation based on the standard of living to which you want to become accustomed rather than hold your standard of living to a reasonable/moderate pace and keep money in reserve for the growth that you’re talking about. And for contingencies that none of us can anticipate, but always occur. My experience is that lawyers tend to spend more lavishly on themselves than they really ought to and that’s when they get into trouble oftentimes when times like these get tough.
Stephanie Francis Ward: Yeah. I want to go back to something Selwyn mentioned with the surplus of lawyers. I am curious–and this is a question for all of you–if you wanted to bring in a young lawyer maybe who hasn’t been hired by anyone yet to do jobs that suit his or her skills, can you give me a sense about what you can pay them in this market?
Selwyn Gerber: I’ve seen ridiculously low offers. Because I think there is such a surplus of lawyers in today’s marketplace, there is almost no floor. It would almost have to do with potential and so on. But I think you can hire a lawyer for very little money today. I will defer to Ed.
Stephanie Francis Ward: Okay, go ahead.
Edward Poll: In this marketplace, the statistics by the National Association of Law Placement and others indicate that the starting salaries for first year lawyers has gone down by 35 percent or more so that we’re no longer talking about six-digit numbers to start a law career. And, forget about that number for the moment because that is in your big law firms. In other firms, you can hire really experienced, really capable lawyers for something less than $100,000.
Stephanie Francis Ward: And Laura, what’s your experience? I’m curious about like what–we’re talking salaries here, but what about project-wise. I am also curious if this is something solos are comfortable with because there is a bit of a risk, taking on someone that hasn’t practiced before.
Laura Mann: There is a huge risk. I think that risk is not only financial, but it’s also professional. Because once you hire somebody new, especially as a solo practitioner, there’s a really strong relationship there. And when you’re hiring somebody who you don’t really know very well, despite how thorough you may be in the interview process, you’re exposing your clients you have a relationship with to this person and who knows what could happen.
In terms of actual salaries, I haven’t hired a full-time or a part-time staff associate myself. But I have heard a lot of discussion about it and I think it varies very dramatically, depending on your geographic area of course. I am sort of in the northeast so on the periphery of it in the New York City area. And salaries are higher, but they have gone down dramatically. I’ve heard of lawyers being offered and even taking jobs as little as $20,000, $30,000, $40,000 a year, which is unheard of in days of yore. But I think the average starting salary has gone down a lot. And again it also differs depending whether it’s a solo hiring an attorney or whether it’s a medium or a larger firm hiring a new attorney.
Stephanie Francis Ward: And we know that about salaries, but I’m curious, what does that mean for someone like you that uses lawyers on a contract basis?
Laura Mann: Well, I think the contract rates have also come down some and it depends of course on experience level and geographic area what the going rate is. But they have come down some and it makes it a more viable option for me to use contract lawyers on a case-by-case basis or even a regular basis. Then there is no commitment on either side.
You know, I work with attorneys who I hire on a contract basis who have their own practices and want to supplement their income. It’s also a way for me to try somebody else and for them to try me out. How well do we work together? Does my caseload justify hiring this person? So it’s almost for me a way to try somebody out to see if I think they would be a good fit for my firm. As a solo, if I hire another attorney, we’re working very closely together and our personalities and working styles need to match.
Stephanie Francis Ward: Well, and I think that brings up something really important, and I will give this to Ed first. What do you advise clients on finding the right fit when they’re hiring someone else to work with them at a solo practice or small firm? When I say hiring, I mean to do contract work as well.
Edward Poll: Well, you hit–I think at least for me–on the most difficult challenge of this entire discussion. And that is how to buy the services of an individual. Because you know, you’re not looking at an automobile where you can get the tires or you’re looking at a washing machine where you can go to a Consumer’s Report and get some evaluation on pros and cons and comparison with other brands and models. You’re looking at an individual. You’re looking at an individual who has his or her own mental capabilities and creativity and so forth. And so you’ve got that set of parameters.
Assuming for the moment that you could make an evaluation–and I think Laura puts it right when she says, “no matter how thorough you are in the screening process, it doesn’t mean you’re going to be successful because now you’ve got the interpersonal workings between the people”. I think that one of the things I say is do the best you can in terms of the evaluation. Looking at writing samples depending on what the work product is that you want. If it’s a written product obviously look at writing samples. If it’s litigation support, talk to previous employers, maybe even some clients of that person if you can. And do the best you can in the evaluation process, due diligence they say in the legal terminology.
