Another Solo Practice Bites the Dust

This week, it’s Above the Law  columnist Shannon Achimalbe’s turn to Monday morning quarterback a solo practice that ran out of steam– a topic covered previously by Lawyerist , MyShingle and Simple Justice. In spite of this handful of posts, failed law firms or failed start-ups don’t get much coverage (and when they do, it’s all smoke or spin). So even though failure isn’t a topic we like to hear about, analysis is necessary for a balanced view.

In a nutshell, here’s the skinny on the Achimalbe’s hapless solo. He went to law school to escape a minimum wage job but couldn’t find employment after graduation. After a year out of school, he ran into a couple of classmates who’d started practices – and while it wasn’t his first shot, he decided to give it a try.  The first year was rough, with just four clients, and monthly expenses of around $2000 – including rent, bar and networking events, advertising and suppliers – so solo worked odd jobs part time to supplement income. Year two, solo committed to more networking and pro bono that finally bore fruit. So not surprisingly, Year 3 (always the charm) brought a lucrative client which necessitated expansion.  Solo grew – but too quickly — hiring an assistant and adding the cost of additional office space and updated phone system – a jump of $2000/month to $5k. Of course, you know what happens next: two months later, business takes a dive, solo can’t cover his costs and sheds the assistant and fancy digs. But this time around, his heart isn’t in pounding the pavements to get the business back on track and so he shuts down, taking a somewhat more stable but low paying non-legal position.

So what went wrong? Certainly, the $3000/month overhead bump was largely to blame – but why did this solo feel that it made sense to ramp up so quickly? With so many outsourcing options – independent contractors and virtual assistants or even part time work force – readily available and well-documented at websites galore, it is difficult to understand why this solo chose to lock himself when the cash had barely started to flow. Perhaps he was tempting fate – figuring that if solo practice was meant to be, he’d cover that new overhead and then some. Or maybe, because his heart wasn’t fully committed to solo practice even after three years in, he acted impulsively because he felt he had nothing to lose. 

Attitude matters – because much of what you have to do in those first few years of practice ain’t pretty. You spend lots of time doing grunt work on committees, sucking up to bar honchos so they’ll throw business your way and establishing relationships with mentors which can be a great help but also a waste of time (the unsuccessful solo mentioned that one mentor provided useless advice about a case though another was very helpful). Unless you really want to do what you’re doing, this kind of stuff can be torture.

Still, even if you’re one of those lawyers who’s on the fence about starting a practice, the cautionary tale at ATL doesn’t mean you shouldn’t try. Because you just might find that after enough time, solo practice just might capture your heart .

And now readers, let me capture your advice in the comment section. What do you think went wrong with this unsuccessful solo and what would you have advised as a fix?

14 Comments

  1. shg on October 27, 2014 at 9:39 am

    There isn’t always a reason why a solo practice fails. Or succeeds, for
    that matter. Certainly, we can enable our ability to take advantage of
    opportunity through hard work, client service and competence, but even so, it’s
    no guarantee.
    One point in this post is worth
    repeating.

    So not surprisingly, Year 3 (always the charm)…

    I appreciate the enthusiasm so many lawyers have that compels them to want to share their advice on starting a practice, but until they have managed to maintain a viable practice for at least three years (and I might go a bit farther and say 5 years), turned a profit and achieved stability, they have no clue whether they will survive, no less thrive. They are not yet in a position to advise anyone, and their choices are just as likely to lead to disaster as success.The virtue of blogs like My Shingle (or for the hard of thinking, The Puddle), is that they share lessons of both failure and success. In contrast, there are the vulture websites like SPU that exist to suck the last dime out of struggling wannabe solos.

    It’s hard enough to survive as a solo. There is no reason to make it any worse than it has to be.



  2. Paul Spitz on October 27, 2014 at 10:13 am

    Well, the first problem is that the subject does not have an entrepreneurial mindset. When we use the term “entrepreneur,” people may think of Mark Zuckerberg or someone like that, but every lawyer that starts a solo practice or a small firm is an entrepreneur. And you have to have that essential entrepreneurial mindset, where you have a high tolerance for risk, you are willing to wear every hat, and you cannot conceive of working for someone else. If you don’t have that spirit, nothing else matters. Period.

    Second, his overhead was way too high. I’m not talking about when he hired the assistant and moved to new space. I’m talking about day 1. Spending $2000/month is ridiculous for a new solo. He should have spent more time on websites like this one, or reading Carolyn’s book, to research all the low-cost options for running a solo practice.

