I’m going to continue on the theme of solo practice if you don’t mind. One of the lines of comments from my prior post showed a depressing and dangerous misconception: that IBR will save you from the financial devastation of opening up a solo practice. In essence, the line of thought was that if you're not earning anything, your student loans technically don't matter under IBR. And on the surface, that sounds reasonable. No income, no payments. But that doesn't make starting a solo practice a smart idea, or something that has no risk because of IBR.
Here’s why: most new solos are losing money each month, not making money or breaking even. And IBR is a one-way street. By that, I mean if you’re making only a little money, your payments will be small, but if you’re losing money, your IBR payments will not be negative. You're still losing money. IBR doesn't help someone whose business is not profitable. IBR doesn't give you a refund.
For those who have not yet experienced solo practice, or for those who still think that when all else fails, they’ll just hang out a shingle and let IBR take care of all their financial worries, let me walk you through a typical day as a solo in terms of your net income rather than time. Note that this is a low-budget solo practice – while I’m sure someone could run a practice for far less (and while I'm sure some readers will miss the point entirely and write comments like "no way rent costs that much!" or "I can buy 1000 pens for $10 on eBay"), I would argue that it will always cost you about twice what you expect it to cost to keep a new small business afloat, especially with the complete lack of experience possessed by most fresh law graduates when it comes to running a business. Don’t underestimate the fixed costs of running a low-budget law practice – the main saving you could make is on office space, but things like malpractice insurance, bar dues, CLEs, advertising and marketing costs, office supplies, and phone/data are generally fixed and unavoidable. Off to work we go...
8:00am Show up at office. Get coffee. The rent is costing at least $500 per month, perhaps closer to $1,000 if it’s in a larger city, utilities included. Let's split the difference and say that the office, with basic utilities included, is $750 per month. Currently, you're $-750 for the month.
8:15am Go through emails. Nothing but junk messages from companies trying to sell you things (research tools, advertising, CLEs, client leads etc.) No new business in here.
8:30am Go through voicemails. Just one, from a client who has some “questions” about a bill you sent. Uh oh.
9:00am Call client back. Client complains that the $800 bill you sent for working on his divorce last month – the matter that took you about twenty hours when all was said and done, and which was the only paying matter you worked on recently – was far too high, despite most of the additional work being because of lies the client told throughout the representation which made a simple case into something difficult. You agree to discount the bill by half after he threatens to file a complaint. Income from this matter this month: $400, so now you're only $-350 for the month.
9:30am Go through mail. Nothing but bills. Bar dues - $240 annually ($20 this month). Lexis (yes, you signed up for that waste of money) is $150 this month. Your phone/data plan $50 this month. Now you're at a net loss of $-570.
10:00am Leave office to attend CLE. Maybe only $100 this month, maybe more considering parking, tolls, gas and so forth - all those little things that people just forget as a cost of doing business. Hope to network with other attorneys and find referral business, but you soon realize that they are all there for the same thing. Nobody has any clients. So far, this month is now $-870.
12:00pm Lunch with one of your few clients, at the client’s request – just to “catch up” (i.e. get a free meal). Unsurprisingly, the client has nothing new for you to work on. Lunches cost you $200 per month, so now you're at $-1,070 this month.
2:00pm Back at office. Spend an hour writing a "practice alert” for your clients, then another hour mailing out one hundred copies of a letter plus two-page factsheet to local business and your few existing clients. Mailing cost is $100 (good paper, stamps, envelopes, labels), plus you now need to buy a new printer cartridge. Net $-1,170.
2:30pm Phone rings. You spend the next half hour giving out free legal advice to a prospective client. You put the phone down and realize that this prospective client has obviously asked the same question to three other attorneys, has now received answers to every part of his legal jigsaw puzzle and doesn’t need a lawyer anymore. But you can bet that he’ll be calling you in two months to complain about your bad free advice when his pro se representation goes wrong. Remember that malpractice carrier is calling you back later this afternoon.
3:30pm Email arrives from Google. Your online advertising and marketing has cost you $200 this month. Net $-1,370.
4:00pm Back from Staples with printer cartridge, plus supplies - paper, pens (clients love to steal your pens), and assorted bits and pieces that every office needs - $150 this month. Now you're net $-1,520.
4:30pm Malpractice insurance rep calls. Your rates are being adjusted. You now pay $2,400 per year. Write check for $200 for this month. Net $-1,720.
5:00pm Phone has not rung once all day with any new business. You call it quits.
5:30pm Get home. On the way, you pick up dry cleaning ($30 this month) and run by the store for a new white shirt ($50) after one of your pens leaked all over it. Gas for all this driving around? $100 this month. But the student loan bill arrives. You owe $750 this month, but - yay! - IBR takes care of this and you owe a grand total of $0 for your loans because your business is so bad. So you're now down a mere $-2,000 for this month for everything directly related to your law practice.
Don't even think about hiring a secretary.
This is a typical day. Your business costs alone this month – just the costs to keep your office open – come to a net loss of around $2,000. This doesn’t include your home rent, living expenses, any form of health insurance, retirement, car payment, credit cards, vacation, or anything that’s not directly related to your law career - let's say that will cost you an additional $2,000 per month. As you can see, the solo practice is running at a massive net loss. You need clients. But where on earth are those $4,000 of billables coming from ($2,000 to cover the costs of the business, and $2,000 to live off)? And where is it coming from next month? And after that? It's a non-stop battle.
While IBR will save you having to pay the student loan bill, it’s not going to refund you the $2,000 you’ve just flushed down the toilet trying to start your law firm this month (and the next, and the next, and so forth). IBR may be a great tool for those who are entering low-paid jobs, but IBR is a useless tool for those who are trying to start a business and who may have a net loss for many months (or years).
Saving $750 on your student loans via IBR is costing you $2,000. Only an idiot pays $2,000 to save $750.
Then comes the follow-up comments along the lines of, "So you should do nothing instead?"
Actually, yes. Or not nothing - just avoid solo practice, which is universally a bad business decision (see my earlier post if you still don't get why). Here’s your homework. Assume you’re a new law grad, $150,000 in debt (although IBR makes this "disappear" for now). How many months can you afford to keep up this charade of “solo practice” before all of your savings have disappeared if you estimate that you're losing $2,000 per month, every month, even on IBR, and the $2,000 you need to live on? Because you'll find you have rather less time than you think to get on your feet, which, at $4,000 per month, will cost you another $50,000-200,000 in cash (that no bank will lend you except perhaps on a credit card at 29.99%) before you can even think of breaking even, and that's assuming that the market for lawyers doesn't get any worse.
Think of IBR not as a blessing, but as a sign that you are failing financially. The idea that IBR is a good thing is wildly inaccurate, because it's nothing more than a sign that your business is not working. Anyone touting it as a benefit for solo practitioners (and anyone else self-employed in the legal world) is wrong, and is relying on logic equivalent to saying something similar to "being on food stamps is great because you get free food," ignoring the fact that life is often pretty miserable for those so low on the economic totem pole, and often doesn't get much better.
I'll be the first to admit that the above figures are ballpark estimates to prove a point (although they're not far off what I experienced when I took a few steps down the solo practice road). But the underlying point stands - if you're not running a profitable solo practice, IBR isn't your friend and it won't insulate you from business losses incurred by trying to go solo.
Charles Cooper is the author, along with Thane Messinger, of “Con Law: Avoiding...or Beating...the Scam of the Century (The Real Student's Guide to Law School and the Legal Profession)”, in addition to being the moderator at Nontradlaw.net and the author of “Later in Life Lawyers”. He can be contacted at charlescooperauthor@gmail.com.
Here’s why: most new solos are losing money each month, not making money or breaking even. And IBR is a one-way street. By that, I mean if you’re making only a little money, your payments will be small, but if you’re losing money, your IBR payments will not be negative. You're still losing money. IBR doesn't help someone whose business is not profitable. IBR doesn't give you a refund.
For those who have not yet experienced solo practice, or for those who still think that when all else fails, they’ll just hang out a shingle and let IBR take care of all their financial worries, let me walk you through a typical day as a solo in terms of your net income rather than time. Note that this is a low-budget solo practice – while I’m sure someone could run a practice for far less (and while I'm sure some readers will miss the point entirely and write comments like "no way rent costs that much!" or "I can buy 1000 pens for $10 on eBay"), I would argue that it will always cost you about twice what you expect it to cost to keep a new small business afloat, especially with the complete lack of experience possessed by most fresh law graduates when it comes to running a business. Don’t underestimate the fixed costs of running a low-budget law practice – the main saving you could make is on office space, but things like malpractice insurance, bar dues, CLEs, advertising and marketing costs, office supplies, and phone/data are generally fixed and unavoidable. Off to work we go...
8:00am Show up at office. Get coffee. The rent is costing at least $500 per month, perhaps closer to $1,000 if it’s in a larger city, utilities included. Let's split the difference and say that the office, with basic utilities included, is $750 per month. Currently, you're $-750 for the month.
8:15am Go through emails. Nothing but junk messages from companies trying to sell you things (research tools, advertising, CLEs, client leads etc.) No new business in here.
8:30am Go through voicemails. Just one, from a client who has some “questions” about a bill you sent. Uh oh.
9:00am Call client back. Client complains that the $800 bill you sent for working on his divorce last month – the matter that took you about twenty hours when all was said and done, and which was the only paying matter you worked on recently – was far too high, despite most of the additional work being because of lies the client told throughout the representation which made a simple case into something difficult. You agree to discount the bill by half after he threatens to file a complaint. Income from this matter this month: $400, so now you're only $-350 for the month.
9:30am Go through mail. Nothing but bills. Bar dues - $240 annually ($20 this month). Lexis (yes, you signed up for that waste of money) is $150 this month. Your phone/data plan $50 this month. Now you're at a net loss of $-570.
10:00am Leave office to attend CLE. Maybe only $100 this month, maybe more considering parking, tolls, gas and so forth - all those little things that people just forget as a cost of doing business. Hope to network with other attorneys and find referral business, but you soon realize that they are all there for the same thing. Nobody has any clients. So far, this month is now $-870.
12:00pm Lunch with one of your few clients, at the client’s request – just to “catch up” (i.e. get a free meal). Unsurprisingly, the client has nothing new for you to work on. Lunches cost you $200 per month, so now you're at $-1,070 this month.
2:00pm Back at office. Spend an hour writing a "practice alert” for your clients, then another hour mailing out one hundred copies of a letter plus two-page factsheet to local business and your few existing clients. Mailing cost is $100 (good paper, stamps, envelopes, labels), plus you now need to buy a new printer cartridge. Net $-1,170.
2:30pm Phone rings. You spend the next half hour giving out free legal advice to a prospective client. You put the phone down and realize that this prospective client has obviously asked the same question to three other attorneys, has now received answers to every part of his legal jigsaw puzzle and doesn’t need a lawyer anymore. But you can bet that he’ll be calling you in two months to complain about your bad free advice when his pro se representation goes wrong. Remember that malpractice carrier is calling you back later this afternoon.
3:30pm Email arrives from Google. Your online advertising and marketing has cost you $200 this month. Net $-1,370.
4:00pm Back from Staples with printer cartridge, plus supplies - paper, pens (clients love to steal your pens), and assorted bits and pieces that every office needs - $150 this month. Now you're net $-1,520.
4:30pm Malpractice insurance rep calls. Your rates are being adjusted. You now pay $2,400 per year. Write check for $200 for this month. Net $-1,720.
5:00pm Phone has not rung once all day with any new business. You call it quits.
5:30pm Get home. On the way, you pick up dry cleaning ($30 this month) and run by the store for a new white shirt ($50) after one of your pens leaked all over it. Gas for all this driving around? $100 this month. But the student loan bill arrives. You owe $750 this month, but - yay! - IBR takes care of this and you owe a grand total of $0 for your loans because your business is so bad. So you're now down a mere $-2,000 for this month for everything directly related to your law practice.
Don't even think about hiring a secretary.
This is a typical day. Your business costs alone this month – just the costs to keep your office open – come to a net loss of around $2,000. This doesn’t include your home rent, living expenses, any form of health insurance, retirement, car payment, credit cards, vacation, or anything that’s not directly related to your law career - let's say that will cost you an additional $2,000 per month. As you can see, the solo practice is running at a massive net loss. You need clients. But where on earth are those $4,000 of billables coming from ($2,000 to cover the costs of the business, and $2,000 to live off)? And where is it coming from next month? And after that? It's a non-stop battle.
While IBR will save you having to pay the student loan bill, it’s not going to refund you the $2,000 you’ve just flushed down the toilet trying to start your law firm this month (and the next, and the next, and so forth). IBR may be a great tool for those who are entering low-paid jobs, but IBR is a useless tool for those who are trying to start a business and who may have a net loss for many months (or years).
Saving $750 on your student loans via IBR is costing you $2,000. Only an idiot pays $2,000 to save $750.
Then comes the follow-up comments along the lines of, "So you should do nothing instead?"
Actually, yes. Or not nothing - just avoid solo practice, which is universally a bad business decision (see my earlier post if you still don't get why). Here’s your homework. Assume you’re a new law grad, $150,000 in debt (although IBR makes this "disappear" for now). How many months can you afford to keep up this charade of “solo practice” before all of your savings have disappeared if you estimate that you're losing $2,000 per month, every month, even on IBR, and the $2,000 you need to live on? Because you'll find you have rather less time than you think to get on your feet, which, at $4,000 per month, will cost you another $50,000-200,000 in cash (that no bank will lend you except perhaps on a credit card at 29.99%) before you can even think of breaking even, and that's assuming that the market for lawyers doesn't get any worse.
Think of IBR not as a blessing, but as a sign that you are failing financially. The idea that IBR is a good thing is wildly inaccurate, because it's nothing more than a sign that your business is not working. Anyone touting it as a benefit for solo practitioners (and anyone else self-employed in the legal world) is wrong, and is relying on logic equivalent to saying something similar to "being on food stamps is great because you get free food," ignoring the fact that life is often pretty miserable for those so low on the economic totem pole, and often doesn't get much better.
I'll be the first to admit that the above figures are ballpark estimates to prove a point (although they're not far off what I experienced when I took a few steps down the solo practice road). But the underlying point stands - if you're not running a profitable solo practice, IBR isn't your friend and it won't insulate you from business losses incurred by trying to go solo.
Charles Cooper is the author, along with Thane Messinger, of “Con Law: Avoiding...or Beating...the Scam of the Century (The Real Student's Guide to Law School and the Legal Profession)”, in addition to being the moderator at Nontradlaw.net and the author of “Later in Life Lawyers”. He can be contacted at charlescooperauthor@gmail.com.
IBR allows you to start a business though without the burden of knowing your full loan amount has to be paid every month. So, yes, IBR is helpful, and should be appreciated for what it is.
ReplyDeleteI don't get what the alternative is. Do nothing, not try? Hope someone else gives you a job? Rely on others?
I think you missed the point of my post, or I didn't explain it well enough, so let me summarize:
DeleteIBR is often billed as a way to insulate oneself from the high costs of college. And for many students, it is - but only those students who are employed (or even unemployed) after graduation.
IBR will also help someone who is starting a business, as it takes the burden off when it comes to student loan payments. But one assumes that such a business will eventually be profitable.
Solo practice is different in two ways from a typical business:
1 - It is such a bad business model (trying to open shop in a saturated market that is shrinking, and offering nothing new that isn't already available), and
2 - The costs of running a solo practice are high.
Where IBR helps is for those grads who are off running low-cost startups, or taking low-paid entry level jobs to gain experience and connections.
The problem arises where IBR is used by law schools as a tool to recruit students, some of whom clearly believe (as per the comments to my earlier post) that IBR will allow them to take a shot at starting a solo practice. But the plan falls to pieces because they just don't realize how expensive it is to run a solo practice.
That was essentially the point. Not that IBR doesn't help anyone. Just the far narrower point that IBR should never be used as a reason to go to law school and think that it will make starting a solo practice a viable option.
And the alternative to that? Don't go to law school! This information needs to be spread around now rather than later. The time to discover that running a small law office costs thousands per month is before the dreamy-eyed law school applicant ever sets foot in law school, not during 3L when the assistant in the career services office tells you that it's what you should be doing now that you don't have a real job. And for that 3L, a solo practice would be an extremely bad idea, because as explained above, the costs of doing business far outweigh the savings from IBR. That student would be far better working in any paying or non-paying non-law job and resetting his or her career, rather than throwing good money (and time) after bad by trying to win at solo practice where the chances of success are 1-100.
I think the ultimate problem is that IBR is touted as a solution to the problem of spiraling (law school) educational debt, when it was intended to be a stop-gap measure. ScamDeans in particular are fond of encouraging struggling students to pass the buck to the public. The real issue is that legal education is too expensive, period.
ReplyDeleteLower the cost of tuition, and the arguments surrounding IBR practically become moot. The day will come when the American Taxpayer(tm) gets sick and tired of bailing out students and, by extension, universities.
My biggest issue with IBR or any similar program is that it keeps the gravy train rolling for the law schools. How can we justify a system where taxpayers (most of whom make way less than law professors) subsidize law professors' and deans' high salaries?
ReplyDeleteThe way to lower tuition is to stop having the gov't loan (or guarantee) vast sums of money to law students with little or no real work experience or credit history. Since I doubt anyone has the political will to stop federal loans outright, cap the total amount of guaranteed loans at $20k/year. Law tuition will drop overnight.
