What I Learned From Quitting A Stable Job to Start a Law Firm

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What I Learned From Quitting A Stable Job to Start a Law Firm

Mon, 08/08/2022 - 05:27
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No, it Didn’t Start as a Side Hustle

The goal of many law school graduates is to land a job at a mid sized or large law firm right out of school. They value the security and learning opportunities from experienced lawyers, the benefits of having existing clients, and the relief of practicing law without concern for the business side of things.

For the more entrepreneurial among them, the appeal of starting their own solo firm is more attractive than working for someone else. This offers control and flexibility, and despite the risks, they can build something that’s theirs.

But building a firm from nothing to turn it into a stable and profitable firm takes time and perseverance, whether you’re a brand-new grad or you’ve been working at a firm for a while.

If you’re considering leaving your stable law firm job to set out on your own and build your firm, you don’t have to juggle both.

Plan Your Expenses

Most lawyers come out of law school with a lot of student debt, which can be significant. This is a big financial obligation that leads many to go to a large firm where they can count on a steady paycheck and the stability to know where their money is coming from. Large firms may also offer health insurance and other benefits, such as paid time off or retirement.

If you’re starting your own firm, that’s all on you. You need to worry about your loans, your own insurance, your own salary, and the expenses for the business itself. You can’t count on a steady paycheck!

Your firm may take some time before you bring in clients and revenue as well, and you may be looking at months before you get a real paycheck.

That’s not to say that you shouldn’t start your own firm, but this is something to keep in mind. You need to create a plan for your expenses and have a cushion for your professional and personal needs for a year, or perhaps two. This way, you have a safety net in your budget if it takes a while for your firm to take off.

If you want to start a firm and you don’t have the savings built up yet, that’s okay. There’s no rule, and plenty of young lawyers take a chance on themselves by starting a firm before they’re established.

Consider Your Expenses

Any business comes with startup costs and overhead, including a law firm. You have to pay for mandatory professional services, such as memberships to legal databases, licensing, malpractice insurance, and more.

The business itself has expenses, such as business insurance, staff salaries and benefits, office space lease or rental, and advertising and marketing expenses. There are plenty of smaller expenses you may miss as well, such as office furniture and supplies, décor, technology equipment and subscriptions, tools for scheduling, and more.

These expenses can add up quickly, so make sure you’re prepared for the full cost of running your own firm.

Choose Your Practice Area

If you start out at an established law firm, you may be settled into a niche practice like criminal defense, family law, divorce lawyers, and prenuptial agreement lawyers. You may get involved with a firm that has many practice areas, giving you a chance to experiment with new options and learn from experienced lawyers along the way.

When you have a firm of your own, you don’t have the benefit of senior partners and their wealth of experience. You may not be in a position to only take the cases that develop your career or learning, since you have to pay the bills.

With this in mind, you may want to have a wide range of practice areas to attract more clients and build your reputation. That said, being a solo firm may give you an opportunity to take on smaller cases that big firms don’t have time for.

Consider Work-Life Balance

Young lawyers often struggle with the grueling hours and constant work time that happens at an established firm. Tasks trickle down from senior staff, overloading the associates. But that also comes with the benefit of not having to worry about deadlines, court dates, or other administrative tasks when you have time off.

When you’re running your own firm, the work-life balance may be worse, at least in the beginning. You could find yourself working long hours, evenings, and weekends for months on end, and this schedule can be rough for anyone. You’re also responsible for deadlines, court dates, record-keeping, and all those other details.

Stay Disciplined

The appeal of autonomy and flexibility are part of what attracts young lawyers to their own firm. If you work at a mid-sized or large law firm as an associate, you have minimal control over the cases and clients that are assigned to you.

As your own boss, you can set your hours, choose the interesting cases, decide how many hours or cases you want to work, where you want to work, and more. Even if you bring on a staff in the future, you’re still the main decision-maker.

Of course, that means you may have to make sacrifices in the beginning. You may not have the clientele to turn down cases or take a day off if you want. You’re working toward having full control eventually, but you can’t go into it expecting that from the start.

Plan Client Acquisition

Reputation was always part of how law firms got business, but the market has gotten really competitive. Clients may find firms through ads, print, television commercials, billboards, word-of-mouth referrals, social media – the list is endless.

It’s important to have a strategy in place for client acquisition before you start your law firm. Plan your marketing and budget, your preferred channels, and your brand. The strategy doesn’t need to be fully refined, but having a general strategy with client personas, a website, social media accounts, and a mix of different marketing methods will help you get more exposure for your firm from the start.

Think About Your Compensation Structure

Many lawyers bill hourly, but others may use a flat fee, retainer, or contingency. This is typically dictated by the type of law firm or practice area. Personal attorneys often use contingency and get paid when the compensation is recovered for a client, for example.

At bigger firms, lawyers bill by the hour, but they don’t handle the accounting. Other staff members track time, submit invoices, track payments, and balance the books. When it’s just you, you’re responsible for keeping up with the billing.

Choosing your pay structure is entirely up to you, but you should consider what clients expect from your area of practice. For example, a personal injury attorney may not do well with a flat fee or retainer structure. Also, it may take time for you to get the revenue to pay yourself.

Resign on Good Terms

How you handle your resignation from your current firm can have a huge impact on your success at your new firm, especially if you’re staying in the area. You should leave on good terms and stay transparent with your current firm to establish a strong professional relationship.

Attracting clients is challenging for any firm, but it’s much harder when you’re starting out. Your old firm can be helpful with referrals and may send you cases that are too small or complicated for them to take on, which benefits you.

If you try to poach clients or leave on bad terms, you probably can’t count on referrals or good word from your old firm. It’s not the right thing to do and it will only harm your reputation, so do your best to give your current firm notice and make the resignation as amiable as possible.

Leverage Your Network

Referral programs are excellent for bringing clients to your firm. If you can build a referral program with your old firm, that’s a good place to start. Otherwise, you can start with your personal and professional network, such as your friends and family, former colleagues, classmates, and anyone else that may have a connection to your business.

If you’re in personal injury or car accident injury law, speak with a physical therapist or doctor in the area for referrals. If you’re in tax law, a local accounting firm may have referrals for you. You could also start building buzz when you begin the process of opening the firm, even if it’s months or years in advance.

Keep in mind that your current firm may not take kindly to you sharing your plans for a solo firm with clients, however. It’s not ethical to try to recruit clients for your new firm at the one you’re planning to leave, unless you’ve spoken to your current firm and they’ve approved the decision.

There’s nothing wrong with preparing local businesses and your social network about your plans to open a firm, however. Just be mindful of speaking to clients with a connection to your current firm, especially if you haven’t announced your plans to them yet.

Build Your Own Solo Law Firm

Taking the leap to leave your established, steady job at a law firm to start a solo firm on your own is an exciting decision – and maybe a bit of a scary one! But taking charge of your career like this is an excellent learning opportunity and a chance to have control over your own future. Starting a firm doesn’t have to be a gamble if you plan appropriately, build some savings, and begin with your network and marketing plan early on.

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Author Bio: Maxwell Hills is the founder of Hills Law Group, a premier Orange County divorce lawyer law firm with a concentration on high net worth divorces. Max’s entrepreneurial career stretches back to his teenage days when he had his music used in Grey’s Anatomy and ESPN. Today, Max has used that experience to build Hills Law Group with 0 customers and $0 in revenue to a respected firm in the industry.