Below, a reader writes in with advice on some frequently asked questions related to solo practice. The reader’s questions and our answers are interspersed below. Readers, since I’ve only started one practice, after all, I’m the first to admit that I’m not an authority on all ways to go solo. What I’ve learned from blogging here and meeting other solos is that there are as many routes to success as there are shinglers. So please write in and send comments that reflect your own unique experience.
(1) My spouse and I have set one year as our goal to start the firm – we want to save at least six months of expenses before we take the leap. Is that realistic or do you think it will take more time to get up and running? How much capital do you think one needs to get started?
Though I’ve seen other numbers, saving to cover six months of expenses seems reasonable. Sure, you could wait until you’ve got a year’s worth of expenses covered, but as I advised this reader, there’s always a tradeoff between waiting and getting started. You don’t want to start out on the wrong foot with insufficient savings but at the same time, you don’t want to put a firm on hold permanently as you save and build up clients.
In terms of capital, it’s relatively easy to start a small firm on a shoestring these days. I’m guessing that you and your wife have at least one home computer that’s powerful enough to be transformed into a work machine. And with computer prices falling, you can even purchase a decent laptop as a second office machine for $1000 or less. You’ll also need to pay malpractice, the cost of which will depend upon your jurisidiction, state and practice area, but can probably be located for $200/month or less starting out. Other expenses would include business cards, stationary, phone service (here, you can use a cell phone if you already have one), and potentially office payments (see response to Q. 4) And then there’s health insurance if you and your spouse will both be self-employed.
One suggestion I’d make given that both you and your spouse are considering a firm is that you stagger your start up. For example, if you are both employed, you could leave your position and hang the shingle, while your spouse would continue to work for another six months to a year. You’d have the benefit of insurance coverage, plus your spouse’s earnings could go into the firm. Perhaps, thereafter your spouse could leave or cut down to part time. This would give you both the ability to get your practice started with some set revenues still coming in the door. Then, you could work to wean yourselves off your spouse’s salary to full dependence on law firm income.
(2) Did you have clients lined up before you started? If so, how far in advance did you start discussing your move with prospective clients?
I had one very small client lined up before I left my firm, but it was a unique situation. My firm had given me six months notice to find another job and because I needed the cash, I stayed on at the firm as long as I could rather than tried to negotiate a lump sum severance. In any event, during that six month grace period, another attorney referred me a small client who I signed on while at my firm with the understanding (that I made known to the client and the firm) that I would take the client since the matter was so small. Not the best way to go about things, but at least I was forthright and as I mentioned, the client was so small that the incident was soon forgotten (actually, even after I left the firm helped me out with a mock moot court to prepare for the argument). But other than these kinds of quirky and unique situations, you can’t really do much in the way of directly soliciting clients until you leave the firm (see this prior post). What you can do, however, is to be sure to provide top rate service to clients whom you’d like to take and make yourself indispensible to them so that by the time you announce your departure, there’s no question that they’ll choose to come with you.
(3) Are there any resources you would suggest that I review/read before making the move? Anything that you think is a must read?
I’d recommend some of the books listed in our OnLine Guide. I’d read Foonberg just because his book is a rite of passage, something that almost all prospective solos read. But truth be told, it’s seeming a little dated, even the recent addition. The ABA’s Flying Solo book was just updated; it’s a collection of chapters on different aspects of solo practice (including one by me on "How Not to Be Lonely). And of course, I recommend the MyShingle OnLine Guide (especially the various state bar manuals) because they’re all pretty recent. Finally, check out some non-law marketing books as well like those recommended by my fellow blogger Matt Homann of Non Billable Hour and also magazines like Inc. for entrepreneurs, because, after all, you’re going to be one as well.
(4) I’m thinking of working from home, at least for the first year. Do you have any views on whether office space is necessary from the get-go?
There’s a constant tension between lawyers who advocate home offices and those who don’t. Some, like Grant Griffiths who runs Home Office Lawyer is a fabulous example of a home office lawyer who’s on the cutting edge of technology and professionalism. Yet others (including Foonberg) believe that home offices don’t convey a sufficiently professional image.
Leaving aside the long term, however, a home office in my view is the best way to start out. By working from home, you’ll save at least $5000 a year (assuming $400 a month rent which isn’t even feasible in all places) and thus, relieve some financial pressure. If you’re concerned about appearances, rent virtual space with a mail drop and hourly office space. Or you can meet clients down at the court house or at their offices. As you build your practice, you can decide whether you want to remain at home or move to an office.
In my case, I started out in a virtual office space with a fancy Pennsylvania Avenue address. Within a year, I was busy enough to justify full time space and lucky enough to find an affordable sublet right near the White House in DC. But after my second daughter was born, I found that I didn’t have time to make the office commute, so I returned to the home office/virtual space arrangement.
(5) I realize that rates will vary based on factors such as practice area, jurisdiction, etc., but do you know what the range is for professional liability insurance? Also, do you have a ballpark on the cost of health insurance?
I’m guessing that you should be able to find professional liability insurance for $200 a month or less, but this depends on practice area. Some fields are riskier than others. My advice on liability insurance is to shop around; the bar recommended provider is not necessarily cheapest. Also, play around with coverage amounts and deductibles to find something within your range. Just be sure that your plan offers defense costs so you don’t have to worry about hiring counsel if a client ever brings a grievance.
I have less of an idea of the cost of health insurance since I’ve been fortunate to have coverage through my spouse. I know that there have been periods when he’s worked as an independent and we’ve turned to COBRA which wasn’t cheap but was less than paying full freight out of pocket. If you’re young and healthy, there may be reasonably priced plans or HMOs. I don’t believe that the bars offer health insurance packages but I’ve heard that Chambers of Commerce might have some leads on cost effective packages. Readers – if you have any answer to this issue, please write in and let me know.