The problem is most of the actors in the current system - congress, sallie mae and other loan originators, law schools and even the students themselves (until they graduate) - win big from it. They have no incentive to change it, even by just capping graduate loans.
DeleteIts only the graduates who are suffering. Unfortunately they don't seem to have much power, and even if they do dare to speak up they are dismissed as fools or slackers.
Good post, but unfortunately, still subtly (unintentionally) biased in favor of solo practice.
ReplyDeleteWhat ??
The post's repeated use of the term "new solos" sends the message that an 'established' solo practice is somehow different or somehow profitable.
Not so. Established solos have the exact expenses as described above, probably more. Your insurance costs go up, and they don't lock-in your rent because you made it five years. Bar dues go up in several states.
Your experience doesn't change the economic situation and certainly doesn't change your clients' situations. Solo-ing is one-off business. It's not like you're going to get steady, repeat business from couple whose divorce you just did, or that you're going to be the regular Bankruptcy lawyer for the Stevensons.
You might get the guy's second DWI case, but by the third, he's not able to pay anyone. Same with drug possession.
New or old, solo is solo, and the struggle for paying work never abates. You're trying to run a shop, offering nothing new, in a contracting market that continues to gain players. Most of your clients' problems arise from their lack of money.
For people looking to get into law, soloing must not be offered as a possibility under any circumstances. Yes, in the past, some graduates have now ended up there by default, and some people trapped in the current collapsing market are being forced into this mode against their will. But under no circumstances should anyone be taking on debt to get a law degree to open a solo practice. Period.
An excellent point - I'm glad you brought it up. There were plenty of comments to my earlier post that seemed to imply that one merely has to get over the hump of the first few years and then you'll be making it, as if experience is all that one needs to have clients clawing at the front door each morning.
DeleteI'll back up everything you said. Solos who have been doing this for many years, and who are the most likely to succeed based upon their skills and experience, are failing left, right, and center. A new solo doesn't stand a chance.
I tried soloing for about 6 months during a period of unemployment. After a few months of paying out money for everything you mention above (plus many other things not even mentioned, i.e., computers, furniture, printers, business cards, stamps, envelopes, stationary, software, books, the list is endless) I jumped at the first document review opportunity that came my way. After losing my associated position after three years on the job, I have been doing contract work for the past 8 years now. I'm not happy with my current line of work, but it is paying the bills. Once I pay down my debt a bit more, I will be in a position to start another solo practice, but this time I will be committed and better financed. It's a pipe dream to think you can start a solo practice without any money saved up. The problem is most recent law students are at their poorest after graduation. After paying those BarBri idiots 1,000's of dollars, you're left scraping the bottom of the barrel for lunch money, let alone the costs associated with opening a legitimate law practice. Also, the discussion of IBR ignores the fact that there will be a whopping tax bill waiting for you at the end. It's a bad deal all around. Don't rely on IBR to be your saving grace. It's almost like relying on social security to be there when you retire - not happening.
ReplyDeleteI gave soloing six months (with six years of prior legal experience in a small and a midlaw firm) before I realized that it was a disaster. Actually, I knew that it was a disaster within the first two months, then I gave it a couple more months to really make sure, and two more to wind things down and make an exit.
DeleteIt's a terrible waste of time and effort and money. I had close to six years of relevant experience when I started - I had worked in small and medium firms, had local clients, local experience, general and specific legal skills in solo-relevant practice areas, a local reputation, and should have stood a pretty good chance of success compared to many.
Perhaps I should not be so hard on solo practice. If anyone wants to try it, by all means go ahead. Just make sure you have a job lined up six months down the road because you'll most likely need it, and make sure you're prepared to throw good money after bad.
If you don't need the job after six months, great. You're one of the few success stories. But never go into solo practice with the idea that you'll (1) make money or (2) survive for more than a few months. It will far more often than not be a "phase" you go through rather than a career.
If you start work as a solo for whatever reason, make sure you get into the habit of looking for a new job for the first hour of every day.
Why should this site be responsible for offering solutions to those who are in law school today? They are not victims of the scam. They are victims of their own self delusion for ignoring the clear warnings against law school.
DeleteThe legal field is and always has been based on mentorship. It is difficult to learn all the applicable rules from a book, and a young attorney needs introductions to paying clients from attorneys willing to vouch for him or her. Advertising will not help unless the attorney specializes in personal injury, family law, criminal law or a few other areas where clients of more modest means need legal services and may not already know an attorney. By and large, attorneys in these fields cannot rely on repeat business. Thus, an attorney with no significant connections to the local bar has little or no chance of attracting a reliable client base.
DeleteI started a solo practice right out of law school about 15 years ago. I survived three years (before marriage and kids) because I rented an office in a suite of lawyers who could give me contract work and small referrals. I also got a large chunk of revenue from the firm where I had been a law clerk before law school that suddenly received a large influx of business and needed help. Even with that my practice was not sustainable for the long term and I joined a firm as an associate to get some significant specialized experience (in the short time in the late 90's when a stale attorney could get into a firm). After eight more years of associate experience, I returned to solo practice (I realized the petty Ponzi-nature of mid-law where clients are rare and lawyers are plentiful) and still struggle - covering the nut with contract work and referrals from other attorneys. Luckily I've attracted a few corporate clients. . . . The key word in the last sentence is "luck." With more and more lawyers there are fewer and fewer opportunities to attract clients/attorneys willing to pay a living wage.
Mentorship works when the number of new entrants to the field is about equal to the number leaving plus the growth rate of the demand for services. The legal practice was a good bet when the partner-associate ratio was closer to 1:1, and a partner's retirement relied on his/her associates succeeding. Associates would either climb to partnership or develop practice skills and client connections (and partner recommendations) to make it on his/her own. With the oversupply of young talent, firm practice has become a beauty pageant where a few are groomed to succeed the older generation and the rest are left to their own devices with few usable skills or advantageous professional relationships. Without a credible back story for why they left their firm and/or partner recommendations, these lawyers may have an even harder time establishing themselves as solos.
