Starting a law firm with no money is becoming an increasing possibility for new lawyers.
There was once a time when nearly any law graduate could find a lawyer gig—maybe not an ideal long-term career, but they could at least get their feet in the door at a small firm or public interest position where they’d gain valuable experience before making the move to private practice. Since 2008 or so, however, that hasn’t been the case. Many graduates are forced to take a low-paying position that barely covers the rent and student loans until they get so frustrated that they either quit law entirely or join the ranks of those starting their own practices.
I am one of those folks. Many of us from the “lost generation” of graduates are still lost, and if we haven’t taken the plunge into solo practice yet, I expect many will soon.
Of course, whether you’re a fresh graduate or underpaid associate, chances are you don’t have a lot of capital to work with. So if you’re looking to hang a shingle, can you do so with no money? I, and many people I know, have done it—with varying degrees of success. Here’s my advice.
Think hard about whether the time is right
Everyone’s situation, assets, and expenses are different, so this might be better expressed through examples.
In 2015, I actually did start a practice on a limited budget. At the time, I had no expenses, except for Moustakas the puppy and rent. Student loan repayment is income-based, so yes, I paid a little more in interest, but the monthly payments were basically nill. It was actually pretty easy to make the low-income thing work, especially since I wasn’t used to the finer things in life.
In 2017, I just put my California legal practice on hold and moved to Brooklyn for the love of my life’s medical career. In the next year, we’re going to move again, get married, and welcome our first child—a baby girl. This would not be the time to quit a job and start a full-time practice.
After a year or two, when my soon-to-be-wife was working, had health insurance for all of us, and our life had stabilized a bit? That might be a better time to start a full-time practice.
See the difference? Evaluate your month-to-month expenses, any other income in the household, and your savings, if you have any. Expect the worst (no income for at least a few months) and ask yourself if you, and your family, can swing the risk. Plan to take no vacations and cut any extravagances (think paid-for used Honda Civic, not leased BMW), and if you have a current job, save at least enough to cover a few months’ worth of living expenses before you launch your firm.
Keep your law firm expenses down
When it comes to investments you’ll need to make for your law firm, remember that you probably don’t need much beyond your laptop, a reliable printer, and a few miscellaneous bits of software and services. I’d recommend:
- Microsoft Office (or Microsoft 365)
- Cloud practice management and client intake software that includes everything you need to run, manage, and grow your firm—from intake to invoice
- An accountant (I hate bookkeeping, as does every other lawyer I know)
You can also save on things others splurge on, such as legal research services, by taking your laptop to the law library. At least out in California, when I was still there, the libraries would even let you use your own laptop and connect to LexisNexis or Westlaw for free, so long as you were on their wireless network. (There are even free legal research tools you can take advantage of).
Depending on your practice area and clientele, you may even be able to skimp on office space: One friend of mine found a rarely-used co-working space for startups and works out of there, including dipping into private rooms for meetings with clients who think he’s just super tech-savvy.
Plan, plan, plan
You need a business plan—maybe not one of those crazy five-year income-and-expense projection fantasies, but at least a realistic map of your expected expenses, a budget, practice and geographical areas you’ll take on, and a marketing and business development strategy.
We’ve already talked about expenses above, and law firm budgets previously, so start with those.
In terms of practice area, if you’re making the jump from a firm to your own practice, you probably already know what you enjoy doing. For those fresh out of school, think of a few areas you like and get an idea of the competition in your area: Are there hundreds of DUI lawyers in your vicinity? What about something less common, like elder law? (True story: the mid-sized town where my parents live has retirement communities opening weekly, it seems, but only one elder law attorney shows up when I do a Google search.)
Finally, plan for marketing your law firm. In my younger days, I used to be all about free marketing. You can and should build a marketing strategy that covers the free and low-cost basics, but the biggest difference I see between those who pay for marketing, and those who do not, is that the former can pick and choose their clients and their growth tends to be more rapid (assuming they’re good at the lawyering part of things).
Also, keep in mind that if you need clients now, spending money on ads that appear to folks who need a lawyer immediately (think a DUI defendant Googling for help and seeing your ad at the top of the page) can quickly get the phones ringing—even if it isn’t free. The other con to free advertising is, of course, that much of it (guest blogging, for example) takes a lot of time.
Still, free marketing options should have a place in your business plan. I previously wrote about ten free places to advertise, and they’re all places that I’d still recommend wholeheartedly. Reputation management—seeking happy reviews and responding to the negative ones—is also vital, as most consumers say they already use online reviews when researching professional service providers.
Start working on these marketing initiatives before you make the jump into practice. You can start by building a website. (Doing it yourself saves money, but is a huge time commitment. If you’re waiting on bar results or have too much time on your hands, go for it. Otherwise, hire somebody reputable.)
If you know your future office address, you can set up a Google My Business profile a couple of weeks before you launch. Leverage Clio’s integration with Google My Business to ensure potential new clients can book consultations with you right from your listing. And if you’re going to be running paid advertising, you can make sure the vendor has everything ready to go on day one.
Lastly, networking may or may not help with business development. For most practices, it’ll take years of networking and building your professional reputation before other lawyers send you valuable clients. In the meantime, they’ll just send their low-income or pro-bono clients to you. In a few years, these referral cases will often be your best clients, but for now, don’t count on it.
You may have some luck, however, with networking outside of lawyer circles where other professionals, like real estate agents, don’t have a “go-to” lawyer for divorces or probate disputes.
Starting a law firm, especially one with no budget, is not going to pay off any time soon. For the first year, or two, or even three, you’ll have months where clients aren’t paying and you aren’t sure whether it is worth it. This is, in every sense of the word, a long game. To have a chance at being successful, you’ll need to keep pressing forward.
I know dozens of lawyers with small or solo practices. None of them made it big in their first year, or even in their first couple of years. But if you know that practicing law is what you want to do, and you can swing the income ebbs and flows of running a small business, being your own boss while helping people with their legal issues is a pretty incomparable gig. Nearly all the on-their-own lawyers I know would agree—and almost none of them would ever consider working for someone else again.
We published this blog post in September 2017. Last updated: .
Categorized in: Business
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