There seems to be a great deal of erroneous conventional wisdom related to the economics of practicing law -- especially related to a solo or small firm practitioner just hanging a shingle trying to make a living. Law schools try to sell this outcome as though it was a preferred outcome for a law student in debt and a good employment result. I will be posting a series of blog entries in the coming days to attempt to dispel some of the legal urban legend myths related to hanging a shingle. The bottom line is that its a really hard way to make a living for anyone -- much less someone deep in student loan debt.
MYTH #1
IF THERE WERE REALLY TOO MANY LAWYERS IN THE MARKET, THEN THE COST OF LEGAL SERVICES WOULD COME DOWN.
One frequent claim by law school apologists is that there isn't an oversupply of lawyers in the market, because if there was then the cost of legal services would be coming down. "The cost of legal services is simply supply and demand, stupid!" This criticism lacks a fundamental misunderstanding of the economics of practicing law, particularly for a solo practitioner.
First, let's understand that the attorney's take home pay does not somehow equate to the billable hour charged. "I wish I made that much money an hour!" is the common client refrain when signing a retainer agreement. No one ever stops and thinks how much a doctor is making per hour moving from patient cubicle to patient cubicle spending about 5 minutes with each one then billing $80 for an office visit plus extra charges for peeing in the cup. An attorney friend of mine, who hadn't made $100 that day practicing law, was once in a party store when the person in front of him checking out asked the store owner if he could change a $100 bill. The store owner just stood there and smirked and laughed and replied, "If I can't change $100 bill then I need to close my doors!" An attorney doesn't have cubicle after cubicle of clients lined up or a cash register with a line of people waiting to put money in it. All an attorney has is his or her time; every task is very time intensive if it is done right. Some of this time can be billed for and some cannot.
Second, the attorney is lucky if there is anything left over after all of the overhead of a law practice is paid. The reality is that even a modest no-frills modern law office is an expensive undertaking. There is rent, hazard insurance, malpractice insurance, workman's comp insurance, personal property taxes, income taxes, unemployment taxes, bar dues, continuing ed fees, telephone service, postage, cell phone, fax lines, computers and back up systems, practice and billing software, scanners, office supplies, printers, business cards and letterhead, furniture, advertising, legal research fees, signage, constant updates coming in for your library, legal newspapers, cleaning, storage of closed files, utilities, bookkeeper costs, security costs, etc., etc., etc. And have you seen the cost for health care these days? If you take on contingency fee files, you may end up fronting thousands of dollars which you never recoup if the file doesn't pan out. The bottom line is that bills for hundreds of dollars from dozens of vendors come in the mail every month that have to be paid before the attorney sees a single dime of profit.
If you have staff, that is a huge overhead expense to meet; if you don't have staff, that means a huge amount of your time is spent on tasks you can't bill for. Staffing is always a conundrum for an attorney. It always gives off an air of success and professionalism to have someone answering your phone, making the copies and getting the mail out. I'm not being disrespectful here or arrogant, but the reality is that most secretaries or paralegals in a small firm setting can't be trusted to do more than that. Perhaps in a large firm where the secretaries and paralegals are making significant wages the work product is better. This is not typically the case in a smaller firm or with a sole practitioner who cannot afford to pay top wages and benefits. For example, even drafting a simple deed, you need to be able to get the names right, make sure the interests being conveyed are spelled out, make sure the property is being conveyed into the right estate for the circumstances, get the legal description correct, make sure any easements or right-of-ways are properly dealt with, make sure all the transfer taxes or exemptions are identified, make sure the document conforms with local recording requirements. With computers, it is usually simpler to do the work yourself than to explain it to a secretary, review it, correct it, review it again, probably correct it again, etc. It is not uncommon for a legal secretary/paralegal to actually make more money than the attorney he/she works for given that they get paid first shocking as that may sound.
If an attorney chooses to just do the work themselves and not hire staff, the efficiencies are many times devoured by the "time sucks" associated with running a business. It is amazing the number of solicitor calls that come in over the course of a day, particularly from business who serve the legal services industry. You can hang up on the telephone calls but it is not so easy to get rid of the steady stream of door-to-door solicitors. Every summer brings a supply of fresh-faced college students desperately trying to sell you cheap art to hang on your walls. When you are answering your own phone, each call has to be answered but each call is also a distraction that causes you to break your train of thought on the task you are trying to accomplish. Probably close to 1/3 of your time is spent wasted on things you can't charge anyone for like answering calls from people who don't end up hiring you, getting your bills out, paying bills and general bookkeeping, dealing with junk mail, etc., etc., etc. A sole-practioner trying to make a living spends much of their day simply running in quicksand.