Unfortunately, the number of lawyers continues to explode and, for numerous reasons, the legal field is contracting. So, I would agree, unless you have an old-school mentor who will stake his reputation on you (over and over) or are have the resources (significant ad dollars and charisma) to develop a personal injury mill to process fender-benders, don't go solo right out of school. For the last decade or more I have been advising friends and acquaintances not to go to law school at all.
I went to law school pre-internet and only wished that I had this knowledge before starting. It is very expensive to operate a solo practice. One big expense that was stated is advertising. The telephone directory is very expensive(a full-page ad locally costs $2,000-$3,000 per month-that's right a month!) and is only good for a year.
DeleteWe all realize you have to spend money to make money but in law one can very easily spend more than what is incoming. To be very honest, I often wonder how many attorneys actually stay afloat in this business.
Well it's the nature of free enterprise. In high school, if you took business, in first chapter of the book there is always a section on "sole-proprietorship" and a statement that around 70-80% sole-proprietorships fail in the first year. Well solo practice is a sole-proprietorship and it is subject to the same business conditions that are currently there. Just like in any business there are things such as "start-up" costs which you need to spend before you even serve your first customer. And then there are ongoing maintenance costs. And if your solo practice does not generate enough revenue to cover your maintenance costs, then your business is unprofitable and you will be losing money. However you are entitled to everything that you earn. And when you are working for someone else, you are generating revenue for someone else (about 4 times as much as what you take home before tax).
DeleteScott Bullock did an epic post on Solo Practice University. Should have been enough to knock sense into prospective solos.
ReplyDeleteWhere is this post?
DeleteScott Bullock shut down his blog a couple of years ago:
Deletehttp://abovethelaw.com/2010/08/scamblogs-get-some-mainstream-media-attention/#more-31145
Don't forget all your income as a solo is subject to self employment tax which means you will forego estimated payments while you pay bills and will end up with a giant tax bill at years end
ReplyDeleteExcellent post. The costs all sound about right to me (though I'm not in solo practice, thank heaven).
ReplyDeleteThis part especially rang true:
Client complains that the $800 bill you sent for working on his divorce last month – the matter that took you about twenty hours when all was said and done, and which was the only paying matter you worked on recently – was far too high, despite most of the additional work being because of lies the client told throughout the representation which made a simple case into something difficult. You agree to discount the bill by half after he threatens to file a complaint. Income from this matter this month: $400, so now you're only $-350 for the month.
Most clients -- especially the kind of clients that solos are most likely to get, if any -- have no clue about the time it takes to come up with solutions to their problems.
One issue that's not addressed in the post, and something I wonder about, is how do new solos learn how to do anything? Without sample documents or experienced practitioners to teach you the ropes, how do you figure out how to do the stuff that clients need from you?
The lack of mentorship is huge. You can't just read a law book and claim you know that area of law (like some moron comment here that all one needs to do is teach oneself a niche like maritime personal injury - wtf?). You need advice and most of all you need firms and sample docs. You don't get given that stuff. You get it from working in a firm and burning the forms files on the server onto a CD before you leave.
Delete"and burning the forms files on the server onto a CD before you leave"
DeleteWhat is a CD?
Is that sorta like a thumb-drive, but you have to burn it instead of just copying to it?
The comment at 8:48 raises an extremely valuable point.
DeleteFor those who haven't ever practiced law, here's how it works:
1 - Attorney gives you something to do.
2 - You find a prior example of said thing.
3 - You change the names and pertinent details and provisions in the existing document.
4 - You're done.
Law is forms. You never, ever draft things from scratch. If it's something nobody has ever seen before, your supervising partner will beg or steal a pertinent form from a friend at another firm.
You never reinvent the wheel. You just repaint the wheel that you've stolen from someone else's vehicle and bill them as if you carved it from a lump of solid steel with a toothbrush.
Ecclesiastes 1:9
What has been will be again, what has been done will be done again; there is nothing new under the sun.
(I had to look that up, but it applies here - there is nothing that you can't find an existing form, contract, or other document to cover if you have the right connections. And if you don't have the right connections, it's malpractice.)
"You never reinvent the wheel. You just repaint the wheel that you've stolen from someone else's vehicle and bill them as if you carved it from a lump of solid steel with a toothbrush."
DeleteI used to do a fair bit of IP transactional work. And while I understand the point you're trying to make, it's usually not quite so simple.
You can find yourself drowning in hundreds of prior similar examples and the art and labor of doing the current deal competently (or hopefully more than competently) is in recognizing what needs must be in your current contract and what does not belong.
You know there is an old joke about firm that was giving customers free advice on how to fix their own computers. Advices were sound but customers could not follow directions properly and broke their computers in such a way that repairing them at a firm cost them much more than if they would have let the specialists handle it in the first place.
DeleteGoogling and copying stuff can only get you so far. That's the whole point of education and spending all those years at college--you should be able to figure out stuff on your own, "carve your own wheel" if necessary. I really hope most of this generation lawyers didn't pay a lot of money, endured excruciating tests just to help people with paperwork that requires at most a day worth of training.
And as far hypothetical scenario of filing customer filing complaint if there is no discount (50% in this case)--let him file it. At least days won't be as boring and you get to keep those $400 that you have earned and customer agreed to pay you (and has paid you).
The problem is, since there is no upward mobility in the long run in law, the only viable option is Solo. And this post essentially tells those with law degrees but no employment prospects to give up any hope of being a lawyer. I have said this before and I will again. You can make it as a solo, but you need to solo smart. That means gaining an expertise that no one else does. Everybody does divorces and criminal defense and general Personal Injury. Not everyone however does Maritime personal injury, or Erisa disputes, etc. So now that you have your law degrees . . your employment prospects are lousy, solo is out the window. JUST WHAT ARE YOU GOING TO DO? What if you just left your mid sized firm and YOU KNOW how to practice law. Do you give up or do you try to make it on your own? I mean, this site is great for warning people away from law school. IT OFFERS NO SOLUTIONS to those who graduated law school or who will graduate in the next year or so.