But then, when all that’s said and done and you’ve made an offer that’s within your budget, and it’s an offer that has maybe some upside for the individual so there is some reason for them to focus very intently on the project involved, have a short leash. By that I mean you have a 30-, 60-, 90-day evaluation process and see what their work product is on-the-job training, so to speak. And if it passes muster, great. And if it doesn’t, cut your losses and move on.
Selwyn Gerber: You know they say at the business schools now, “be very slow to hire and be very quick to fire.” And so I think that echoes what we just heard. I think the key is, do you want someone who is an echo chamber who thinks and does exactly the same as you, or somebody who is complimentary? Most people naturally gravitate to people who are exactly like them. The truth is, those are not the most powerful teams. The most powerful teams are complimentary, but you’ve got to be able to handle somebody who thinks differently from you. That’s where the real greatness in real law firms comes about, is people who complement each other, not people who echo each other, but you’ve got to be big to handle it.
Edward Poll: Yeah, I would concur in that completely. And the other thing that I have to say is in my own experience of 25 years of practicing law before becoming a consultant full time is that I’ve seen good lawyers lose cases and I’ve seen what I thought were bad lawyers win cases. So ultimately we’re looking at results. And that’s all part of the evaluation process.
Stephanie Francis Ward: I’m also curious, we talk about how to make sure this person is right for you, if you’ve been working by yourself for a while it’s probably hard to get used to have someone else around. I mean, maybe it’s for the best. All of you, do you have advice on maybe there is some things the lawyer can do who has had this solo practice and they’ve done their own thing every day for years. Now they’re bringing in people they have to work with. What kind of advice would you have for them?
Edward Poll: Consult a marriage counselor.
Stephanie Francis Ward: What do you think Laura?
Laura Mann: Not a bad idea. I think it takes patience and it does take a lot of tolerance. We do get set in our ways very easily and we like things done the way we like them done. So I would encourage people to just really be tolerant and know that maybe you could have done it better yourself, but you won’t be profitable or have peace of mind or have a life back if you do it all yourself. So if every “i” isn’t dotted exactly the way you would do it, that is okay.
Stephanie Francis Ward: Okay. Ed, do you have any thoughts on what are some pretty common defining moments when a sole practitioner knows he or she needs to bring in another lawyer to help us work?
Edward Poll: That’s a tough question, but I think that ultimately it’s when you go to sleep at night and you continue to think about the matters you handled the day before. You’re fearful about what’s going to happen the day after because you can’t be at five places at one time. And the real fear is that you may have missed a deadline or in the future may miss a deadline. If you’re in that kind of environment, that’s the time to quickly get somebody else to help you.
One of the things that we have in today’s world that makes our life better and different is that we have technology to help us do some of the things. We can have the machine, the software program help us delay that time when we need to hire somebody else. But I think fear is a great motivator on the one hand. And, seeing an opportunity on the other hand are times when you want to go hire somebody.
Do you want to hire somebody full time or not? Laura talked about that a moment ago. My own advice is, try a contract lawyer first and see how it goes. See if that relieves the pressure. If it does, just stay with the contract lawyer until you get more opportunity and more confidence and you get to the point that Selwyn was talking about where you’re now hiring for the future and you’re comfortable with that.
Stephanie Francis Ward: And Selwyn, could you give us a sense generally, someone with a healthy law practice and they decide to bring someone on, can you give us a sense perhaps in percentages of how that can increase their profit?
Selwyn Gerber: Too hard, too specific, it would just be making up numbers frankly. I couldn’t do that, I’m sorry.
Stephanie Francis Ward: That’s okay.
Selwyn Gerber: There are just so many factors. I think it all depends on the specific. The devil is in the details. We can go over that concept, but at the end of the day it’s about the nature of the lawyer, the kind of practice he has, the business he has, that he has done what needs to be done, the pipeline or the anticipated pipeline and the type of person he’s looking at in terms of, as I said, complimentary, which is the whole key as far as I am concerned, as far as our firm is concerned to building powerful practices. It’s complimentary rather than simply duplicative.
Stephanie Francis Ward: And I’m curious, this is a question for all of you, have you seen situations where the only thing that was stopping the lawyer from bringing in more profits to his or her firm was fear of bringing on another lawyer, either contract, part time, full time, whatever. Have you seen that much in life? Ed, do you want to take that first?