    Third, and this isn’t very clear from the post, is how focused his practice was. Was he a door lawyer, taking on anything and everything that came his way? I know a lot of lawyers do that, and seem to make a living at it, but I frankly don’t understand how someone can do trusts & estates, civil litigation, business transactional work, criminal defense, etc., and claim to be good at any of it. Any one of those is a full-time job to have any mastery at it. Maybe after 20 years of practice someone has developed enough experience to do more than one or two of those passably well, but I don’t see how a newbie could. Pick one thing, focus on it, spend the ample downtime he has learning as much as he can.

    Fourth, there is a fleeting reference about returning to pound the pavement in the third year, when there was a new business downturn. It implies that he had stopped actively networking and searching for new business. If that’s the case, then no wonder. Searching for new business is a constant, like making sure the toilet paper is stocked and that you have a clean shirt to wear every day. Even if you have a full deck of work this week, you have to allocate time to prospecting for new business.



  3. myshingle on October 27, 2014 at 10:18 am

    Three years is where you at least start to see the light at the end of the tunnel. But you’re right – in a solo only practice- or any business for that matter – things can fall apart at any time and there are no guarantees.



  4. myshingle on October 27, 2014 at 10:25 am

    That’s a good point – the $2000 start up cost is very high – unless he was also including medical insurance which could easily account for half. If that’s the case, the costs aren’t terrible and it does seem like he spent his money on networking and taking people to lunch which can be cost effective. Most likely, this person’s practice suffered from the other problems you referenced (particularly, lack of focus)



  5. Paul Spitz on October 27, 2014 at 10:33 am

    Health insurance no longer needs to be a huge expense, thanks to the ACA. For someone in their 20s, just starting out with a new practice, that first and second year revenue will probably be low. That may qualify them for the subsidies, which can lower the monthly premium cost dramatically.

    I suspect that a substantial portion of that $2000/month was advertising. You have to be so careful with advertising. Ad sales people call relentlessly, and very little of it is appropriate. It is very easy to waste a lot of money, and get trapped in a contract with no easy exit. Remember the old saying? 50% of advertising works, I just don’t know which 50%.



  6. Randall Ryder on October 27, 2014 at 12:54 pm

    Overhead and (lack of) motivation. It’s easy to think you’ve made it after 1-2 big cases. Or even 1-2 good years. But past success does not guarantee anything.

    I’m on year 4 of my practice and I’m still terrified of closing down. I think that fear is what keeps me motivated and helps me continue to pound the pavement. I can’t say that is a guarantee for success — but there is a demonstrable difference in business when I start to pat myself on the back and stop doing the little things that made me successful in the first place.



  7. J. Flanders on October 27, 2014 at 2:00 pm

    My gut reaction is that this lawyer doesn’t know how to run a business.



  8. Alex on October 28, 2014 at 11:45 am

    I’m unimpressed by 4 clients in his first year–especially if two are family members. I would imagine that most solos in their first year out of law school are doing something consumer-facing and something relatively uncomplicated. So it’s a volume practice: lots of misdemeanors, or divorces, or landlord-tenant deals. Maybe some simple civil things. In those practice areas, there are a lot of price-sensitive potential clients.

    Reading between the lines, I’d say he spent a lot more time waiting tables that first year than trying to find clients. Also, why does he mention his LSAT? Get over it. And any attorney that mentions their high LSAT in the context of complaining about the poor results of their job search, is putting off some negative energy.



  9. Paul Spitz on October 28, 2014 at 1:46 pm

    In my previous comment, I mentioned that the subject didn’t seem to have the entrepreneurial mindset. I want to add that it isn’t necessarily a bad thing to not have that mindset. Not everyone is cut out to be an entrepreneur. Some people are more comfortable getting jobs and working for other people. There’s a place in this world for both, and you have to discover what suits you. For the non-entrepreneurs, however, don’t for a minute think that there is less risk or more security working for other people. If the events of the past 20 years have shown us anything, it’s that there is no such thing as job security.



  10. Jamie on October 28, 2014 at 2:42 pm

    Well, leaving aside the giant issue that this kid probably shouldn’t have gone to law school in the first place…lack of mentoring is a huge problem. With more and more younger lawyers abandoning the practice, we need to come up with a more systemic approach. Incubators are part of it, but as a profession we need to create an infrastructure similar to medical residencies, or a better apprenticeship model, if we’re really going to address the issue.



  11. Tim Jones on October 29, 2014 at 7:00 pm

    Sounds like his biggest mistake was hiring extra help too soon. Hard to tell, but it’s not clear that he was tracking how successful his advertising (including networking, etc.) was. That’s an easy way to send money down the drain.