ReplyDeleteTheir "solution" was to listen to the warnings given three years ago! This is not 2005 where the message was not yet clear. This is 2013 where the scamblogs have been telling this same story for years now, and few people in law school today can claim that they didn't know it was a scam.
DeleteThose currently in law school made their own mess. Their solution is simple - QUIT!
For everyone else, DON'T GO TO LAW SCHOOL!
Easy.
Infinity you forgot to mention that you could practice international space law for animals too because that's a niche with little coverage now. Think of all that munny you'll earn when they start farming on the moon.
DeleteFYI nobody will hire a new solo to go anything, let alone maritime personal injury law.
My own opinion is that a solo needs to bridge the gap between volume areas and niche areas. Maritime law sounds fun and all, but it would be very had to gain any financial traction focusing exclusively on that ... at least for the first few years of practice. There needs to be some "bread and butter" stuff in there to pay the bills.
DeleteGive me a break. People are supposed to listen to a few whiners on the internet about not going to law school? I went in the 80's, and they were talking about how there were way too many lawyers back then. You think this message is anything new? Just more of the same. So people saw the glass as half full instead of half empty. There is a place for optimism in the world. So again, what solutions do you have for those already here? It is petulant and reflecting on a very young mind to just say tough . . . you should have listened years ago.
DeleteERISA is a saturated area. Up or out has killed it. There are many more experienced lawyers with expertise in ERISA, including ERISA claims experience, than there are jobs or demand for services.
DeleteAnyone who is banking on making money doing ERISA disputes is going to be sorry. It is particularly hard to get paid as your client cannot get damages outside of the benefits he or she is entitled to under the plan. If all they can get is their pension or health benefit, how much can they pay you. Furthermore, you do not have a chance of getting a dime paid by the employer outside of going to court.
Maybe some people are experts in class action litigation and can get financing. However, these suits are very hard to win. It is a big risk on the plaintiffs side. A few are successful or settle, but many are dismissed.
Most benefit plans give the plan administrator full discretion to decide benefit claims, and the plan administrator's decision will be overturned only if arbitrary and capricious. That means you do not win defending most ERISA claims that are denied.
A very difficult time winning both individual cases and class cases. Furthermore, you are up against experts with years of experience on the defense side once you get to court. A solo does not have flying chance in heaven against these experts unless he or she knows the law, procedure and every aspect of the case inside and out. There are procedural technicalities that are very complex to learn, and you need to be trained by these experts to know them.
So good luck making a living doing ERISA disputes as a new solo. You are highly likely to go under before you turn a profit. Even an experienced solo is going to have trouble earning a living handling ERISA claims.
I practiced in ERISA class action litigation for 3 years. I can tell you that it is extremely complicated and unless you have the experience ... even if you have the experience, you - as a solo do not have the money to fund these types of cases. It's ridiculous to even think that a solo could fund it. Your only option would be to affiliate with lead counsel and do small slivers of the overall work in the hope that there would be a big payday in 5-10 years. While you do the class action work, you could work on other more mundane cases to pay the bills. That would be the way to approach it, otherwise you are just delusional.
Delete9:00, sure it's petulant. But THERE ARE NO SOLUTIONS! The solution was to heed the fucking warnings!
DeletePlus, it's a SCAM, remember! There is no recourse. There are no do-overs or get-outs. It's a scam.
People who are in law school now with bad grades should QUIT. That is their practical solution.
People who just graduated, well they should have known better to begin with - they could have not attended, they could have quit in 1L, or after 2L, or not even bother wasting money on the bar prep course. And if they are stuck with huge debt and no job, then THEY HAVE TO FIND THEIR OWN SOLUTION.
This site is about saving people from going to law school in the first place, not offering handouts to fuckers who have heard the scam stories for years but still failed to take action. It's too late now!!!
Sometimes, there is no solution other than to say "yeah I was a dumbfuck, but I can still put that behind me and move on."
Plus I think Cooper offered a damn good solution in this post! Don't go solo. Do something else.
It seems you're not looking for a solution. You're looking for a perfect ending to your predicament. There isn't one. It's a scam. No solutions. Just bandaids and temporary fixes, and one solution that is to get the fuck out of law. But you're waiting for someone to say "oh here's a solution I'll get you the dream law job you wanted and everything will be happy."
That solution will not arrive. There are no good solutions, and WE SURE AS FUCK DON'T OWE YOU A SOLUTION!
Sometimes the best a victim can do is warn those who follow, not beg for help. Don't dismiss this site as bullshit just because we can't correct your law school mistake and feed every hungry child and cure cancer and shit like that.
No solutions.
So get with the fucking program and stop advising people to go to law school because there are solutions out there that we just haven't stumbled upon yet. Start spreading the word that law school is a scam. That's the solution.
The temporary band aid is a job for the lucky few. That job is not likely to last though, and then you are back to unemployment.
DeleteIf you can get any decent job outside of law, take it. That means a job that leads to another job, even if the job you are getting is low paying. Law is too saturated to be a reliable source of steady income for most lawyers.
@ 11:01 above:
DeleteI'm afraid you are right. Any solution for victims will just perpetuate the scam. Expanded IBR, loan forgiveness, welfare for unemployed lawyers, anything that lessens the pain of the scam will keep law schools in business. Many schools will tout these social safety nets as proof that law school is not a risk (some already do this with IBR).
It is really sad, but the only way to stop this scam is to let its full force be felt. Once people realize that there are droves of unemployed and ruined law school grads on the streets, law school applications might finally drop below available seats and it might finally be in politicians' interests to stop using other people's money to subsidize massive student loans.
