Some Thoughts on Hanging Out a Shingle

by Terri Olson

Hanging out your own shingle has always been an immensely attractive idea to many young lawyers. The notion may come from the perceived freedom of being your own boss and choosing your own cases and clients, or it may arise out of economic necessity when you can't get an associate's position, but regardless of its origin, the thought of seeing your own nameplate on your own door will cross the mind of most newer lawyers at least once.

Unfortunately, being a good lawyer has little to do with being a good law firm owner. While some of the necessary qualities for running a law firm can be learned -- like understanding basic business or accounting concepts -- others are inherent -- like being a self-starter, being able to adapt to change, and being willing to accept risk. So if you have been wondering whether you should take the plunge, here are some questions that you may want to consider before rushing to order your new letterhead.

Do you have a realistic idea of what being a lawyer/business owner entails? Running your own law firm means much more than taking in clients and dealing with their legal problems. You will need to get a business license, pay your taxes, hire employees and pay their payroll taxes, sign leases and other contracts, choose equipment and library resources, set fees, generate bills, and pursue past-due accounts, and do all of this while continuously marketing your services as a lawyer to bring in new business.

Do you have a tolerance for risk? Even when your business is going well, you have no guarantees about where it will head tomorrow. Downturns in the economy have substantial impact on law firms, especially those who practice in real estate. Other decisions you must make -- such as branching into a new specialty or moving your office -- are gambles that may or may not pay off. Your life as a lawyer/business owner will always contain an element of insecurity.

Do you know where your clients will be coming from? Competition among lawyers is intense. Especially if you are a recent graduate and have not been able to develop an area of expertise and a loyal following, you should think long and hard about how you will get business. It's not enough to run a Yellow Pages ad and wait for the phone to ring: all lawyers need to have a plan in mind for business development and marketing. Young attorneys planning on a general civil practice must also realize that there is little to distinguish them in the minds of the public from all of the other lawyers out there, and be prepared to dedicate much creative energy to overcoming this.

Do you have something to live on while you're waiting for your business to grow? It isn't realistic to expect to open the door, take out an ad, and be showing a profit the first month, no matter how good you are or how many of your friends have promised to bring you their business. Most businesses take from six months to a year before they are fully self-supporting, so you will need to have dependable income or savings to carry you through the first few months.

Do you have the support of your spouse or other partner? Starting a new law firm is a tension-laden process, and it can be even worse for your loved ones, since they are affected by what is happening but have little or no control over it. If you are going on your own against the expressed wishes of those nearest to you, don't expect an easy time of it -- especially if you're relying on their income to do so.

If you think you can make a go of it, don't worry that you'll have nowhere to turn for help. Numerous resources are available both from YLS and the State Bar itself. More than a third of the calls the Law Practice Management program receives are from lawyers looking to set up their own practices, so don't hesitate to call us for information and a sympathetic ear. Some items we can help with include:

  • Setting up a trust account
  • Learning basic marketing principles
  • Purchasing computers and software
  • Purchasing office equipment
  • Understanding taxes and the form of practice available to you
  • Purchasing library books or CD-ROM
  • Hiring and managing employees
The direct line for the Law Practice Management program is 404-527-8773, or you can call the Bar at 1-800-334-6865 and ask for extension 773.

Good luck!

Teri Olson is the former Director of the Law Practice Management Program.