The point is that the oversupply of attorneys isn't going to bring the cost of legal services down significantly. The cost of the services is driven by overhead and lost time managing the business as much as anything. Even a simple no-frills office is expensive to run. A young attorney with a large monthly student loan payment simply finds it more difficult to make a regular monthly payment on top of all the other regular monthly payments. This is particularly true because of the feast and famine cash flow up and downs associated with a small law practice.
The myth that "there isn't an oversupply of lawyers because otherwise the cost of legal services would come down" is BUSTED.
One frequent claim by law school apologists is that there isn't an oversupply of lawyers in the market, because if there was then the cost of legal services would be coming down. "The cost of legal services is simply supply and demand, stupid!" This criticism lacks a fundamental misunderstanding of the economics of practicing law, particularly for a solo practitioner.
First, let's understand that the attorney's take home pay does not somehow equate to the billable hour charged. "I wish I made that much money an hour!" is the common client refrain when signing a retainer agreement. No one ever stops and thinks how much a doctor is making per hour moving from patient cubicle to patient cubicle spending about 5 minutes with each one then billing $80 for an office visit plus extra charges for peeing in the cup. An attorney friend of mine, who hadn't made $100 that day practicing law, was once in a party store when the person in front of him checking out asked the store owner if he could change a $100 bill. The store owner just stood there and smirked and laughed and replied, "If I can't change $100 bill then I need to close my doors!" An attorney doesn't have cubicle after cubicle of clients lined up or a cash register with a line of people waiting to put money in it. All an attorney has is his or her time; every task is very time intensive if it is done right. Some of this time can be billed for and some cannot.
Second, the attorney is lucky if there is anything left over after all of the overhead of a law practice is paid. The reality is that even a modest no-frills modern law office is an expensive undertaking. There is rent, hazard insurance, malpractice insurance, workman's comp insurance, personal property taxes, income taxes, unemployment taxes, bar dues, continuing ed fees, telephone service, postage, cell phone, fax lines, computers and back up systems, practice and billing software, scanners, office supplies, printers, business cards and letterhead, furniture, advertising, legal research fees, signage, constant updates coming in for your library, legal newspapers, cleaning, storage of closed files, utilities, bookkeeper costs, security costs, etc., etc., etc. And have you seen the cost for health care these days? If you take on contingency fee files, you may end up fronting thousands of dollars which you never recoup if the file doesn't pan out. The bottom line is that bills for hundreds of dollars from dozens of vendors come in the mail every month that have to be paid before the attorney sees a single dime of profit.
If you have staff, that is a huge overhead expense to meet; if you don't have staff, that means a huge amount of your time is spent on tasks you can't bill for. Staffing is always a conundrum for an attorney. It always gives off an air of success and professionalism to have someone answering your phone, making the copies and getting the mail out. I'm not being disrespectful here or arrogant, but the reality is that most secretaries or paralegals in a small firm setting can't be trusted to do more than that. Perhaps in a large firm where the secretaries and paralegals are making significant wages the work product is better. This is not typically the case in a smaller firm or with a sole practitioner who cannot afford to pay top wages and benefits. For example, even drafting a simple deed, you need to be able to get the names right, make sure the interests being conveyed are spelled out, make sure the property is being conveyed into the right estate for the circumstances, get the legal description correct, make sure any easements or right-of-ways are properly dealt with, make sure all the transfer taxes or exemptions are identified, make sure the document conforms with local recording requirements. With computers, it is usually simpler to do the work yourself than to explain it to a secretary, review it, correct it, review it again, probably correct it again, etc. It is not uncommon for a legal secretary/paralegal to actually make more money than the attorney he/she works for given that they get paid first shocking as that may sound.
If an attorney chooses to just do the work themselves and not hire staff, the efficiencies are many times devoured by the "time sucks" associated with running a business. It is amazing the number of solicitor calls that come in over the course of a day, particularly from business who serve the legal services industry. You can hang up on the telephone calls but it is not so easy to get rid of the steady stream of door-to-door solicitors. Every summer brings a supply of fresh-faced college students desperately trying to sell you cheap art to hang on your walls. When you are answering your own phone, each call has to be answered but each call is also a distraction that causes you to break your train of thought on the task you are trying to accomplish. Probably close to 1/3 of your time is spent wasted on things you can't charge anyone for like answering calls from people who don't end up hiring you, getting your bills out, paying bills and general bookkeeping, dealing with junk mail, etc., etc., etc. A sole-practioner trying to make a living spends much of their day simply running in quicksand.
