10 Realities of Owning a Law Firm

Owning a Law Firm

No. 1: Getting started is scary.

The safety net is gone. It’ll feel like you are walking a tightrope made of dental floss. Every mistake will be amplified by the unknown. Self-doubt will appear and have you reconsider the decision. You’ll work for hours, maybe even days, without making a buck.

No. 2: A little progress is liberating.

I still remember my first client. Sophisticated contract. Multiple rounds of revisions. I made less than a grand. It would be significantly more today; however, nothing has compared to receiving an email from my payment processor confirming the client paid. If I could do it once, it could be replicated.

Akaveil

No. 3: Building a business isn’t easy. 

You may be a great lawyer, but running a business requires other skills. Be ready to learn how to market, read financials, manage people, and build systems. It’s the difference between working on vs working in the business. Mastering fulfillment will make ownership much easier. 

No. 4: You never know.

Take the call. Attend the event. Step outside comfort. Opportunities are endless. I no longer do intake, but I still handle brief consultations to see if my firm is the right fit for a project. Sometimes the lead turns into nothing more than a friendly conversation and my offer to point the person in the right direction. And other times, it turns into a great, long-term relationship. 

No. 5: Embrace failure.

It’s going to happen. You will make mistakes. Everyone makes mistakes. Mistakes are rarely a catastrophe. Instead, they linger and occupy headspace for weeks or months. This can be taking on a client after disregarding all the red flags, hiring the wrong person, or undercharging on an engagement with poor scoping. It happens. The key is to identify these mistakes as early as possible and take action to minimize the downside. The loss already occurred. Unwillingness to acknowledge the mistake is only going to cost you more. 

Legal Services of Miami

No. 6: The road to growth has potholes.

Winning is relative and not linear. Maybe winning is working less while maintaining the same level of income. Or maybe, it entails building a 50-person team. Regardless of your definition of success, you will have missteps. Once you digest this reality, it makes it much easier to focus on the goal. 

No. 7: Protect your biggest asset.

Once you start making a name for yourself, time dwindles. This person wants to chat. Meetings run long. The calendar starts to have no air to breathe. The best thing you can do as an owner is to guard your time. And be ruthless about it. If you don’t, others will be happy to take it from you. 

No. 8: The floor is high.

Let’s say you make $150K at a firm and you work between 45-50 hours per week. And this excludes all time you pick up your phone at night to check emails. If you have your own firm and charge $300/hour, then you need to bill 500 hours/year to break even (likely less after the tax benefits of ownership). This breaks down to about 40 hours/month or 10 hours/week or 2 hours/day. 2 hours/day is very doable.

No. 9: Clients don’t grow on trees.

We already established a simple baseline of 2 hours/day. But who’s paying you to do what you do? This is likely the scariest part of hanging a shingle. How will clients know about you? Get out. Shake hands. Kiss babies. Join a group. Write online. Hustle. Grind. And repeat. If you put in the time, work will appear. The key, though, is no one is going to walk up and offer to pay you. You’ll have to earn it. A causational relationship exists between putting yourself out there and work appearing.

No. 10: Risk is okay. 

Running a business comes with no instruction manual or safety net. Employees receive paychecks. Clock in, clock out. Direct deposit occurs every other Friday. It’s a different world when you have your own firm. Work may not exist. Clients may take time to pay (if at all). If you can figure out the nuances of running a business, the upside is beautiful. Money aside, you will be able to set your own terms and determine how and with whom you spend your time. 

Comments 1

  1. A Solo Practitioner says:

    Jeffrey: I appreciate the opportunity to read your article. I am a solo practitioner in a contingency fee practice that has been disrupted strongly by the COVID-19 pandemic and government agency partial shutdowns. I can also describe what it has felt like being responsible for the business of practicing law. It feels like being caught in the gravity well of a stellar mass black hole and steadily being drawn towards it The only thing that keeps me from falling inescapably towards if, spaghetified, and sucked into personal, professional, and financial oblivion ruin is spending cash on overhead from whatever resources that are available (excluding resources that don’t belong to me). Lines of credit. Credit cards. Retirement funds, Small fees from small settlements and benefit award that trickle in. It’s only marginally better to know that you have some large fees coming in the future but not knowing precisely when they will actually be in the bank when your reserve resources are dwindling and you feel like you’re going to be sucked into oblivion months before that money will arrive. I had my CPA file amended returns for my ERTC refund only to find out four months later that my CPA had not followed up on whether the IRS had actually processed and entered my Forms 941-X into their system and that the Forms 941-X would have to be refiled, and now, according to the IRS rep with whom I spoke last month, it’s likely to be September before I can expect to receive my ERTC when I needed that money months ago to pay overhead. Good news came this week that a case with a five-figure fee that has been on hold since the end of January is now close to proceeding to final approval was most welcome. So, I would like to think that my hopes for positive cash flow are not false hopes.

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