I try to respond personally to the many emails that I receive from readers, but every so often, the email raises a question that has broader interest to other readers, so I post it here. Here’s an email that I recently received, with my response – but I welcome you to chime in:
Q: I am a second year corporate associate at a biglaw shop in a major city. Along with a significant number of colleagues, I have been let go because of the economy. Though I did not think about it before, I am now seriously considering hanging out my shingle. I don’t have a great deal of experience, but I hope to make up for that with ability, hard work and personality.
I have a question that, I hope, might of interest to some of your other readers. In short, if I were to open my own practice, I would like to cater primarily to business clients, doing contracts, M&A, real estate and corporate governance work. I realize, however, that cultivating business clients takes time. Though I have some entrepreneur-friends who, I am assured, would hire me in a heartbeat, my bread and butter in the first year or two would probably be referrals and walk-ins more typical to the solo I would become – wills, divorces, residential real estate, personal injury.
My question is this: is it a feasible business model to sustain a practice in the short run with consumer matters while developing business contacts for later specialization? My concern is that by building expertise in areas that don’t pose a long term interest, I would pigeonhole myself and never quite become a business lawyer.
Put another way, should I (a) open my doors and start developing business clients, while “eating what I can” in the meantime, or (b) invest more in client development prior to opening up?
If you are fairly certain that you would like to handle transactional and corporate matters for business clients, those areas should serve as your primary focus from the start of your practice. As I’ll describe below, I believe that there are many ways that you can make this practice area fairly profitable from the inception. However, I also understand your concern about being able to make money and thus, you may want to choose one or two consumer practice areas to supplement your earnings at the outset. (Note – I am assuming that you are interested in non-business matters primarily for cash flow reasons, not for personal interest. For solos who are interested in a variety of practice areas, I would encourage you to sample several before settling on a few core practice areas).
Here’s the rationale behind my advice. First of all, even consumer cases like personal injury or family law or probate may not be easy to come by without marketing. So you’ll probably need to spend some time trying to proactively attract consumer cases. References to “door law” or “threshold law” aside, many of these clients won’t simply walk in off the street without any marketing effort on your part. In addition, based on your background, I’m guessing that you probably don’t have much familiarity with these types of matters and as a result, you’ll also need time to get up to speed. All of this effort in other areas will detract from your ability to build up your corporate and business practice.
The other problem that I see with some of the practice areas that you’ve identified is that there’s not much synergy between those areas and your preferred target clients. True, some divorce or probate clients may also be business owners, but that’s more likely to be accidental rather than regular occurrence. So when you handle these consumer matters, you’ll wind up spending time with clients who won’t have the ability to refer you business matters. Because most lawyers generate work through referrals, spending the majority of you time with clients who can’t refer you work down the line is not productive in the long run.
On the other hand, you’re right not to avoid putting alll of your eggs in one basket by focusing exclusively on corporate or transactional matters from the get-go. So as I said before, I’d choose a couple of other manageable practice areas – either with some synergy or which allow you to develop skills that could help your corporate practice. For example, if you think that litigation skills might come in handy as part of your business offerings, consider personal injury, collection work or consumer debt cases. You might also explore employment law. In this economy, it’s a hot practice area – and familiarity with employment work can provide a value add for your corporate clients. If you decide you’d like to handle trusts and estates or divorce work, think about a special niche emphasis on business clients and their unique needs in probate or divorce cases (e.g., passing business ownership to heirs, valuing and splitting businesses in divorce).
Meanwhile, what can you do to build your business practice starting out? First, start small, focusing on small businesses and smaller matters. With increasing lay offs, more Americans will be considering starting a business as an alternative-of-last-resort to traditional employment. Granted, most of these new business owners won’t have much money, but by putting together some templates that you could customize, you could draft business documents fairly economically. You could even provide these services exclusively online on an unbundled basis — you would consult with the client by email or phone and drafting the documents, but leaving the actual filing or notarization to the client. The other advantage of putting your business practice at least partly online is that it increases your geographic reach. Living in a metropolitan area as you do, you may face competition for business from other laid off associates. But with an online practice, you can extend your scope throughout the state – thus giving small business owners in remote areas the benefit of affordable access to a former biglaw attorney. By handling these smaller matters for a few hundred dollars a project, you’ll start bringing in a stream of revenue that will enable you to pay your bills and subsidize other marketing efforts until larger clients start to come through the door. As your firm grows, you could retain these online, discounted services to serve new businesses that might eventually grow into major clients.
So, how would I market your new business practice? First off, I’d set up a website and blog that offers commentary and advice on small business issues. In particular, I’d give examples of how having a lawyer draft documents is preferable, in many cases, to relying on forms. I’d offer to speak at local entrepreneur groups on business issues and put my presentations up on my website. I might try to find several small business niches – start-ups, green companies, entertainment, woman or minority owned – to focus the business practice. A newsletter is useful – perhaps you could feature a small business owner in each issue. You could also start a networking group and host talks on topics of interest to small businesses – accounting and legal issues, but also social media and marketing. Hosting these events puts you at the center of the action – and you’ll make your own contacts by reaching out to potential panelists. Finally, of course, let all of your former biglaw colleagues know your plans and mine your firm’s alumni network (if it has one).
Obviously, these are just a couple of ideas – there are many more. Readers, feel free to chime in.