Starting Your Own Law Firm

Many people, attorneys included, have an entrepreneurial spirit. Attorneys have the advantage that their law license is actually a business license that gives them the right to set up their law office and practice law in the state where they obtained it.
 

The thought of being in charge of their own firm is definitely appealing for most attorneys. However, not all of them would be able to and should have their own law firms. The change from being an attorney-employee to an owner of a law office is difficult and should be approached with much thought. There are hundreds of successful law firms; however, hundreds of firms are shutting down every year, bringing their owners to bankruptcy.


I myself thought of opening up my own law office when I was still practicing law as an attorney and took some initial steps, like renting an office, placing an ad in the Yellow Pages, and talking to some friends with businesses about wanting them, clients. Because once you leave a large law office to start your own practice, it will be nearly impossible to get back into the big law firm world. Fortunately, I had an excellent relationship with the law firm where I was currently working. They gave me half a year to determine whether I wanted to stay with the firm or continue in my legal profession.

I did not want to run my own law practice as you often have to accept clients that are not exciting to pay the bills. But I also did not want to continue as an attorney in a law office. In my six months of trying what fitted me best and going on many law firms interviews, I realized that my passion and talents lay in legal recruiting, so I started BCG Attorney Search and found my success there. But I also know that opening their own legal practice is the best decision of their lives for some people.

Thanks to my work as a legal recruiter, I have met many attorneys who have started their own firms successfully and unsuccessfully. So, in this article, I am bringing you 10 reasons why you should and should not start your own law practice.
 

10 Reasons FOR Starting Your Own Firm

You Have a Source of Work for Your Law Firm (Clients, Former Law Firm or Corporation)

If you have clients you know will go with you and give you work, or if your previous law firm or corporation has agreed to give you work, it is a good reason to start a law office.

Many attorneys who have been representing clients for years under their previous law firms start their own firms knowing that these clients will come with them, and that is the security you need when going on your own business venture. Clients will often go with you because they trust you when you have been working with someone for years on serious legal issues, and you have given them legal advice and built a personal relationship with them. That is the best way to secure work in your new law practice. However, not every client you have been taking care of for years will go with you. Some prefer to stay with a well-known and secure name of a big law firm, so you should not automatically assume that every long-term client you have a good relationship with will leave for you.

If you leave your firm on good terms, you may also get work from your previous employer. Many law firms send out smaller cases to law firms they have good relationships with, and many departing attorneys can have successful law practices thanks to the clients their previous firm sends them.

The same applies if you have worked as an in-house counsel for a big company. The company you are leaving will often hire the firm established by their previous employee (if the price difference is not too high), which means a stream of work you already have some experience with. That is beneficial for both sides and can create working relationships that last decades.
 

You Have a Group of Attorneys You Trust That Will Work With You

Establishing a law firm with a group of great attorneys you trust is always better than doing it yourself, especially if you create a group of people who complement each other with their skills. No one can really be a "jack of all trades." Creating a strong group of attorneys where one is good at generating business, another is great with budgeting and financial matters, another can bring a great reputation and network, and someone else is talented in recruiting and finding the best new talent can be a base of a much stronger firm than if one person tried to take on all of these roles.

Many of the most successful firms in the country were created when talented lawyers who worked together for years in one law office left and started independently. However, complete trust is essential for this grouping to work, and it is always better to go into something like this with people you worked with for many years and know their strong sides and where their weaknesses lie.
 

You Have a Narrow Specialization or Skill You Know Will Keep Bringing in Clients and Work

Specialties in practice areas, such as patent or real estate law or some types of corporate law, can be a great way to create a successful solo law practice. This can be knowledge on patenting specific classes of drugs or types of microwave frequencies or knowledge and experience in specific tax transactions.

Having a lot of experience in something specialized like this with a network of clients who regularly need your services is a great reason to start as a solo practitioner. A well-defined skill that is hard to find elsewhere is a wonderful marketing opportunity and, if done correctly, will be a great consistent source of work. If you can market yourself as the best expert on your specialization in your market, almost every person needing such legal advice will come your way.
 

You Are Experienced and Talented Businessperson and Know That You Will Be Able To Succeed

Some people are just born with business and entrepreneurial blood in their veins. They often start realizing their business ideas early in their teenage years. They are confident in making trades, persuading clients, tackling the financial side of things, and finding out more about the business world. If you are one of those people, starting your own law firm might be just for you.

Someone with a natural talent for business will often succeed regardless of where they went to law school, how they did there, or what law office they worked in before. Great business skills are hard to find among attorneys. That is why many of them start their law firms for the wrong reasons or with naive expectations and end up having to close them. However, if you are one of those who were born business-savvy or were able to develop their business skills to near perfection, starting a law office will probably be a good decision for you.
 

You Are in a Small Market Without a Ton of Competition

If you can open a law firm in a small town with few other law firms to choose from, you often hit the jackpot. In many small towns, people with legal issues willing to spend money on them do not have any other choice than to come to you.

When you are the only law office in the town, you can be sure that you will have enough clients and work. I personally know many of them who approach my company to find someone who will take over their practice once they retire. You can create long-lasting professional relationships with all clients in firms in small towns, which also helps in having a successful career as a solo practitioner.

The market in large cities can be extremely competitive, and it can be tough to start a law office there. You have to compete against large law firms with decades of established reputation and hundreds of smaller solo law practices. So, starting in a smaller town might be the better business decision.
 

You Have Family or Friends Who Can Send Work to Your Law Firm

Having a family member or a friend who can send you enough work is a great reason to start your own law firm.

I was working with an attorney who was desperate to find a law firm job as he was let go as someone with more than a decade of experience. I advised him to ask around his close circle about a possible source of work for a law firm. He found out that his sister's husband pays over a million a year to a law firm he does not like to care for his firm's litigation matters and would much rather pay him if he opened his own practice. So, of course, he started as his own boss and is now doing very well. He is even expanding and taking on new clients.

Not everyone can take advantage of this, but if you are lucky and someone close to you can bring you a consistent stream of work, you should make use of it and start your own business. Having enough work is the essence of becoming a successful business owner, even if the source is your own parent.
 

You are a Hustler and Willing To Do Anything To Get Money in Your Law Practice

The truth is, if you want to build a successful firm from the ground up, you will have to hustle, and you will have to take jobs you do not want. There is no going around it. If you are willing to do so, starting on your own might be right for you.

You cannot care about the opinions of others about you, and you cannot be afraid to get out there and do the work. It might be fighting the IRS, working on workers' compensation, or personal injury. It definitely will be marketing and advertising your firm in any way possible. When you are just starting, you should do anything that comes your way and brings in clients and money. Building a business is hard work; therefore, critiques and taunts from other attorneys are the last things that should matter to you.

The most successful attorneys are always the ones who are not scared and ashamed to go after what they want without regard for their ego. If you are a hustler and not afraid to get out there, it will help you push your firm further.
 

You Are Unable To Work With Others or in a Structured Work Environment

Many people cannot get along with other attorneys, and they may hate working with them. Some have problems taking orders from other people, are more productive working alone, do not get along with people around them, or cannot work in a structured environment and need their own flexibility. There is nothing wrong with that.

When you are working as a solo practitioner or leading a tiny firm with just a few other attorneys creating your own schedule and rules, you do not have problems getting along with your co-workers.

Many attorneys who start on their own for this reason have started in a large law firm where they gained training and experience, but they found out that they cannot function in such an environment. The next logical step then leads them to become their own boss and thus solve their issues as employees of a big firm.
 

You Do Not Have Another Job Offer and Want To Avoid Having the Gap in a Resume

It happens to the best of us - you have been let go by your previous law firm and cannot find a placement quickly enough. Now you are afraid that you will have a gap on your resume that will scare off any potential employer. If that is your case, starting a legal professional might be a great way to avoid this. It is always better to have at least something on your resume, even if you do not have many clients on your own, than having nothing at all. Law firms do not really see how much work and how many clients you have while working solo but will think your services are in demand when you have opened your practice law. If you have at least some work to do, starting as a solo practitioner or a small law firm to avoid being unemployed is a good idea.
 

You Do Not Care About Money or Success and Just Want To Start on Your Own

If you really want to start on your own, do things your way, and you do not care how much money you accumulate or what others think of you, you should go for it. It is one of the best reasons to start on your own.
 