The point is that the oversupply of attorneys isn't going to bring the cost of legal services down significantly. The cost of the services is driven by overhead and lost time managing the business as much as anything. Even a simple no-frills office is expensive to run. A young attorney with a large monthly student loan payment simply finds it more difficult to make a regular monthly payment on top of all the other regular monthly payments. This is particularly true because of the feast and famine cash flow up and downs associated with a small law practice.
The myth that "there isn't an oversupply of lawyers because otherwise the cost of legal services would come down" is BUSTED.
First - also, this will be a great series and compliments an upcoming story about my recent first year as a solo.
ReplyDeleteYeah, on some days you sink a relative "whale" and take home $3 or $4 grand, but you go for long dry periods and you always have to pay business and bar expenses. Also, lawsuits are difficult when on contingency, especially against municipalities where one technicality can kill a case even after you sink $2K into developing a good claim.
Law school apologists always blather about how a solo career will get better...but I work on cases in fee sharing agreements with a few firms and they do not charge much more than I do (although they have more clients). It is depressing to see that the long game is not much different than the short one.
This was so good I won't comment yet but instead will read the rest of the series. I suspect that R A B will eventually cover all points I want to make.
ReplyDeleteThat description of a solo practice was written by someone who never had one - at least, it looks that way to me.
ReplyDelete"Security costs?" LOL.
"...every task is very time intensive if it is done right." You must have never done a deed, a will, a power of attorney, a security agreement, etc. There are hoards of quick tasks that many solos do.
"...if you don't have staff, that means a huge amount of your time is spent on tasks you can't bill for." A huge amount? Like what? Licking envelopes and picking up office supplies? What does a staff person do on a client's matter that attorneys can't bill for? I bill for all my time and don't have a secretary or receptionist.
Don't get me wrong, there are some accurate concepts in the article, but you should have consulted solos before describing our businesses.
I still get a chuckle out of "security." My very own cop outside my door.
"It is not uncommon for a legal secretary/paralegal to actually make more money than the attorney he/she works for given that they get paid first shocking as that may sound." I've heard this and am sure it occurs. What it shows you is that the dumbass attorney has no business starting a business. Hiring a legal secretary when there is not enough work to pay BOTH the attorney and the legal secretary (with the attorney making the larger chunk), is utterly asinine.
Basically, I think the article describes the many people out there who go solo but have no business acumen. You used bad examples because these attorneys who screw up like this really are to blame. Think about it... The premise is there is hardly enough work out there for people to scrape by. Okay, and so now, the attorney has to hire a legal assistant? LOL. I'm not saying the article said the attorney had to. I am saying the article analyzed that scenario as if it was a rational decision. It is not.
Part of the myth could be dispelled if some of these attorneys had half a brain when it comes to running a business.
Alarm system.
Delete"I bill for all my time and don't have a secretary or receptionist."
DeleteYou're almost certainly either lying or unethical.
How do you manage invoices? Other billing issues? Collections?
Do you charge for initial consults?
Who do you charge when dealing with office issues, like buying supplies, keeping the copier working, keeping files organized, paying bills, etc.?
How do you market?
How do you deal with client work that you can't really bill for? How do you keep clients if you're nickel and diming them for every second?
Your idea is nice - bill a lot - but the realities of modern law practice are that you're only going to be able to bill for 1/2 to 2/3 of your time, and that a paralegal or secretary is essential in helping free up billable time.
Hey Jeffm:
DeleteDo you have a book we can all buy?
I guess I should have stated, "... for all my time spent working on client's cases." I don't charge to send bills, write checks and buy office supplies. These activities take up very little time. It takes about 3 hours a month to do billing. I spend maybe a total of 1 hour a month writing checks. Maybe 1 hour a month getting office supplies.
DeleteHow is a paralegal going to free a solo up to do billables? Are you billing 8 hours a day? If so, you are doing pretty darn well. If I get to the point of billing 8 hours a day routinely, heck yeah, I'd have a secretary. But then, I'd be making so much money, the cost of a secretary would be nominal.