Edward Poll: Yeah, I have. That’s one of the things I consult my clients about is they reach a point where they are successful and they’re not sure where to go from there. And I remember one case in particular where the lawyer in Georgia didn’t know whether he should take on more space, though it was being offered to him, that was adjacent to where he is. I said, “Grab it, because you won’t have the opportunity. If need be, you can sublet it to somebody else.”
But, before we had the lease done, we talked about increasing the number of lawyers in his firm and he took the gamble and it paid off. His life was much more easier, much more simple and much more profitable. He could then focus more on the marketing, bring in more new business yet, and now he’s got folks in the back room so to speak to make sure the work is done properly. I think that’s a very real scenario.
Stephanie Francis Ward: Okay. And Laura, can you tell me, when you first started bringing on contract lawyers, what surprised you the most do you think?
Laura Mann: What surprised me? I’m not sure that I really had any surprises. I was pleasantly surprised I guess by how easy it was to let the work go and how it took a while because I wanted to make sure that anyone I brought in any capacity was the right fit for me, and of course it’s always a gamble. But I was pleasantly surprised by the work that got done and how much relief I felt. The stress that was lifted off of my shoulders, not knowing if it would get done even if I wasn’t doing it and didn’t have time to do it, was immense.
Stephanie Francis Ward: Okay, all right. Well, I think that’s everything I had for everyone today. Did anyone want to add anything else?
Selwyn Gerber: No. I think the principles were well laid out and those who listen to the podcast should see which aspect is applicable and to call any of us and we would be happy to help them.
Stephanie Francis Ward: Okay.
Edward Poll: The only thing that I can say is that this is a great time for growth. There is dramatic change in the horizon and great opportunities arise when there is change. And you’ve just got to keep your eyes open. And I think the hardest thing for all of us, myself included, is to put fear aside and move forward with open eyes. But there’s great opportunity there.
Selwyn Gerber: I will tell you what I’m seeing, and we didn’t really discuss this, but before the program ends I just want to mention it. I’m seeing the creation of what I think of as virtual law firms. Where solo practitioners either team up either with complementary skills or competitive skills in a way and create a virtual firm so they have resources together on tap and without incurring the overhead structure and the entire overhead cost as well as the hassles of a larger firm. They have all the benefits of a multi-specialty virtual firm. That is something I have seen over the last year or two that I have never seen before. I think it’s a great option for the solos.
Laura Mann: There is a lot of that going on. To kind of piggyback on to that, the last thing I’d like to add is, fear is huge when you’re trying to make a living and doing it on your own. And a way to compensate for that fear and still move forward is being creative. And I would encourage anyone who is listening to this to think outside the box. This is a time of a lot of change right now and it is a time of opportunity as well. And if you can get creative in terms of how to expand your practice without necessarily committing in the traditional ways that may not be feasible right now, then the possibilities are endless.
Stephanie Francis Ward: All right, thank you all.
Edward Poll: If I can put in a plug that is particularly applicable for the solo practitioner. One of the things that all of us I think benefit from is having somebody to talk to. We don’t have this conversation in the largest canyon in the world. What I call the largest canyon in the world, that area between our two ear lobes. If we can find somebody to talk to on a regular basis and throw our ideas out there and have them tested, whether it be the accountant selling his or the coach as I am or somebody else, but a professional who is not there just empathetically but who is there on a regular basis for you. You can test your ideas. You don’t have to be there alone, isolated in space. And, that’s when you’re more secure and I think more comfortable taking chances that you might not otherwise.
Stephanie Francis Ward: Okay.
Edward Poll: I think the coaching concept is alive and well and has benefitted many people in many industries and lawyers are now beginning to understand that it can help them as well.
Stephanie Francis Ward: Okay. Thank you guys so much for your time, I appreciate it.
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Stephanie Francis Ward
Selwyn Gerber, a CPA, is the founder and managing director of Gerber & Co. The California business represents many professional practices, including law firms.
Laura Mann has a sole law practice in Parsippany, N.J. She handles civil litigation matters, including family law and debt-collection defense.
Edward Poll is a coach, certified management consultant, author and speaker on law practice management. His work can be found at LawBiz Blog, and he is the author of Growing Your Law Practice in Tough Times. He’s based in Venice, Calif.