How Much Do Solos Earn? An Excerpt from Solo by Choice:
Among its expansive topics, Solo by Choice briefly covers what solos earn – a topic I’ve also addressed at MyShingle here and here. Accurate information on solo salaries are hard to come by given the variation in practices, the fact that many solos also operate lucrative side hustles where they may compensate for lower earnings and self-reporting error. But here’s a summary:
These observations on solo income are not scientific; they’re based on a handful of available law firm economic surveys for a variety of states released between 2012 and 2017 which relied on voluntary responses. Nevertheless, some interesting trends emerged:
– Solos earn less than biglaw attorneys. Generally, median solo incomes equaled 55 to 60 percent of the highest category of earners, i.e., lawyers in firms of 30 or more.
– Solos earn more than public and nonprofit sectors. Though solos may lag behind the largest firms in earnings, Professor Simkovic’s research found that solo income — even in the lower percentiles — nearly always exceeds lawyer salaries in the public and non-profit sector. Solo earnings also eclipse statewide median income. For example, the average household income in Colorado for 2017 was $69,117 while median solo income was nearly double at $113,000. A solo’s median income for 2015 was $105,00, while the state median was $59,206. Moreover, the state income figures are for households; so, if a solo has a working spouse, their combined incomes would place them far above state averages. Though these numbers are state specific, they should give confidence that from a financial perspective, starting a law firm is at least as good, if not better, than leaving the law.
– Practice area selection impacts income. In most states, attorney income varied widely depending upon practice area. Across the board, general practice (in those states where it was listed as an option) and family law ranked lowest on the earnings scale. Not surprisingly, specialized fields like intellectual property and securities litigation ranked high.
– Income increases commensurate with years in practice. As solos gain experience in practice (whether solo or not), their income increases. In those states that measured solo income as a function of years of experience (Colorado), there was a 30 percent growth in income from a year out of school to 20 years out. Professor Simkovic also noted that census data shows a sharp increase in solo earnings after 12 years.
– Solos in shared-space and work-from-home offices fare better. On the whole, the studies show that solos in “shared space” arrangements fared better in most jurisdictions, dramatically so in Michigan where median income for a solo working from an office in 2017 was $153,358 compared to $197,158 for a space-sharer, and $121,298 for a solo with office in Oregon compared to $197,158 for an Oregon space-sharer. The upward trend for space-sharers suggests that solos may gain significant benefits from sharing space in the form of increased referrals. And across the board, solos with any kind of office out-earned home-based solos (though again, many who work from home may also be part-time). Post pandemic, it’s still unclear of what happens to the traditional office, but regardless of where you choose to work, recognize the benefits of professional and personal interaction whether it happens in an office or planned Zoom sessions.
SIDEBAR: What about those million dollar solos?
If you’ve done any online research on starting a law firm, you’ve probably been bombarded with ads for coaches, tutorials and other programs promising to help you build a seven-figure law firm. Are there really solo law firms earning that much revenue?
The good news is that absolutely yes, it’s possible for a solo practice to generate a million dollar in revenues. In The One-Million Dollar, One Person Business by Wall Street Journal reporter Elaine Pofeldt (discussed here) documented the growth of sole-owned “non-employer businesses” generating between $1 million to $2.49 million in revenue from 26,161 in 2016, up from 26,744 in 2011. Pofeldt observed that the growth reflects factors such as expansion of freelance platforms and automation, but also a shift in attitude among entrepreneurs who intentionally avoid hiring permanent employees, preferring to remain lean and flexible. And these same trends apply equally to solos in any practice area, not just personal injury or class-action work.
But. Growing a multi-million dollar business organically doesn’t happen overnight. Realistically, if you’re starting from scratch, million dollar growth can take several years of building up referrals and marketing processes, along with plenty of iteration and hard work to figure out what works for you. True, you can accelerate the process, which is what most of the coaching programs promise, but you’ll also find that speeding up the process entails hefty spends on marketing and outsourcing. So even though your firm may generate a million dollars, you’ll likely take home far less.
Ultimately, each of us is responsible for measuring our own success. For those who define success as a seven-figure law firm, know that it can be done and don’t let naysayers persuade you otherwise. But if your version of success means earning a low six-figure income from an asset that you created while enjoying intellectually stimulating work that matters and time with friends and family, then building a million dollar firm may not be your cup of tea, and that’s fine too.
Additional Resources on What Solo and Small Firm Lawyer Owners Earn:
Is $160,000 For a New Solo or Small Firm Owner Realistic or Rare? (updated 9/2022)
Solo and Small Firm Lawyers Average $198,000/Year (updated 9/2022)
Median Lawyer Income Drops Over Past Twenty Years (reported by Reuters, 8/2022, applicable to all lawyers, not just solo/small)