If you guys can't even bill 2 hours a day on average, you've got 6 hours dead time. You don't need a paralegal to allegedly free you up to do more billing.
There's some person who keeps chasing me around, thinking I have a book to sell. The price is free, but if this person wants to send me $100, I'll take it.
DeleteOne of the problems is that college kids keep analyzing business data as if they were still in college. It's amazing how all the finance grads know how to make a profit because all you have to is assume a spread.
DeleteSame goes the other way around. These kids have no exposure to actually running a solo practice. Yet, they seem to know so much about it. They know all the things you have to do and can give you all the reasons why the world isn't perfect.
The best way to learn is to go out and do it. Just as in law school, you all criticize how the profs don't teach you the real practice of law. But then, you come along and act all afraid of learning the real practice of law. Get out and do it. Who cares if you fail? Along the way, of course, you can learn where you can make improvements and make your adjustments accordingly?
Adjustments like these:
Getting stiffed by non-paying clients? Get bigger retainers.
Not getting enough clients because your retainer quotes are too high? Ease off from the amount you try to get as a retainer.
Tired of making paltry income because you don't have all that many cases and your legal secretary AND you just sit around shooting the shit? Tired of paying the secretary while hardly paying yourself? Get rid of the secretary and do all the work yourself. It might mean a smidge less blogging, but money counts.
The best advice for young ones with no experience is to go out and get some experience. Stop erecting barriers that you don't need to knock down.
No one is chasing you around Jeff. To do so would imply that you are important, you are not. You seem to post on all the scamblogs every day and quite often which seems to raise the question...are you trying to sell something or are you obsessed?
DeleteThen, why do you keep following my posts with suggestions I have a book to sell? Have you ever seen me offer anything for sale? I think the obsession is yours.
Deletehttp://vimeo.com/60234703
ReplyDeleteEconomists study theory and ideal scenarios. They don't study real-world business. That is why universities categorize those majors into different colleges within the universities.
As a solo practitioner who has been in the legal racket now for almost 20 years, I can tell you that there is a race to the bottom with the oversupply of lawyers all chasing the same deadbeat clients. Things have gotten worse as new lawyers don't know what they are doing and more importantly, don't know how much to charge, which is what is bringing the down revenue for most solo practices.
ReplyDeleteOff the top of my head, here is a list of expenses you absolutely need to defray to sustain a solo practice:
1) Rent: Although virtual office arrangements have been allowed, clients will not take a lawyer seriously unless he/she has a brick and mortar office. A drop box in a fancy building won't cut it. True story: virtual tenant lawyer meets prospective client in fancy office rented by the hour. Client asks "where are your degrees? how come the walls only have artwork from Ikea? what kind of lawyer doesn't put his credentials on the wall?" Needless to say, the lawyer did not get retained on the matter. Also, meeting clients at Starbucks, the local library or the bar association is in my opinion unethical and runs afoul of the rules on professional responsibility since you are breaching attorney-client privilege by having your client tell his/her story within earshot distance of the public.
2) Staff: You need at least one person who will answer calls, sort mail and draft simple correspondence. Sure you may do this yourself, but you will burn out quickly and the courts frown on hourly arrangements where lawyers are billing for their time while performing secretarial duties. Fee arbitration committees don't like it either. A cowboy is not a cowboy without a horse. A lawyer is not a lawyer without at least a secretary or paralegal.
3) Workers' Compensation insurance: mandatory if you have at least one employee. If you cut corners on this and your employee slips and falls on a patch of ice or wet floor in or within the building you work out of and you don't have worker's comp. insurance, you will be in boiling water.
4) Malpractice Insurance: Sure most new lawyers may think they can practice without it since they are judgment proof. This is foolish thinking and it is analogous to walking into a Thai brothel and screwing every whore without a prophylactic. If you get sued or even get a disciplinary complaint and you have no insurance, prepare to spend your whole time defending the lawsuit and disciplinary proceedings on your own while further neglecting your current caseload. Remember, one who represents himself has only a fool for a client.
5) Reliable transportation: You need a car that won't breakdown. I have seen some judges sanction lawyers who get to court late by 5 minutes. "My car broke down" is akin to saying "My dog ate my homework" when it comes to some judges. And with a car, you need to pay insurance but you knew that anyway since it is the law.
