Anonymous User wrote:Is there a point where you sacrifice profit to scale? I may be in a slight different position that other potential solos, but my wife will be in biglaw when I make the jump. I will also have significant cash reserves. My goal is to hire staff and eventually a associate. Do you have any opinions on that? How long that would take? Basically, my goal is to own a small firm, not remain solo.
I typed this out and realized it's kind of a rant, so my conclusion is this -- certainly you can have a higher ceiling by scaling your practice, and maybe you can sacrifice profit to work less by hiring support; but early on, you are much better off running a lean and mean, profit first practice before you make any big hires that cost significant overhead.
Personally, I may be guilty of short-termism and being too conservative, but I am staying as a true solo until I pay off my loans. I would then hire one assistant, and then maybe years from now an associate when I'm semi-retired.
I've really surveyed the landscape, and it's just such a mixed bag to make any sort of conclusion regarding profitability. Certainly there is a higher ceiling when you scale, but that carries great risk if you do it too soon.
I know true solos (i.e., no employees, like me) who make $250,000 a year. I know solos with one assistant who make more (this seems to be the dream scenario, although I don't have enough non-legal work to actually delegate right now). I know guys who have built firms that make a killing; but I know a three-partner firm that makes a ton (more than a million in revenues a year), but each partner's profit isn't *that* much higher than mine.
The rule of thumb I was taught was to not hire anyone until you are profiting $8-10,000 a month consistently. This means that, no doubt, you will always be able to pay your staff AND yourself. And the practice of law is too hard not to pay yourself.
I've conducted a little experiment with this by hiring my brother to come in once per week for about four hours. He can obviously do all the manual things (print and mail stuff, copy stuff, scan stuff, drop something off at the post office, etc.). I'm going to teach him how to do billing this month.
But what's really eye-opening is how much he is dependent on me for anything legal or substantive. Granted, he's not a trained paralegal obviously, but even every paralegal I've had needs a close eye. And then you find yourself worried not only about stuff you're doing, but stuff you've delegated.
And this leads to probably my biggest hesitation -- I need to spend probably years building up systems and procedures, as well as a form bank, until anyone can come in and efficiently do this stuff that makes my expense worth it. Just think of your average criminal misdemeanor court appointment:
1) Review notice of hearing
2) Calendar pre-trial hearing
3) Print docket and notate statutes of offenses
4) Send letter to defendant regarding hearing (form)
5) File discovery request, bill of particulars, and maybe other forms (forms)
6) Copy, organize, review discovery materials
7) Schedule meeting with defendant (if they call)
8 ) Attend pre-trial hearing, maybe get plea
9) Send closing letter to Defendant explaining plea (form)
10) Complete fee application
11) Turn in fee application to county court for judge's signature
12) Take fee application to auditor
13) Receive and deposit check (make sure it's deposited into the right account!)
I'm missing stuff, but that is JUST a simple run of the mill criminal misdemeanor that involves no complications. It will probably take me a couple hours to put together the forms for someone else to be able to handle all of that run of the mill stuff.
Now imagine a trade secrets case. There would be a TON. Think about letters and billing and on and on and on -- it's hard to delegate, and building up systems and processes and forms for you to efficiently delegate that is going to take time.
There are pros and cons to it. I will certainly get an assistant here, hopefully within a year or two. I would be happy to advise of my profitability and productivity then.
But it's a very difficult decision, and all this said -- I'm very confident that early on, it is absolutely necessary to run a lean and mean practice and get your feet off the ground before you start with a "firm."