My Shingle

Why The Best Solo and Small Firm Lawyers Aren’t the Best Entrepreneurs

by Carolyn Elefant on June 12, 2012 · 5 comments

in Client Relations, MyShingle Solo, Solo Trends

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About a year ago, in response to then- Above the Law columnist  Jay Shepard, I asserted that wanting to run a business is NOT the most important characteristic for lawyers wanting to start their own practice.  I postulated that lawyers who hang a shingle for the excitement of running a business rather than a passion for law will soon find themselves disappointed because as a business law ain’t all that exciting.

Balkanized professional ethics codes often stymie innovation (sometimes for better, but sometimes to the detriment of expanded access to law), we’re bound by past precedent and can’t just make up arguments as we go along, and we can’t vie for venture capital.  Perhaps Jay also saw the writing on the wall, because shortly after that column, he shuttered his law firm to open a consulting business focused on pricing legal “knowledge” (if you call it legal services, you’ll have to charge 20% less!) while I’m still trudging away.

So are those of us who still actually practice law, and continue to view it as a profession or a calling or passion simply a bunch of idiots?  Maybe so.  But among entrepreneurs, there are those who are good at it and those who aren’t.  As Malcolm Gladwell discusses in this video, those entrepreneurs guided by money and a single-minded obsession with business are wildly and financially successful. But those who depart the straight-and-narrow business path because they gravitate towards the pull of a strong moral compass are the ones we remember.

In law, we can figure out how to market a firm and make oodles or money or enough to sustain our lifestyle and desire. Or we can figure out ways to serve clients, create great precedent or expand access to law and make a difference.  Maybe being a good lawyer and bad businessman isn’t such a bad thing after all.

  • SeanEveritt1

    I disagree with this argument for two reasons.   One, when you are out on your own as a solo, your primary job is not to practice law, but to find clients so that you can practice law and be on your own.  If all you wanted to do was practice law, you would not leave whatever law-firm or legal job that you held before.  So, practicing law should not be the primary motivator for going out on your own. Indeed, as with any business, you should like but not be “in love” with your product, which may blind you to the business aspects.  

    Two, I think it is naive and dangerous thinking to claim that practicing law as a solo is about “expanding access” or otherwise doing something more focused on “moral” goals or “doing good” for society.  Your only job as a solo is to get a good client, service that client well, and make money so that you can stay in practice.  Of course your job after that, as a provider for your family and simply as a human being, is to create wealth for you and your family, and otherwise contribute to the economy.  

    Thus, your only “calling” is to service the client well.  Indeed, if there is any aspect of soloing that is “right” or “good”, it is the fact that larger firms will charge that client too much and won’t do as good a job as the solo.  And the flip side of your “calling” is to avoid clients that will not pay you what you deserve, no matter the “morality” of their cause.   

    With due respect to the author, I think there is actually too much concern within our profession about requiring pro bono work, and too much hand-wringing about “expanded access” to the poor.  Doctors do not even perform the type of pro bono that lawyers are required to do.   There are two things that one immediately notices about the way the legal system provides pro bono work.  First, nothing is ever asked of the person receiving the free service. Second, there is a caste system where prosecutors, former judges, legal aid workers, etc. etc. for some reason are excused from having to do pro bono.  (E.g., I have never been able to figure out why someone making six figures as the “director” of a legal services organizations does not themselves have to perform pro bono hours — I would love someone to explain that.)

    In sum, you are very much in a “business” if you are a solo, and your business is to find good clients and represent them well.   This helps you, the client and the world at large by creating wealth.  It also permits you to work for yourself and not be subject to the whims of the type of irrational boss we have all experienced. (It also helps you to pay less in taxes.)  And it helps the practice because you are providing a better service than bigger firms.  So, concentrate on that and forget all of the flighty (not to mention somewhat arrogant) notions of “doing good.”  Even if you could figure out which action is “good” for society as a whole (which is probably impossible), that action probably has consequences you didn’t anticipate.  

  • myshingle

    I would hardly call Bill Gates a slacker. He is an example given by Gladwell of a business person who will be remembered long after Steve Jobs because he used wealth to do good
    By the way, expanding access isn’t necessarily about pro Bono or lower income clients. Start ups and small companies and new media tech need access to law also. Solos can make a decent living representing these groups for whom big law rates are out of reach. It’s intellectually challenging work and a way to make precedent for future generations but not as exciting as being a tech start up.
    By the way, if being lawyer isn’t the prime motivator for starting a firm, why do so many lawyers who want to be businessmen leave the practice to work as consultants or business people?

  • SeanEveritt1

    I’m glad you brought up Bill Gates, because I think he is a perfect example of what is wrong with the “do gooder” mentality.  He should have either stayed on with Microsoft and made it a better company (I have owned the stock for years and it is the biggest dog of a stock ever) or he should have started a new tech company, and gave people jobs, created wealth, etc. etc.  Instead he is out trying to “save the world.”  He doesn’t understand that you save the world by creating companies like Microsoft, not by creating yet another “foundation” so people can drive Land Rovers around Africa and pour yet more money into ineffective programs.   I wish Bill Gates had more sympathy for the elderly person whose retirement account depends on the (now dismal) profit from Microsoft.  

    I think your point about “expanding access”  to law by providing services to start-ups and small companies is excellent.  Yet it just proves my point:  these are opportunities for solos to take business from the big firms and, as you say, “make a decent living.”  Yes, let’s do all of that, and take business from these big-firm lawyers — that’s a beautiful thing, b/c the big firm lawyers charge so much and do so little.  But let’s not pretend we have some altruistic, do-good purpose in doing so.  Let’s do it for the profit, and be proud we are providing for our families, and (perhaps more importantly) not working to enrich someone else.  Finally, I think the fact that lawyers who leave firms for other businesses simply proves that the law is merely another type of business — if it isn’t profitable as a business, you should leave and do something else.  There are people who close their dry-cleaning shops or plumbing companies b/c a profit cannot be made.  Certainly it does not disprove the fact that the law is a business.  All big and mid-sized firms started from small ones, after all.  

  • Der Nister

    Sean:

    Having recently gone out on my own, I found a lot of truth and encouragement in your comment.  By the way, I am not sure Carolyn would disagree with what you said. I think she was  focusing on an ideal. Anyway, thank you for your comment.

  • myshingle

    Yes, I do agree with most of these comments. I am mostly concerned when I hear people say that they started a law practice because they always wanted to run a business. These people will be disappointed because law is not the most interesting business model, and there are many regulatory hurdles. If they don’t like or love the law, they will be disappointed. Of course, you have to be a business person to run a firm. If you can’t earn enough to keep your doors open, you won’t be able to help any clients, rich or poor. But that should be fairly self-evident.

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