6) Office equipment: You need a computer that was made within the last 3-4 years. No Windows 8, just get Windows 7 Pro. Apple computers are for play, not for business. Most business or legal software isn't compatible with Apple machines anyway. You also need a portable computer. I suppose you can get the new computers that can be both a desktop and tablet. Bottom line: You will need to spend about $5K on office equipment to start up (e.g., printers, expensive toner, separate back up hard drive, network boxes, etc.).
7) Office furniture: Clients aren't going to sit on the floor. Your practice is not some hibachi joint. You will need a desk, a few chairs, a workstation and file cabinets. Hon file cabinets are expensive. I buy the 5 lateral drawer cabinets for $1,100 a piece. You can get them used but don't expect to pay a deep discount. Think of the discount the law school book store gave you for buying a used casebook.
In criminal law, no one cares about an office, furniture, employees, nothing but how much you can do for the best price. Some snaz can snag you a whale here and there...but I am not at the murder trial level just yet.
DeleteContinued...
ReplyDelete8) Parking: This is a huge cost if you are in an urban area. In NYC alone, I used to pay $500 a month for parking by my office back in 2007.
9) Tech costs: Unless you are A++ certified in configuring networks and phone systems, expect to drop a couple of thousand on a tech to set you up.
10) Advertising: This is low on my list because I don't need to advertise anymore. If you are a new lawyer, however, no one knows you from Dick Hardwood, Esquire down the street. You will need to get your name out there. Most use the internet where I hear avvo, yodel, etc. charge hundreds of dollars a month. I think it is crazy to spend this kind of money in advertising but then again, I know someone who spends $100K in advertising a year and he makes about $400K in gross income. His take home pay for the year? $90K.
11) Other insurance/security: You need to get tech warranty on all electronic office equipment. If you download a virus or your hard drive crashes (it happens), you will need to hire a tech person who will charge you $135 an hour (that is what I pay) to get you back up and running again. Avoid this by getting a warranty. With respect to security, I pay $150 a month to a company that monitors my office (we have keyless electronic cards for entry). Offices do get broken into.
Feel free to add more as I am typing this on the go. Overall, you will need at least $20K to start up a solo practice. The lease on your office alone will require first/last month's rent plus one month's security deposit. Are law schools telling their graduates about these costs? Or are they saying it is as simple as hanging a shingle?
"Staff: You need at least one person who will answer calls, sort mail and draft simple correspondence. Sure you may do this yourself, but you will burn out quickly and the courts frown on hourly arrangements where lawyers are billing for their time while performing secretarial duties. Fee arbitration committees don't like it either. A cowboy is not a cowboy without a horse. A lawyer is not a lawyer without at least a secretary or paralegal."
ReplyDeleteThis 20-year solo/own law firm attorney disagrees. I tried an assistant for maybe about 8 month period some 12 years ago. It was a big joke, and the joke was on me. They are worthless window dressing. As to billing, if you type up your own envelope and put the postage on it yourself, your bills reads, "Draft and file motion for summary judgment." It does not read, "Draft motion for summary judgment. Prepare envelope and lick it. Mail it."
I will never have an assistant again unless I am too busy. IMO, "too busy" means making so much money that I can't keep up with it.
Worker's comp..... You need it because of that worthless secretary you hired for window-dressing. Without her, you are just a solo. You can't sue yourself for slipping in your own office.
$5k in office equipment? All I use is a $900 laptop, a $400 printer and have about $200 in office supplies. Again, when you get into the $5k range, it's because of that worthless window-dressing you call a secretary.
Office furniture. You can get what you need for about $3k (in fact, you might already have some spare pieces you can bring from home).
Even this light-duty version presupposes you need an office. When my lease expires, I predict I will be done with offices. I rarely ever go nowadays. Clients don't care - at least mine don't. There will be some who will care (so I won't take that away from you), but by and large, many will not - provided you demonstrate knowledge of the proposed subject matter.
Many lawyers rely on window-dressing to mask incompetence and insecurity.
I agree completely. I am new but more competent in certain narrow areas of law than 20-year veterans. Case in point: I just signed a $5K retainer in front of the court house because I knew what I was talking about during the detailed consult. (That is a good chunk of change for me). I get an occasional client that wants to meet at my "office" but those clients rarely end up paying anyway.
DeleteDidn't you used to disagree a little more about 2 months ago? I was thinking we debated this idea.
DeleteAlso, $5k is a good chunk of change for just about everyone.... when the bulk of it goes into your pocket instead of secretaries and overhead.
DeleteAs one who was in a solo practice, it gets more right than wrong, but it ignores two facts: 1. There are entire days when the phone doesn't ring-even though you've spent hours "networking" at the Bar meetings, the Rotary, etc, etc, etc. It's an open secret that very rarely do attorneys refer out cases to other attorneys if it's a paying client and 2. most people don't want to pay legal fees. Everybody I dealt with-even the contingency fee cases-wanted to negotiate. And there were many who came to my office, got a quote, and were never seen again. Then there were the many who called; at least some were direct and wanted me to tell them what to do and admit they didn't want to pay for it.
ReplyDeleteThe other little secret is that costs seem to expand exponentially.
Two examples: if you get health insurance as a young healthy person, it's expensive. If you make the "mistake" of getting married/having a family, the cost increases dramatically.
If you purchase malpractice, er, "errors and omissions" insurance, here's my example. First year, not so bad; second year not so bad-third year the cost had doubled from the increased amount second year. And if you give up the game and purchase the tail-that's double your last year's premium.
It costs a lot of money to run even a one-man shop.
I am an old time lawyer, went solo 25 years ago. I have made a very nice living . . but I learned to try cases and pretty much limit my practice to personal injury and insurance disputes (the prevailing party is entitled to attorney fees). I will tell you that it is tougher than ever out there because there are more lawyers, there are some lawyers who advertise non-stop in all mediums who get lots of the business, and the insurance companies are worse to deal with now than I ever remember, which means you need to be willing to try many cases if you want a decent settlement. If you take on all types of cases, you will be a jack of all trades and a master of none, and it will drive you batty. You have to learn to be selective about those cases you take and those you don't. That being said, if I were starting out now as a solo, I would try to learn an area of the law that few attorneys know about or do. Few attorneys in my town are familiar with maritime law or the Lonshoreman Harbor Compensation Act, and thus I have been referred some wonderful cases and made lots of money on them. Other lawyers are experts in trusts and estates, or medicare subrogation rights. Erisa is another big area that lawyers avoid but can be lucrative. But I am glad I am at the tail end of my career. It is getting harder and harder out there to get cases, there are more and more areas of potential liability and malpractice, and tort reform is killing the business. Good luck to those who try to make it solo. Its not impossible and if you are a good trial lawyer, you can make a very nice living. . . but nothing is guaranteed.
ReplyDeleteI'm the old timer in solo practice for years. I do want to add that if you are looking to make a living seeking out paying clients, forget it. Most people don't have enough money to pay you to hardly make it worth your time and regardless, most people don't want to pay lawyers anything. I offer free consultations for PI work, as do most lawyers, but I try to help people in other areas also, if for good public relations if no other reason. I have learned however that many people don't want to pay even a token amount to consult with a lawyer. So if I don't want to bother with a consultation, all I say is that it is anywhere from $50 to $200 for 30 minutes to an hour of my time. It is very rare indeed that a person wants to pay anything. People have some sense that lawyers don't charge for their time because of all of the advertising about free consultations, no recovery no fee sort of thing.
ReplyDeleteBut people can be even worse. I get people calling me wanting to sue their insurance companies for all sorts of things. Again, I like insurance cases because the prevailing party can get fees and sometimes they can be huge regardless of the amount in dispute, BUT people want a total free ride. Very recent example. Guy claims construction in the area has caused his pool to leak. Homeowners insurance company rejects claim saying lack of maintenance. I tell guy he needs to hire a structural engineer to see if pool leaking is related to the construction. He reacts in shock. "isn't that your job". So he not only wants my time to free, he wants me to spend MY money to see if he even has a case to begin with. Its just incredible what people expect from their lawyers at times. I sent him on his way.
JeffM, unfortunately you have to go through many bad apples to get to a good one (i.e., employee). When I started my practice, I did everything on my own. I was putting in 16 hour days at the office, which led to my divorce as I was not spending time at home. I later found out my wife was cheating on me with my neighbor, who was a 9/11 widower who received $3M from the feds in compensation and basically is a day trader working from home.
ReplyDeleteEventually, without competent help, you will burn out. I now have 2 paralegals and a receptionist working for me. I get into the office at 10AM and leave by 5PM. Having competent help has helped me lead a balanced life. I bill out my paralegal's time at $95 an hour so I found out ways to make money off of the Biglaw model. However, as many have stated, it is harder today to make a living as a lawyer. In 2006, I was on a 10 year plan to retire. The Great Recession scrapped that fantasy. I had to layoff one paralegal as competition for clients has intensified.
