Of Lawyers and Risk

Published April 19, 2011

Someone said, “Business, by definition, is taking a risk. Law, by definition, is staying away from risk.” The jokes about lawyers who hedge their bets and are reluctant to commit are plentiful – as in the story of the client who hoped to hire a one-armed lawyer because he did not want a legal advisor whose recommendations always seemed to end with, “But, on the other hand . . . .”Anticipating alternatives is the nature of legal counsel – but those who pursue “The Business of Law®” must be anything but risk adverse.

Living with Risk

Lawyers in solo or small firm practice are immersed in the concept of ownership. This means being the last person to receive financial benefit from the firm. Staff and associates come first. Vendors and suppliers come next … and then owners. It means that you are personally responsible for the debts and liabilities of the firm. It means that you lay awake at night wondering how to improve the efficiency, growth and profitability of the law firm. This epitomizes living with risk.

Managing Money

Small firm lawyers know that managing money is the number one consideration for survival. Practice needs should always be met first, and personal needs should be the minimum expense necessary to maintain a standard of living. It’s a hard discipline, one not often found in large corporate firms. Running one’s own law firm is not easy. The effort to excel, made more intense by the pressure of economics, can cause tremendous problems.

Entrepreneurial Demeanor

Any lawyer in small firm practice needs all the traits of an entrepreneur: motivation, acceptance of risk, resiliency, commitment. There are lawyers who are close to burn-out or at the very least are unhappy in their day-to-day occupation, and who thus run the risk of alcohol or drug abuse. And several years of recession have created even more stress and risk, which are worsened by worry over income, client demands and workload.

Achieving Success

All of this is not to say that the practice of law is unrewarding, or involves more pain than pleasure. Most lawyers enjoy being in practice and find it to be satisfying. But successful lawyers also recognize that success as a firm – as opposed to success in the courtroom or at the negotiating table – can never be taken for granted. It takes hard work and an honest acceptance of the fact that being a lawyer can be a very risky business.

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Audience type: Small Law Firms, Sole Practitioners