MyShingle : Solo and Small Law Firm Management and Marketing

Tomorrow and throughout the week, I'll be posting the essays that I received in response to MyShingle's Sixth Birthday contest.  But for my first post of the New Year, like many of my blogging colleagues (e.g., Ross Kodner, Neil Squillante,Niki Black and Stephanie Kimbro) I wanted to share some of my predictions for 2009.  I won't comment on micro-trends, such as this year's hot practice areas, because I just completed a terrific piece on that topic for a bar magazine and I don't want to spill the beans.  Instead, below are some broader thoughts on where I see the legal profession, in particular solo and small firm practice, headed in the year to come.

I view 2009 as a transition year, not a breakthrough year, with the operative theme being trust.  Crises like the mortgage meltdown, where borrowers allowed lenders to convince them that they could afford a mortgage triple the size of their income or the Madoff Ponzi scheme, where investors simply took Madoff's word that his returns were as he said, have substantially eroded the public's trust in professionals.  Clients are going to scrutinize lawyers more closely than ever and look to third party information such as online testimonials or even the much maligned (not by me) Avvo ratings and those sites will gain traction.  (Incidentally, I'm not alone with this prediction -- Richard Susskind, author of The End of Lawyers, p.112  discusses how eventually clients will have access to repositories of feedback from clients just as users have available on eBay or Amazon).

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I've finished reading Malcolm Gladwell's Outliers which argues that a variety of factors, such as luck, era of birth or family support account as much for success as sheer talent.  After all, what explains the break out success of certain individuals with innate talent in comparison to the mediocre performance of those equally endowed? 

If you haven't read Outliers, Gladwell's premise sounds depressing.  After all, what's the point of working hard if our fate is determined by factors beyond our control?  But I take away the opposite from Gladwell and find his observations enormously helpful.  For once we realize that other factors besides merit account for success, those of us who are less talented can replicate the kind of environment that is conducive to success through the company we keep.

Obviously, we can't recreate our own families, or re-live our childhood.  But what we can do is surround ourselves with good company -- friends and colleagues and peers and mentors who support and motivate and inspire us.  That's especially important in solo practice.  I wonder how many talented young lawyers have been deterred from starting a practice because they encountered only naysayers along the way rather than lawyers who supported and nurtured their vision.  How many lawyers fired from a job have left the law in shame, tail between their legs, feeling as if they'd failed when with the right encouragement, they could have opened their own firm and made a real difference in the lives of clients and to our entire profession. 

I'm often asked what matters most in starting a law firm.  Is it resources or sheer talent or powerful connections?  For me, two characteristics matter most.  First, doggedness (another Gladwell success factor) - that persistence to keep at it just like a dog with a bone.  And second, community -- those solos who have spouses who cheer them on or their proud parents who rave about their son or daughter, "the lawyer with his/her own firm."  Show me a solo who's willing to work crazy-hard with a strong support group in place versus one who's read all the latest marketing books and hired the first rate experts to draw up a business plan and create a fancy logo and brand and I'll place my money on the dogged, every single time. 

As for me, I'm fortunate that I've never lacked the support that I needed to start my own practice, and then this blog.  First, it came from my husband who in the early weeks of my practice, bought me the laptop that I didn't think we could afford that enabled me to work in the library or on the upper levels of our house instead of in the damp, dark and depressing basement.  (My husband also had the original idea for setting up this site, originally conceived as a portal, as a blog).  More recently, I've found positive reinforcement in my various on-line communities -- the blogosphere, Solosez, my own little mastermind clique and more recently Twitter -- all of which have kept me surrounded, nearly 24/7  with people who just dazzle me with their writing skills and wit and accomplishments and who generously share wisdom and knowledge and encouragement.  How can anyone fail in that kind of environment?

For 2009, I wish the gift of good company for all of you current solos as well as those of you who are thinking about making the leap to solo practice.  This is my last post for 2008, so have a wonderful New Year.  I'll see you on the other side!

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UPDATE - ENCORE TELECONFERENCE from Biglaw to Yourlaw - JANUARY 9, 2009 (Thursday) at 3 pm EST. Sign up below.  IF YOU HAVE  ALREADY SIGNED UP YOU WILL AUTOMATICALLY RECEIVE INFORMATION ON THE CALL VIA EMAIL.

Given that 1762 lawyers lost their jobs in 2008 according to the Law Shucks Layoff Tracker, I decided to release a new e-book entitled From Biglaw to Yourlaw. You've always believed starting a firm was a last resort.  Now, it may be your only resort.  My only goal in the book, which gives an overview of the current economic situation and dispells some of the myths associated with starting a firm, is to convince large firm attorneys to view starting a law firm as a viable option.  I also wanted to provide an objective view of starting a practice - neither the naysaying, "it can't be done" perspective of law schools and large firm lawyers nor the "you can work 4 hours a week and earn gazillions" perspective of some disreputable marketers and gurus.  As with everything else, reality lies somewhere in between.

If you'd like to download a copy of the book and get the dial in number for a FREE CONFERENCE CALL on From Biglaw to Yourlaw, just sign up below (if you already signed up previously, you should have received the e-book in a follow up message).

Download Free E-book (and get teleconference dial in information)
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And so, another biglaw firm -- this time, 150 year-old New York based Thacher, Profitt -- comes tumbling down.  But though the names may change (think Heller, Ehrman, Thelen and Brobeck.com) the circumstances are virtually identical: 

Step 1:  Each firm suffers some kind of economic crisis. 

Step 2:  Rainmaking partners panic and begin to jump ship, taking valuable business with them (See WSJ Law Blog, here and here and Legal Pad, here)

Step 3:  Remaining partners can't figure out how to reorganize so they pursue mergers with other firms which not surprisingly, have no interest in assuming liability for another firm's economic woes;

Step 4:  Merger talks break down, and more partners jump ship; while other firms (including those that those that spurned a formal merger or previously dumped their own unprofitable practice groups) cherry pick the lucrative remains while leaving the rest of the lawyers and staff to fend for themselves.

To a solo like me, this kind of behavior is incomprehensible on so many levels.  For starters, I thought that law firm partners were owners.  If that's the case, why don't they behave that way?  My firm has gone through rough times where I've thought about throwing in the towel.  But I've got too much of myself invested in this venture, and too much I still want to accomplish to ever abandon my firm in a heartbeat.  Plus, figuring out new ways to solve old problems like clients who don't pay or clients who jilt me after their first influx of venture capital is one of the most exciting and challenging aspects of running a firm.  And I'm not unique either; my fellow solo and small firm colleagues share this same drive to constantly improve and innovate. 

Second, no offense, but engaging in merger talks when your firm is floundering seems kind of silly.  I'm assuming that any firm looking to merge will engage in due diligence, which means that the failing firm will be forced to divulge its secrets, such as which practice areas are profitable and which aren't.  Once the acquiring firm learns where the sweet spots are, it has no incentive to acquire the whole firm and will instead, take on only the most lucrative parts.  In contrast to conventional business, where parties negotiating a merger could implement some kind of non-compete to prevent cherry picking, ethics rules don't allow firms to restrict lawyers from moving to other firms and taking clients with them.  

Finally, after going through the demise of one firm, why do lawyers reflexively jump to another firm and take the risk that the same thing will happen again, instead of striking out on their own?  I believe that In spite of all that's happened this past year, many lawyers still foolishly believe that law firms offer security, a hedge in bad times.  But it's false security. As I've written before, law firms' diversity is illusory: sure, they offer different practice areas, but success depends on clients' ability to pay high fees.  So when the economy tanks, the whole firm goes down as well.

True, solo practice offers no security.  But the security that biglaw offers is false, and that's far worse than no security at all.   False security lulls lawyers into inaction, makes them believe that someone will take care of them in tough times instead of gearing up to take care of themselves. 

If you are a large firm attorney - either a partner or an associate - I urge you to consider starting your own firm, now.  In fact, I feel so strongly, that I'd like to offer a special end of the year teleseminar/webinar on DECEMBER 30, noon EST on starting your own firm.  I know that many of you at large firms believe that solo practice means handling estates, family law or consumer cases and that is certainly an exciting option.  But you can also take your existing biglaw style practice to your own firm.  My own practice specialty is energy regulatory work, a traditionally "large firm style" practice area and I've worked at large firms (though it's been a long time ago now), so I am familiar with your the fears and concerns of those considering a move from "biglaw to yourlaw."   At the same time, because of my background, I'm also familiar with the unique advantages that a large firm attorney can bring to your own practice. 

Why do I want to do this? Because I am frustrated at seeing large firm lawyers make the same mistakes again and again.  Moreover, I don't want to see the legal profession lose talent. I would hate to have so many lawyers who sought a career in law give it up because they just don't know what the alternatives are.   Trust me, I'm not going to talk you into starting a firm or try to sell you anything.  I just want to share some information and assure you that it can be done if you decide to do it.  If you don't want to call in, consider reading a copy of my book, Solo by Choice (click on sidebar) - you can either order it from Amazon or find it in a local law libraries.