I want to make one last point. In addition to the profession getting worse, the clients are horrendous, more so than 20 years ago. Clients expect you to do miracles (e.g., acquittal on 2nd degree murder with full confession in prosecutors' file) for pennies. Recently, I had a woman come to my office to retain me to handle her brother's criminal appeal. I ordered the trial transcript and the guy's trial attorney was a complete moron who laid a very poor record. There was a chain of custody issue which he completely ignored. It turns out, the chain of custody (for evidence) was critical to the defense. Now I can't raise that issue on appeal all because they retained some wet behind the ears rookie who probably never tried a case in his life and thought his moot court experience would get him through. I could go on and on about the horrors of practicing as a solo but I am sure many will chime in on this blog.
Most of the poor records that I have seen in my two years of practice came from incompetent sleeping boomers.
DeleteEach has a different way of handling their business, no doubt. I am a 20-year. Ever since going solo 14 years ago, I have had a pretty easy life. I almost feel guilty for it. I make sure to bill and collect at least 2 hours a day. That means maybe actually working 2.5 hours a day. The rest of the time, I just blow on anything and nothing. It generates an income typically between $100k and $150k. No secretaries. Low overhead. Just work about 2.5 hours a day. It leaves a lot of time to figure out what other things in life can make for good hobbies and investments.
DeleteI can certainly see how a person having constantly chase money to pay everyone but himself can become tiring and lead to burn-out. It's not quite as fun to pay everyone else, as it is to pay yourself.
Burn-outs working too hard for too little money. Also, attorneys undercharging (not being paid enough) and thus, not motivated to do as good a job.
Deleterace to the bottom indeed.
ReplyDelete15 years ago I did patent work for a fortune 200 company. they paid a very nice chunk of case for a patent application. now, they have firms doing their work for 20% less than what they were paying 15 years ago. very scary.
although not my areas, divorces, bankruptcies, wills can be had for a fraction on what they use to go for.
good for the consumer. bad for the attorneys.
Ch. 7 bankruptcies are seriously a race to the bottom. 100-200 bucks plus court costs in a lot of areas. Good luck making a living trying to break into that volume market.
DeleteThe problem with bankruptcy and most forms based practices (e.g., immigration, wills, residential real estate, etc.) are exacerbated by the fact that any layperson can go to a non-attorney (i.e., bankruptcy petition preparer, notario, etc.) and pay a measly sum. Also, Nolo and Thomson Reuters have cornered the legal forms based market by offering cheap software that generates the forms. The bottom line is clients don't want to pay lawyers on an hourly basis.
DeleteYou want to know how I know things are bad? Years ago, a Personal Injury attorney would automatically get one third (33%) of the recovery. Now, I see attorneys lowering their recovery percentage to 15-20% which is fucking INSANE! I blame the law schools for producing too many lawyers who are forced to open shop not knowing anything about practicing law or how much to charge. I am within 5-7 years from retirement and I am looking forward to getting out of this profession as it just feels like the bar is a shark infested pool fighting over scraps.
You raise bankruptcies. In 1985, lawyers would charge $2,500 to file a Chapter 7 case. That was a standard fee. $2,500.00 in 1985 dollars today is about $5,250.00. Yet, I see lawyers slashing their fees to $399 plus the filing fee to do a Chapter 7, which is my understanding, is becoming a lot harder because trustees haven't gotten a raise since 1991 and are trying to liquidate everything and the kitchen sink. It is sheer madness that what people pay in 2013 dollars for a bankruptcy wouldn't even defray the cost of the filing fee in 1985. Race to the bottom? We are already at the bottom. In the age of LegalZoom, Shpoonkle and others, this is Thunderdome.
"good for the consumer. bad for the attorneys."
DeleteIn any professional situation--medical, dental, architectural, or legal--reduced price seems like it would be good for the consumer.
It's not, though--it's deadly not. Reduced earnings for professionals doing important tasks means reduced competency and reduced care. A lower price and a missed diagnosis; a lower price and an unnecessary crown; a lower price and a cracked foundation or a statute of limitations passed: all these things seem "cheaper" for the consumer, when actually, they can be deadly.
Shitty lawyers charging tiny fees and screwing people out of money or civil rights ten years later may not be as bad as doctors killing people with bad drug combos, but it's still pretty bad. Don't cheer these current price "reductions"--they just represent taking on a huge social debt that our injured children will have to pay off later.