^^^This^^^
DeleteWhen will people learn? I guess not when the information is available (which it is now), but when there is a critical mass of retards who got burned and are now fucking angry!
Erisa entitles you to attorney fees at the discretion of the Federal Judge of course, if you prevail. I practice in a relatively large city with hundreds of lawyers. Those lawyers who take Erisa cases are few and far between, primarily because the ARE complicated. So learn the law. Read the cases. Look on line using Pacer to get copies of pleadings and see how other lawyers are doing it. Learn the rules of evidence. Watch lawyers try cases. The courts are open to the public. When you say this stuff is complicated . . . well yea . . that's why people hire lawyers. But what stops even a young lawyer from a TTTT from learning this stuff if he was smart enough to pass the bar? You can convince yourself why YOU SHOULD NOT GO SOLO, but how about looking at the reasons why you SHOULD GO SOLO. I have a good reason. You have no other choice but to do so. Share space with an older lawyer. Help him with his files for free rent. Do what you need to do. You went to law school to practice law, so learn to practice law. Or sit in your one parents cellar and kick yourself for ruining your life for going to law school.
ReplyDeleteYou can take on the appeal of a benefit claim. You do not need to go to court. Problem is that even if you win, there is no money from which to pay you.
DeleteClient gets his/ her benefits. You have spent at least 10 hours and likely 20 hours because the disputed claims are complicated and the plan documents are complicated. Some involve legal research as well as plan document interpretation, and many involve knowing the law well in the minute area of the claim.
How much do you think you are going to get paid for your 10 to 20 hours or more of work? Client is just getting what he/she was entitled to anyway. Try a $200 to $300 fee at best. At those rates, you do not even cover your expenses, let alone take home any money for your efforts, even if you did really good work.
This applies to lawyers representing individuals in ordinary matters - there is no money there from which to pay you. It is a losing game.
This depends on the State you practice. In Florida, any insurance dispute results in the prevailing party against the insurer automatically getting fees regardless of the amount in dispute. This can result in six figure fees for three figure claims, over something as simple as refusal to properly value a totaled car. Florida also has, essentially, a loser pays the winner attorney fee rule for all civil damage actions, which means even small cases can pay off big when you have an insurance company defendant. There are lots of insurance companies taking advantage of a lot of people. This can be lucrative work, if you can get it of course.
DeleteProblem is that state laws do not apply to ERISA claims.
DeleteMost of these ERISA benefit plans are self-insured or are retirement plans that are not insured at all. If that is the case, you are subject to ERISA rules and none of the state law applies.
Just finding out if the plan is insured or subject to ERISA rules can take you many wasted hours. Employers like plans that are subject to ERISA because plaintiffs' attorneys fees are usually not paid by the employer.
Point is that ERISA is different from car accidents. ERISA preempts state laws. You really need to know what you are doing here or you are going to be spending a lot of time on a matter for which you will not get paid.
Agreed, but Erisa does allow for attorney fees at the discretion of the Court. Oftentimes the Court will award such fees, especially if it is clear the employer was arbitrary and capricious.
DeleteWhat that means is that you take a contingent fee case at your peril.
DeleteAs a solo, you are going to have great difficulty winning against of team of experienced lawyers who do nothing but ERISA litigation, let alone collecting any significant fees.
It is very hard to convince a court that the employer was arbitrary and capricious, and most cases of denied claims do not meet that that standard.
Furthermore, with independent final reviews of medical claim denials by independent third parties mandated for many ERISA plans, it is going to be even harder to win a case involving denied medical claims under an ERISA plan.
You can take these cases, but getting paid is far from a given. They are very risky unless your client pays your fees and you get a substantial retainer.
The arrangement you suggest - free office space in exchange for free work - is likely not lawful. It probably violates the minimum wage laws, tax laws and Social Security laws to name a few.
ReplyDeleteFurthermore, even if the arrangement were lawful, you have the severe supply demand imbalance in the legal profession that is going to mean there is no demand for this type of arrangement. The number of solos who would give out free office space, even a free desk, in exchange for free help with cases is small relative to the number of unemployed lawyers seeking work. Most solos have too little work, not too much. Most solos, if they have office space at all, get the tiniest amount of office space possible - maybe even a desk - or a shared office- and clearly not a office with two desks or even a spare secretarial bay. If you want to work in the library or conference room - if there is a library or conference room- that solo likely has to pay extra for your use of the space.
In short, your suggestions are made of pipe dreams - the same type of pipe dreams that people have when they enroll in law school.
I did the space for work arrangment. These things don't work out long term. Remember the saying, there's no such thing as a free lunch. One day, the owner will say, he/she doesn't have any work for you and now you have to start paying real rent money. Plus, you will be at that person's mercy on everything. Make sure you get your own telephone number if you go this route. It can get really ugly. I know from personal experience.
DeleteOffice sharing arrangements are common (and perfectly legal as long as the attorneys comply with the disclosures to the client about how the work is done) and being a "professional" excludes lawyers from silly things like wage and hour laws (if people actually wanted to change things, somebody should bring a class-action lawsuit against law firms arguing that associates should be classified as hourly workers - associates are often times subjected to sweatshop conditions (with regard to the number of hours worked) . . .).
DeleteThe problem with the "free office space" is that most attorneys will want to get some rent in return, and can often get their overflow work done from the multitude of other lawyers calling and writing to solicit contract work for essentially minimum wage. Besides the extra space will be gone, one way or the other, the next time they renegotiate the lease.
I liked the post but found it ironic that it also provides fodder for the "lawyers can't do math" meme.
ReplyDeleteCheck the totals and spend between the 4:30 and 5:30 time stamps. You go from negative 1720, spend 30, 50, and 100, and add it all up to... ...$2000.
:-)
Here you go Comment Warriors:
ReplyDeletehttp://dealbook.nytimes.com/2013/07/09/the-unseen-costs-of-cutting-law-school-faculty/?emc=tnt&tntemail0=y
I'm not gonna read it; I'm NOT!
Delete(Does it say something about the cost to society of losing all that "scholarship"? That non-peer reviewed drivel that passes as "scholarship", I mean?)
There's a law librarian trying to justify all those useless volumes in the comment section.
DeleteI sure hope that they don't close the Law Library altogether. That would be a huge loss.
DeleteThe Library was the place where I loved to secretly pleasure myself during my 1st and 2nd years of LS. I got a naughty thrill from rubbing my crotch while reading a monograph on 'Law and Forcible Entry: A Marxist Sodomite's Perspective', bringing myself to near climax while other students were buried in Prosser on Torts and Williston on Contracts only mere feet away. I'd leave a nice big load in the Uniform Commercial Code, somewhere around section 2-202. It just feels better doing it on commercial paper.
Closing the law library would effectively end many students' sex lives.
Please stop, Scambloggers. Give law school a break.
@9.02, I never thought how tough law students must have it with the extreme lack of erotic reading material in your average law library.
DeleteBut the author of that piece writes -
"The university may need to subsidize the law school.."
(lol, the law school is supposed to subsidize the university, not the other way around)
"..until, over time, the full-time faculty of about 75 professors shrinks by attrition."
(which is going to take about 40 years because those professors will be hanging onto their jobs for dear life)
For those interested, someone stored a bunch of Scott Bullocks "Small Law / Big Debt" posts in docstore at the link below. I don't know if the above-mentioned "Solo Practice U" post is among them, though.
ReplyDeletehttp://www.docstoc.com/docs/50830877/Big-Debt-Small-Law-blog
Mr. Infinity. He is delusional and in pure denial about his impending doom.
ReplyDeleteThe expenses that you mention are exorbitant.
ReplyDeleteGoogle/Lexis/Marketing: Exorbitant. Word of Mouth is and will always be the foundation of practice development. Get creative on your practice areas. Instead of trying to sell burgers like everyone else, open a ThaiExpress and be the only person in town specializing in that.
$1000.00 Office Rent: High. Someone starting out as a solo doesn't need posh space. You can work from your bungalow. If you have kids and need to get away, reasonable, lower price office space can be had.
Mailing/Printing: Ditch the pricy copier that breaks down every month. Go paperless. It's doable. Harness the same technological changes that have eviscerated the rest of our service economy.
CLE/BarDues/E&O: The E&O and Dues rates you quoted were reasonable. But there is free CLE to be had, plenty of it. $100 per month is exorbitant.
You have valid points. After all, most small business will fail. But what are we supposed to do, just crawl in a hole and fucking die? Or, worse yet, keep clicking refresh in CL Legal Jobs?
Point well and truly missed!
DeleteFirst, you can't open a Thai restaurant because that's not what you went to school for nor do you have a license for it. You went to school for burgers - legal services - so you're stuck with the burger market. Don't invent practice areas or opportunities that don't exist! You're a lawyer! You sell law!
Second, don't nitpick the costs - they are averages and I believe also based on experience. Nobody uses a new lawyer working from his bedroom. Word of mouth doesn't exist for lawyers because they all want you to fail (lawyers and general public both). Advertising isn't free. Someone charges for everything, and sometimes you can't risk malpractice by not buying it.
Don't fuss over $100 here and $100 there and use it to claim that the entire premise of the post is mistaken. You go ahead and open your bedroom solo practice running in Google law searches and your parents word of mouth. See how far you get, Lincoln Lawyer. Because that model has been tried countless times and failed too. You think you're the first person to discover that you can (theoretically) practice law from home?
And you really want that stream of miscreants in your house? It would be sleazier than a Craigslist hooker business. Ever seen a real client? They're assholes.
"word of mouth"
Delete"the only person in town"
Monthly office rent well below $1K/month
We're talking the fabled 'move to Nebraska again.' Rural Nebraska at that.
Sending demand e-mails instead of demand letters intrigues me, as does meeting with clients in my home and having them e-sign or e-tick retainer agreements. Having loads of free CLE possibilities in a small town is intriguing as I've found that most free CLE is an in-person, promotional affair ... not an online freebie. But, yeah, times are changing. I get it.
'Creative practice areas' is amusing. You're sure onto something with uniqueness, but specialization inherently involves a narrowing of your practice ... which is usually feasible and sustainable only in larger cities. Oops, up goes the overhead. And once it's somewhat clear that you're beginning to pay your bills doing your speciality, you'll get far, far more company than you can ever possibly imagine.
What to do? Work fast food or work retail. Dig ditches. Become a welder. Swallow your class pride, embarass your parents, and get a small paycheck rather than hide behind a title. There's your fabled hard-work success story. If you're good, you might move up to assistant shift manager ... then full shift manager. Save your money for the day when you can open a business that's truly unique.
And if you're thinking of enlisting, Don't. If you're in boot camp now or will be entering it late next month, Bolt.
Doing something unique? Like what? Jerking off on your face in front of a court house? Have you done what you are preaching? Have you ever made as little as a basic paper clip, jackass?
DeleteYou know you are dealing with an academic lowlife when you hear statements that have whatsoever nothing to do with real life on the planet called Earth.
Right, because there can only be one person in the entire world, Mr. Infinity, who thinks that many of you whine too much and are far too negative.
ReplyDeleteI suppose everyone's stopped reading this thread, but I agree with the jist of the post. I have known about 10 people who tried to solo straight out of law school and they all quickly sank, myself included.
ReplyDeleteThe one exception was this really hot gal who already had an accounting degree and work experience before going to law school. She basically now does law and taxes in her solo practice and is doing well for herself.
Apart from being very personable, hot and bright (which excludes the vast majority of Toileteers right off the bat), she had pre-existing clients and used the degree to expand what she was already doing. So this whole "Go Solo, newly minted Toileteer" is a complete load of nonsense for all but maybe 1% of the graduating class.
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ReplyDelete