If you register below, you'll receive the information for a dial-in or log-in number on December 29, 2008. Please feel free to email me at carolyn.elefant@myshingle.com with any questions.

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I've decided to extend our 6th Birthday contests another week, through December 30.  The details are here but basically, you can write a post on one of two topics:  either "Why I (or my law firm) matters" or how I use technology in my practice to serve clients.  By submitting, you will be eligible to win an Asus subnotebook computer AND I'll publish the top posts at my blog.

For those of you who have written asking for sidebar links, believe me, entering this contest will give you much more mileage.  I'll have a separate tagged category for entrants and you will get great SEO.  Most importantly, you'll help inspire others.

So whether you're an experienced blogger or a newbie solo, jump on board!

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I've been reading Malcolm Gladwell's Outliers, which explores those factors that contribute to extraordinary success.  Though I'm not quite finished with the book, I've already found so many nuggets that help explain why some lawyers who start a law firm experience wild success while others flounder.  I'll share some of these reasons after I've finished the book, but for now, I'll focus on just one factor that matters:  fulfillment.

Some experts would have you believe that you can snap your fingers and poof - without breaking a sweat, a successful law firm materializes, one where you work four hours a week and earn hundreds of thousands of dollars.   That's not the way starting a firm works, at least not in my own experience.  And in fact (and this is something that in a world full of Four Hour Work Week wannabees, I'm almost embarrassed to admit), I wouldn't even wish for a magic potion that would produce an insta-lawfirm because putting in the work is what makes starting a firm so rewarding to begin with.

Of course, long hours doesn't have to mean drudgery, and that's what Gladwell emphasizes. Those who find grand success don't shirk work; they embrace and celebrate it because it doesn't feel like a burden to those who love what they do.  Writes Gladwell (p. 159):

[...]being an entrepreneur -- as cutthroat and grim as it was -- allowed people like the Borenichts (a successful garment industry business family) just off the boat, to find something meaningfull o do well.  When Louis Borgenicht came home afer first seeing that child's apron, he danced a jig.  He hadn't sold anything yet.  He was still penniless and esperate and he knew that to make something of his idea was going to require years of backbreaking labor.  But he was ecstatic, because the prospect of those endless eyars of hard labor did not seem like a burden to him.  Bill Gates had that same feeling when he first sat down at the keyboard at Lakeside.  And the Bestles didn't recoil in horror when they were told they had to play eight hours a day, seven days a week.  They jumped at the chance.  Hard work is a prison sentence only if it does not hav meaning.  Once it does, it becomes the kind of think that makes you grab your wife [or husband] around the waist and dance a jig.

You know what it feels like to dance, don't you?  Those nights where you spend eight or ten hours on a brief that fly by in seconds, or those mornings when you wake up and can't wait to get to work, or the moments when your thoughts fly straignt from your brain to your keyboard, manifesting in a blog post that rocks your audience. 

Finding work that makes you want to dance a jig doesn't guarantee extraordinary success.  But it's an integral part of being an outlier.  And more importantly, even if you don't succeed, at least you can take satisfaction that the trip was worthwhile. 

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May you live in interesting times... -- Chinese Proverb

No doubt, today we live in interesting times, where 250 lawyer firms vanish overnight, where the legal trade press goes from an obsession with PPP (partners per profits) to LPL layoffs per law firm, and where top lawyers are pounding the pavement for work.  But what's so interesting about the proverb "may you live in interesting times" is that it's at once a blessing and a curse.  And while disastrous news flies around us, at the same time, there's opportunity if you take the time to look.

The good news is that when it comes to marketing ideas, you don't need to look much further than the newspaper, Twitter or your RSS feed.  In fact, in today's news alone, I stumbled across a couple of interesting practice niches that can work right now:

1) Over at Legal Blogwatch, I posted about a large law firm that started a law practice area on issues arising out of the Bernie Madoff Ponzi scheme;

2) Today's Wall Street Journal carries an article about how more women are donating eggs and serving as surrogates to earn money in an economic downturn.  That means there's potentially an increased demand for lawyers who handle surrogacy and donor issues;

3) New York is planning to tax music downloads, which could raise all kinds of legal issues for site owners who sell music, universities (who may want to advise students on the implications of downloading music) as well as potential constitutional issues. 

