Do-It-Yourself Practice Success

Published September 6, 2011

Dealing with “The Business of Law®”

I have regularly discussed how law schools do little to prepare graduates for dealing with “The Business of Law®” (finance, practice management, client relations) that determines practice success. This puts the onus on new lawyers to do the preparation themselves, whether they are starting their own practice or joining a major firm. Since this is the time of year when many new graduates enter one or the other of these practice paths, it is worth reviewing how these are two entirely different challenges, with different preparation needed for success in each.

Requirements of a Solo Practice

Solo lawyers need all the traits of an entrepreneur: motivation, acceptance of risk, resiliency, commitment, persistence. But just as important is adequate capital. It’s easiest to start a new solo practice for those legal specialties where capital requirements are less, where it’s easier to reach prospective clients who have immediate and personal needs and are less concerned about appearances. Practice areas that meet these parameters include personal injury, family law, bankruptcy, immigration, personal real estate and the like.

Have a Financial Reserve

Don’t expect immediate cash from such clients. From the very first matter, it takes up to 120 days on average between when a law firm sends out an invoice and when it is paid. For that reason alone, having a financial reserve helps ease the angst of starting a practice. The ideal number would be a minimum of six months of living expenses, and preferably a year. In the meantime, the new lawyer who stays on top of receivables will have the cash to survive.

Demonstrate Your Worth in a Large Firm

The economics of joining large firms have changed dramatically. Many such firms have cut starting associate pay, reflecting the economic reality that it takes them from three to five years to break even on the investment in a new lawyer straight out of law school. It is thus essential for new lawyers in a firm setting to determine and demonstrate their worth to the firm. It is a basic equation: Billings – [Associate’s Total Compensation + Direct and Indirect Expenses] = Net Profit. A positive balance is essential to a successful law firm career.

Set Your Goals and Strategies

New associates can have a dramatic impact on this bottom line by bringing a sense of ownership to business development efforts, rather than just taking work that partners assign. Developing a career requires planning to set overall goals and specific strategies. The issue is not more billable hours, it’s what kind of billable work and what that work contributes to the firm. The firm must be able to measure personal growth by specific standards of billable time, training and client development effort, demonstrated by achieving near-term targets that are realistic. This do-it-yourself approach, even in the largest firms, is the best way to make, not just have, a career.

Categorized in: Coaching, Management

Audience type: Associates