10 Reasons AGAINST Starting Your Own Firm

Although most attorneys start their business journey full of enthusiasm and hope, it is vital to keep in mind that most law firms fail. If you are thinking about starting on your own, you have to really consider your skills, personality, drive, motivation, and many other factors to assess your chances. Working in a law firm is very different from starting your practice law, so thinking you will be a successful solo practitioner is naive and dangerous because you are a successful attorney. Here are the ten most important reasons why you should NOT start a law firm:
 

Operating Business Differs a Lot From Simply Practicing Law and Require Different Skills

Many attorneys who start on their own fail to realize that running a business is very different from simply practicing law as a lawyer who ends up being fatal for their business. They often think that if they earn two hundred thousand dollars a year in a law firm, it will be easy to earn the same billing 500 hours a year if they set their billing rate at 400 dollars an hour.

But anyone who knows something about running a business knows this is not how it works. If an attorney earns two hundred thousand, they cost the firm two or three times that. The firm pays for renting an office space, providing the technology, software, and other resources to be able to actually do the job, supporting staff, training, bonuses, benefits, health insurance, other types of insurance, and the list goes on and on. Any business owner must keep tabs on these necessary expenses; otherwise, they will run their business to the ground. Unfortunately, many big lawyers have.

Some attorneys think they will keep their expenses low and keep most of what they earn as a profit; however, it is not easy. You are now an attorney and a business owner, which means constantly watching the money and making hard business decisions every day, which is no small task.

I personally know many lawyers who have been very successful when working under big names in large firms. However, when they started on their own, they quickly lost all of their clients that went with them from their previous firm and ended up having to do whatever else they could. It is not easy to keep up the same standard of care for clients when you have tens of other tasks to tackle on your to-do list. You have to not only do your legal work, but you are responsible for customer care, making sure that the paying clients actually pay their outstanding bills to you (which is much more difficult than anyone would expect, and you often end up with some of your billed hours unpaid), marketing and advertising, bookkeeping. If you have employees, you also have to take care of them. If you are not prepared for this before establishing your own law firm and do not have those skills, it will cause problems in your business operations.
 

Starting a Law Practice Because You Have to and Have No Other Choice

The truth is many lawyers who start their own legal profession do so because they do not have other options. When no one else employs them, they can stop practicing law or start their own law firm.

The reasons for this are varied. Some attorneys went into a low-ranking law school that left a black mark on their resumes. Others were unlucky and graduated during a recession or went into a currently slow practice area, which set them back. Some might be too senior for law firms or have a bad reputation preventing them from hiring. Attorneys who have worked as in-house counsel or other non-law-firm practice settings also have problems hiring big firms. Whatever the reason is, many lawyers have something in their background that is not viewed positively by law firms, and they resort to starting on their own because they do not see any other way to stay in the legal world.

Most solo practitioners I have met throughout my career as a legal recruiter has started independently because they had no other choice. That gives them a negative connotation, and many people in the legal industry see solo practitioners as "leftover," and no one wanted them.

Of course, many wonderful solo practitioners love what they do and are successful in it. But if you are thinking of starting on your own, you should keep it in mind.
 

The Biggest Clients Will Almost Always Choose Big Firm Over a Solo Practitioner

If you are thinking of starting solo, you need to remember that once you leave a large law firm, you will rarely have large clients anymore. Almost any bigger company is able and will pay the legal fees of large firms over choosing a solo practitioner.

Large law firms are more equipped for handling big cases because they have bigger teams of people. Their name also carries some weight and is often taken as a sign of seriousness by the company or individual standing opposite the company. If a big company chose a solo practitioner to handle their affairs, it could be taken as a sign of weakness from them in the eyes of others.

Everyone who has the money to pay high legal fees will almost always choose a well-established law office over a solo practitioner because they are regarded as "better and more serious." You might be able to work on some smaller matters for large clients or work for wealthy individuals on their personal matters. However, likely, you will never be able to work on sophisticated issues of the larger clients.
 

Solo Practitioners Often Have To Do Contingency Work

Contingency work is something most solo practitioners rely on for their income. Some do not do it, of course, but it is quite common among people in solo practice. It is also widespread in real estate law. For example, corporate attorneys often take a percentage of the deal they are working on instead of setting fees or lowering them. Big law firms avoid transactions like this, as they have enough clients who will pay them now and do not take clients who want to pay later.

Taking on contingency work is often the only way for solo firms to stay afloat, so they sometimes do not really have a choice and have to negotiate with their clients about this. It can result in a solo firm's fluctuating income, and attorneys thinking about starting solo have to be aware of that.
 

The Skills of a Solo Practitioner Can Decline Quickly

This ties in with the reason for not attracting big clients as a solo practitioner - once you stop working on complex, sophisticated cases, your skills will deteriorate. It does not have to happen to all attorneys who start their solo firm, as many factors play a role in this, such as intellect, experience, training, age, etc. However, many solo practitioners work on smaller cases for people who cannot afford to pay for hours of research work and try to lower the fees as much as possible. That often means skipping some steps of good practice and finding shortcuts where possible. A few months of working like this are enough for many attorneys to forget about the training and experience in law firms.

Solo practitioners also do not really have others looking over their work, so they usually do not even know that their standards have lowered so much. I have hired a few solo practitioners and was unpleasantly surprised with the bad habits some of them have taken on. If you are not careful about this, it can easily happen to you.
 

Starting a Firm With Other People Often Ends in a “Break-Up” of the Partnership

If you start any partnership with more people, you have to be prepared not to work out. Just like many marriages end up in a divorce, many professional partnerships break up. Some because the partners have different visions for their firm, others because of financial disputes or other arguments and disagreements. In firms, there is always someone who does not do their fair share of work or wants more money than others deem adequate.

Some firms manage to work these things out and prosper even when more people create them. However, most of these partnerships are destined to fail, and if you are starting a small law office with partners, you have to think about this.
 

Solo Practice Does Not Have the Structure and Processes That Allow Law Firms To Be Successful

Law firms have a business model that has been used and perfected over decades to allow for as much profit and success as possible. They have departments for marketing, human resources, finances that help firms function seamlessly. They fire people who are not performing well and hire those who do. They have bonus schemes that help motivate employees. And the list goes on. Everything in law firms is built to maximize profit.

Solo law practices do not have any of this. They bill fewer hours for lower rates. They sometimes have to focus on administrative tasks instead of billing clients. That puts them at a disadvantage.
 

Solo Practitioners Are Not Very Respected in the Legal World

This has been previously mentioned in several other points, but other legal professionals do not well respect solo practitioners. Judges and attorneys on the opposite side generally know that solo practitioners rarely work on important cases. The matters they work on are often poorly researched and will probably not be appealed (to keep low costs for the clients). They also know that serious clients usually choose law firms rather than solo practitioners if they want their cases seriously.
 

Solo Practitioners Can Rarely Get Back Into Large Law Firms

Large law firms do not look at solo practitioners positively. They think that all solo lawyers are doing it because they do not have other options, cannot get along with other people, do not have the skills to be in big law, or leave in the first instance of problems. So, large law firms will not want you back unless you have scarce and in-demand skills or a ton of transferrable business.
 

Solo Practitioners Earn Less Money Than Their Counterparts in Large Law Firms

As a solo practitioner, you have to spend your time doing things that are not billable. You negotiate and argue with your clients about money. You travel to pick up this thing and another thing. You argue with your client about getting paid for the services you did for them months ago. And this all takes away the time you would be spending billing clients if you worked in a law office. Law firms usually have people hired specifically for taking care of these tasks. As a solo practitioner, you would be doing them yourself.
 

Conclusions

You can become very successful as your own boss running your own law firm. If you have a constant stream of work and do it properly and up to a high standard, you will be fine. However, there are also many ways in which your firm can fail. But you also need to acknowledge the risks and possible problems to be prepared for everything.

See also:
 

• Is an In-House Job Right for You? Top 10 Frequently Asked Questions About In-House Careers
• International Trade Attorney
• Why You Should (and Should Not) Quit the Practice of Law
• Law Firm Partnership: The 10 Critical Considerations During Your Professional Journey