Recently, we asked the all-important question for attorneys—are you ready to go solo? That’s no small thing to think about since the answer could change your life forever. It’s wise to weigh all the pros and cons before you make the leap. But ready or not, maybe the right question to ask next is: should you go solo?
Striking out on your own comes with potentially hefty rewards but also many inherent risks. We recommend putting serious thought into the following four areas before making the decision to launch your own firm!
You’re ready—but are you prepared?
Maybe you feel ready. That doesn’t mean you are!
Perhaps you’re unhappy in your current role and itching to get away. That’s understandable, especially if you feel underutilized or if there’s a specialty you’re passionate about but aren’t getting to explore. Our work needs to challenge and inspire us. But learning the ropes of the legal profession requires plenty of mundane drudge work. It’s better to pay your dues at a firm where you have some backup (and a steady check) than on your own without a safety net.
Maybe you simply feel overworked and underappreciated. We’ve all been there, but that’s not necessarily a sufficient reason to bail. Running your own law firm won’t exactly free up your schedule because there are a billion new business tasks you’ll be responsible for managing. Meanwhile, the only person patting you on the back for a “job well done” will be yourself.
Another oft-cited reason for going solo is that there’s no advancement opportunity at one’s firm. However, when you run your own business, the sky’s the limit…in one direction. In the other direction, the limit is the bottom of a deep chasm you could fall into if you don’t land enough clients to pay the bills.
How’s your timing?
Say you’re fully prepared to launch your law firm. You know what you want, know everything you need to do, and feel ready to go for it. So now let’s talk about timing. Timing is everything, as they say…and they say that for good reason!
The economy has been shaky in recent years. Potential clients may be holding onto their wallets until things level out. Meanwhile, real estate prices are wonky, which affects rent prices. To launch your own firm, you’ll probably need to lease a space but don’t want to get stuck paying too much when setting up shop.
Tied into the above, you must pay attention to local market conditions and demand for attorneys in your area of expertise. As Above the Law notes, because of online legal service providers, “Many law firms that once did nothing more than prepare documents for clients are finding that there’s less of a need for the services that they provide.” If your town is saturated with lawyers, you might need to relocate. That may mean waiting until you’ve saved up enough to move.
One last time-related factor to mull over is your existing caseload. Are you working a big case for your current employer? If so, don’t burn bridges by jumping ship in the middle of a lucrative lawsuit or some other legal action. It could damage your professional reputation.
Are you experienced?
There’s a huge difference between working for a law firm and running one. That’s why only 1% of law school graduates start a solo practice, according to the American Bar Association.
It takes time not only to gain experience as a working attorney but also to learn how to run a business. From bookkeeping, office administration, and HR issues to marketing, website maintenance, and customer relationship management, running a firm is a full-time job by itself. It takes months of preparation just to plan for it. And as Thomas Edison said, “Good fortune is what happens when opportunity meets with planning.”
The more time you take to learn what you need to know and diligently plan your success, the better your odds of obtaining your goals.
Are your financial affairs in order?
A little-known fact is that law school is expensive! But kidding aside, the costs have gotten staggering. Per Forbes, on average, “law school tuition costs $84,558 at public universities for in-state students, and $147,936 for students that attend private universities.”
Add ~$20,000 a year for rent, food, and transportation and you’re looking at a minimum of $100,000 in total costs. No wonder most law school students graduate six figures in the hole. So if you’re paying off student loan debt, now might not be the best time to introduce any instability to your earnings.
That said, maybe your earnings at your current law firm are the problem. If you’re a rainmaker reeling in major clients for your firm but taking home a fraction of what they’re billing, maybe it’s time to fly the coop. In such a case, be sure you’ve saved up a cushion of three to six months’ salary to cover your living expenses. Don’t touch that money for your new firm, though. Never use your personal nest egg as capital for your professional expenses.
To fund your enterprise, you’ll likely want to secure a small business loan. Borrow enough to cover:
- Licensing fees
- Professional organization membership dues
- Office rent
- Furniture and décor
- Computers and software
- All-in-one printer/scanner/copier/fax
- Supplies and toiletries
- Projected utility expenses not covered by the lease (water, sewer, and trash are usually covered; electricity, gas, WiFi, and phones usually aren’t)
- Advertising and marketing costs
- Security cameras
Many startup firm owners tap into friends and family for funding, but that can put relationships at risk if things don’t pan out. Last resort options are to use credit cards or personal loans, but these can come with high interest rates.
Pin down the financial projections and other details in your business plan. These should include the above-listed expenses, plus your projected income (based on your anticipated number of clients, billing rates, contingency fees, and rates for work done by legal staff). Be ready to review your financials again before opening your doors and to keep a close eye on them for as long as you maintain your practice.
In conclusion: Starting a business is a daunting and exhilarating endeavor! If you’ve read Ready to go solo? 6 signs it’s time to start your own law firm and the above article, odds are you’ve made up your mind or are close to doing so. To that, we say congratulations!
As things get off the ground, remember Ruby is standing by to offer full support for your enterprise with flexible virtual receptionist services to suit every budget.