4) And, from Bob Kraft's P.I.S.S.D. blog comes news that the government may raise the attorneys fees cap on SSD cases - which could possibly make them more lucrative for lawyers (it's not a huge increase).

And that's just from a day on my RSS and Twitter.  What kinds of riches might today's news bring to you?

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With the law firm of Dreier LLP on the brink of collapse as the result of founder and sole equity partner Marc Dreier's multi-million dollar criminal fraud, the firm's lawyers are learning first hand that if  a work situation sounds too good to be true, then it probably is.  Not only will many Dreier lawyers find themselves out of a job but they also face considerable personal liability exposure if Dreier's victims sue the firm, because Dreier allowed the firm's malpractice insurance to lapse, reports the New York Times.  

So how did some of New York's "best and brightest" wind up in this precarious situation?  Because Dreier sold them a bill of goods, convincing lawyers to let him handle the business end of the firm so that they could focus on the practice of law.  From the Times story:

Dreier was the only equity partner in the firm, and deals were structured so that only he knew all the specifics and had access to all accounts, people with the firm said in court papers. Dreier persuaded lawyers that such an arrangement was best by stressing that it would allow them to concentrate on their first love, the law, while he worried about running the firm. There would be no executive committee. No partners meetings. Dreier would handle all administrative chores.

I'm not sure why this proposed arrangement didn't set off any alarm bells among firm partners.  Surely they must have realized that as partners in a firm, they could face malpractice liability for their partners' mistakes.  But instead of thinking rationally, these lawyers buried their concerns, allowing themselves to buy into the illusion that one can simply practice law without any regard to the messy business of running a firm.

In starting a practice, many new solos may find themselves faced with all kinds of too good to be true propositions from unscrupulous lawyers.  Some may offer to provide office space in exchange for a few hours of work a week, then turn around and expect you to work 25 hours a week to meet your rental obligation.  Or a lawyer might invite you to rent space in his suite saying, "Oh, we could use a family lawyer here for referrals," and then six months later, when your business picks up, the lawyer may open his own family law practice and compete for your clients.  In another situation, a lawyer rented space to an acquaintance of mine, and started asking him to sign the pleadings.  Turned out the lawyer had been suspended from practice, and was using the acquaintance as a temporary front to allow him to continue to practice.

Bottom line:  analyze every proposal that you receive with the same due diligence that you'd extend to a client.  Get references on the lawyers involved and ask for an unbiased opinion from the bar's law practice management advisor, a trusted colleague or even your spouse or a friend.  As the Dreier situation shows, too good to be true can quickly morph into worse than you ever imagined.

Readers - please share your own horror stories below.

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Spurred by this post by blogmaster, Grant Griffiths and my recent sixth birthday, I've been rethinking the role of my blog roll as I begin a significant overhaul this site.  Originally, my blog roll had two components:  resource links, intended to provide information on other sites that would provide useful information or insights to my readers and other shingles links, intended as a way to highlight solo and small firms and share my SEO. 

As originally designed, the shingle link wasn't  a freebie - I'd ask every person who wanted a listing to commit to reviewing at least three of the other listed blogs and to actually contact at least one other person on the list.  It was an honor system, of course, but I did hear from several participants who found the experience worthwhile. 

These days, however, linking isn't about building community or resources.  Instead, it's all about SEO, building links to build exposure and as such, the links are growing meaningless.  At the same time, I still remain committed to giving exposure to solo and small firm lawyers.  So....

As part of my overhaul, my Other Shingles blogroll will come down from the front page.  I may create a stand alone page for it, or adopt the submit yourself option that Grant recently implemented as his site.  For the time being, however, the best way to gain exposure at my site is to earn it!  I am running two contests -- an essay contest (with a choice of Why I (a Solo/Small Firm/Independent) Lawyer Matter or How Technology Has Improved the Way I Serve Clients and/or Practice Law) and Twitter the Day Away.  These are real contests, with real prizes - an Asus computer or bottle of wine (not just a free ebook or even a copy of my book, Solo by Choice).  You'll get a by-line in the post header that is likely to wind up on the first page of Google search ranking (of course, this isn't  a guarantee)  And I'll publish all the essays that I deem worthy, not just the eventual winner.

Not to be cynical, but I'm betting I won't have many takers.  Why?  Because many people don't want to work for SEO.  They'd rather spend money and hire someone to do it for them (often, with embarrassing results) or spam the top bloggers with requests for links or submit a canned, promotional post.  Those practices won't work here.

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