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  13. Victor Medina on November 3, 2014 at 9:55 pm

    I suppose I come with perspective of having started a practice pretty leanly and have now grown into a practice that employs 7 people and has an overhead that is more than 20x what was referenced in this post (shit, half of my bi-weekly payroll is more than $5k).

    When I started, it seemed impossible that I would generate enough revenue to cover my costs which were pretty reasonable. I acquired a retiring attorney’s practice that came with an employee (and positive cash flow) built-in. The main client from that practice jumped in the middle of our transition, and I had to figure out (fast) how to keep the pirate ship afloat. I brought on new practice areas (which are now my main practice areas) and began to market them (network, book speaking engagements, blog about it, etc.) to generate revenue. Cash flow and revenue are the lifeblood of a law firm. We have no product which, when “sold”, will generate a perpetual stream of money – at least most of us don’t. It took a VERY long while for it to take hold, and all along the way I juggled bills (mostly personal bills, I always did what it took to keep the business bills current – I couldn’t risk my clients by jeopardizing the viability of the practice, but I figured I could jeopardize my own viability). I charged groceries on credit cards (that took me almost 4 years to pay off), I borrowed money from my parents to pay the mortgage, and from my sister-in-law to pay for my kid’s day care. The point is, I got my stripes. I’m keenly aware of what it took to get me here, and I never forget how close I am to having it come crumbling down.

    While lots of things could have happened to cause this lawyer’s solo practice death (and still more can happen to cause the death of other practices), based on this story – he stopped focusing on generating revenue. This here – this practice of law – is a grind, and will always be a grind. Maybe when I’m 20 years into this clients will line up and throw money at me without any effort on my part…not sure what I would do with myself if they did. Until then, I remain hyperfocused on the activities that generate new client work. That can be marketing it its purest forms (advertising, etc.), it can be on creating client experience that leads to client referrals, or establishing and nurturing relationships with referral partners. The point is, it never stops. It can’t stop. Not if I want to continue to feed my team, continue to feed myself and my family, and continue to be around for these wonderful clients that I have.

    My practice is successful by any measure – and yet I still come in on the weekends and work into the night and do whatever it takes to make sure my clients get the best representation. Full stop. I’m not sure if that ever ends, or if I want it to.

    Hiring isn’t an issue, so long as you use the time that the new employee gives you to focus on the stuff only you can do, and the stuff that continues to generate revenue.

    Overhead isn’t a negative. I’ve seen successful practices that have no staff, and practices that have 25 employees. They are different lifestyles, but each must have fidelity to generating the cash flow necessary to support that structure.

    Bah – this is too long. Here’s the telling line:

    | But this time around, his heart isn’t in pounding the pavements to get the business back on track and so he shuts down.|

    Yeah, the vultures were circling at that point. He’s done, and I could have predicted the death of his practice. If you want to be successful at this, you must be indefatigable. It will always be a roller coaster. There will always be dips and setbacks and unforeseen perils and downturns and staff defections and fuck-ups and slaps across the face the moment you get up from something that knocked you down. Welcome to the big leagues. Over time the lows won’t feel as bad, but here’s the crappy part – neither will the highs.

    Either way, take pleasure in the ride.

    Victor



  14. JTK on March 2, 2016 at 6:29 pm

    I’d say the main problem with this lawyer’s approach was that he lacked a clear, focused plan, and therefore certainly couldn’t execute that plan. From my understanding, success as a solo requires a person to develop a substantive expertise in several areas in which there is a need for lawyers and then to market those areas with extreme diligence. In other words, success as a solo requires a lawyer to develop a clear, focused plan (which involves practicing law in a few areas in which there is great need for lawyers) and then to follow through with that plan with extreme diligence (the follow through would involve much marketing and business development). For example, let’s say the market in which this lawyer worked had a high need for divorce lawyers and criminal lawyers. This hapless solo could have learned the ins and outs of criminal and matrimonial law and then began marketing himself to clients who need criminal lawyers and divorce lawyers. If this lawyer were good at the job, knew his areas of the law well and marketed himself with diligence, the receivables would likely roll in, his practice would get running and his venture could be a success.
    The problem with our hapless solo here is that there is no focus or plan to even assess really. It’s not clear what area of law he practiced in, nor how he marketed himself. It sounds like he heard that solos could be successful, so he went through what he perceived to be the motions of trying, and then expected things to just work out from there. This hapless solo didn’t have a detailed plan and therefore certainly couldn’t execute that plan with diligence.



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