My Shingle

Great News for Law Firm Start Ups: 80 Percent of Dotcoms Survived!

by Carolyn Elefant on November 8, 2006 · 2 comments

in Legal Profession Trends, Solo Practice Trends

Print Friendly

I’ve always likened the rise of modern day independent practice (call it the Third Wave if you will) to the dotcom era.  Before dotcoms, small entrepreneurship wasn’t cool.  But the success of little garage companies forced our profession to look at law firm start ups in a different light.

And because law firm start ups have much in common with tech start ups, from shoe string budgets, to competing in areas traditionally handled by larger players, I was thrilled to read this outstanding post by Jeff Lipshaw at the Legal Profession Blog.  Lipshaw writes about a paper in the Journal of Financial Economics, authored by David Kirsch which suggests that the actual failure rate of dot.com start ups was far lower than perceived – roughly 20 percent.  But the steady survival of smaller companies was overshadowed by massive failures of sites like eToys and pets.com. (the post goes on to discuss potential business development ideas that might follow from these statistics, so read the whole thing).

So what does this mean for potential law firm start ups?  Simply, your chances of success are greater than you think!  Get out there and get started.

  • http://www.lawbizblog.com Ed Poll

    When I was teaching in the Entrepreneurship Departments at UCLA and USC, the statistics for failure of new businesses was very high. In some industries, it was as high as 95%. Review of SBA statistics will provide an view of the current status.
    Because it’s so easy to get into the professional service business, such as law, the failure rate also might be high. Reasons for failure include lack of sufficient capital to overcome the initial delays of receiving cash (from doing the work to billing to collecting); lack of appropriate planning; and, most important, failure to understand where the new work will come from (beyond the initial client(s) who said they would follow you.
    One needs more than faith to succeed in any business. It takes foresight, planning, a lot of hard work (persistence) … and, yes, a considerable amount of good luck.

  • http://www.lawbizblog.com Ed Poll

    When I was teaching in the Entrepreneurship Departments at UCLA and USC, the statistics for failure of new businesses was very high. In some industries, it was as high as 95%. Review of SBA statistics will provide an view of the current status.
    Because it’s so easy to get into the professional service business, such as law, the failure rate also might be high. Reasons for failure include lack of sufficient capital to overcome the initial delays of receiving cash (from doing the work to billing to collecting); lack of appropriate planning; and, most important, failure to understand where the new work will come from (beyond the initial client(s) who said they would follow you.
    One needs more than faith to succeed in any business. It takes foresight, planning, a lot of hard work (persistence) … and, yes, a considerable amount of good luck.

Previous post:

Next post: