Speaker 1: In this video, I'd like to tell you guys a little bit about how I started my own law practice 14 years ago and some tips on what you can do if you find yourself in a situation where you either need to or want to start your own law practice. I started my own law practice pretty much out of necessity because the finances at my previous firm weren't good and paychecks were bouncing. I also couldn't find another job that was any better than the one that I was previously in. So it kind of goes to show you how bad the legal job market is, that after having about six years of experience, I still couldn't find anything around where I lived in the Triangle area in North Carolina. So I did interview with a mid-sized law firm, but ultimately I didn't get the job. And the hiring partner told me that at the point that he was interviewing, he had already received over 120 different applications. It's a really tough job market out there. I was already six years out of law school and I had worked for several small law firms doing civil litigation. So by then I felt fairly confident that I could handle cases on my own. And I had already had a lot of client contact and done a lot of things in court or administrative proceedings. So I felt pretty good about jumping in and trying to do things myself. Even before I took that plunge, I started contacting those solo practitioners that I was sort of friends with through different bar associations, people that I had already met and felt sort of friendly with. And I would treat them to lunch or just reach out to them and ask them for their advice. Like, how did you do it? How did you get your clients? How are things like? What are some tips that you can share with me? And by and large, everybody I reached out to was really friendly and they were happy to share with me their advice. So I'm going to share those tips with you here. So even before you decide to take the plunge, you should come up with a plan and a budget. Finances is number one. That's also the number one reason why a lot of people's solo or small law firm practices fail, is because they don't have enough money. They don't pay enough attention to the finances, the bottom line. You got to know exactly what are your fixed expenses every month. And are you going to be able to generate enough income to cover that, plus have enough money for you to live and pay for your own personal expenses? One of the attorneys I spoke with before I started my own practice said that he didn't even start making a profit until two years after he started his own solo law career. Although when he started his own law career, it was because he had graduated from law school and couldn't really find a job. So he moved to North Carolina, not really knowing hardly anybody. And that was very brave of him to do. But he still has a very successful law practice to this day. Do you really need to have two years worth of living expenses saved up before you start your own law practice? I would say, well, there's always going to be an outlier. But the more money you have saved up when you start your own law practice, the safer you're going to be and the better off you will be. So if you can save up two years worth of living expenses, and that also includes all of your business overhead expenses, then you'll probably be a lot more secure than people who had less money saved up or didn't do any financial planning to begin with. So you need to first start out by making a list about your own personal budget. If you're living by yourself, for example, then clearly you have your own rent to pay for, your utilities, cell phone bills, maybe you have student loans to pay. If you have any monthly payments on anything else, like if you have a car loan, for example, anything that you have to pay that is set or something that regularly is incurred every month, you need to write that expense down. You know, how much roughly do you pay every month for your gas costs? Or for your water bill, for example. Or if you have pets, how much do your pets cost you? How much do you need to spend for health insurance, which is another huge expense if you're self-employed and if you don't have a spouse that can offer you health insurance. Also, when you're putting together your monthly budget and your projected monthly expenses, put in an extra cushion of, say, $500 to $1,000 a month, because there's always going to be unexpected expenses that crop up. For example, let's say you get sick and you have to go to urgent care. Then you incur a bill for several hundred dollars for medical costs. Or something happens to your vehicle and then you have to spend another $300 to $500 repairing your car or getting new tires. Something's always going to happen. And there's always going to be some extraneous expenses that you might have, like having to go to a relative's wedding, for example. Or perhaps you want to go to the beach. You need to have a little bit of vacation time. So put in some extra money every month, because most likely you are going to have unexpected expenses. Once you've made a list of all of your expected personal expenditures for each month, then it's time to figure out how much is it going to cost you every month for office overhead, all these expenses related to your hypothetical law practice. Number one, do not hire anybody. You're just starting out. You don't even know how much money you're going to be able to make every month, much less how much profit you're going to be able to make for yourself. And if you can't even figure out how much you're going to make, if that's going to be a profit or a loss, then why would you take on the risk of also having to pay another employee? Another reason why you shouldn't hire any employees when you first start your solo law practice is because it's going to bring on so many more headaches that you can't afford to bring on, in addition to trying to grow your own practice and network and do the work for your clients. Sometimes having an employee is almost like having a child, because you have to watch over them and make sure they're doing their work. How do I know that? Because I've seen it. I saw the way that some of the legal assistants behaved at the firms where I used to work. Whenever the partners were gone, they would be slacking off, just gossiping, chit-chatting, going out to get stuff to eat. Somebody was even planning her own wedding and shopping on eBay, just chilling out. And meanwhile, the partners of the law firm are the ones that have to pay for that person to just goof off and have fun at their expense. Hey, look, the landlord still hasn't taken my name off of this sign here. It's been over 11 years since I was here. When you're looking for office space, I don't think it's a great idea to get office space that's too close to your home, because you don't want to be running into your clients when you go grocery shopping or you're shopping at Target, for example. But at the same time, you don't want to be too far away from your home, because then it's going to be a real drag whenever you have to keep driving back and forth to your office. This is the second office space that I had where I shared office space with a couple of other attorneys and financial professionals. And just like with my first office, we all shared some common waiting room space as well as a conference room and a kitchen area. And we also had a receptionist. So it made the whole place seem really professional. You don't want to be all by yourself in an office just by yourself for safety reasons. And plus, I think it looks a lot better to potential clients when they come in and see a lot of other people working around you. This is the office complex in Cary where I almost bought an office suite. And I'm really glad I dodged that bullet because the more I thought about it and started adding up all the expenses of owning my own office space, the more I realized it didn't make any sense. Because my rent, when I was renting from other people and renting space with other attorneys, which was a really good situation, the rent was only from anywhere from about $315 a month to $500 a month. So if you end up trying to buy your own office space, then you're also stuck in the situation where, you know, you're in the same location. So it's really hard to sell these office suites, at least where I am. There's always something on the market. And as you can see, these buildings, which were probably built, I would say, around 1990s or maybe in the late 1980s, they're already looking kind of worn out. When I walked inside to look at the office space, I did notice a bunch of dead roaches on the floor, so that was a real turn off. I also would have had to pay monthly maintenance dues, sort of like HOA dues, and also property taxes and utilities for the whole place by myself. So just looking at the numbers, it didn't make any sense to buy this office condo. And it turns out that this area is actually not that great. It's sort of a higher crime area. So I think it's a gamble to buy office space. So definitely don't do that, especially when you're just starting your own practice. So what about virtual office space? So virtual office space is another way that people can save money by not actually having a real office, but perhaps you just basically have an address that you can use to put on your website or your emails and business cards and pretend that you have a real office. So it might just be a place where you can get mail. There are some companies such as Regus where you can pay a monthly fee and you have access potentially to use their conference rooms to meet with your clients. So I did a long time ago look into those options, but it actually turned out not to be such a great deal because they nickel and dimed you for everything. Some places charge you by the hour whenever you have to use the conference room, or you get a limited number of hours each month, or week to use the conference room. And there are typically going to be a lot more other random businesses that you are sharing the office suite with. So you won't even know the people that are using the same office address and those types of people are pretty much unlikely to help you out, for example. So another reason that I don't really like the virtual office idea is that people want to know that you actually have a physical presence or a physical presence. It just looks really just unprofessional to not have a real office space. And from a practical perspective, if you don't have real office space and you're just running in to use the conference room at one of those office suites type places, then it becomes really hard when you need to print something or you need to look up something. How are you logistically going to handle having a client meeting when you might need to stop the meeting? And go get something, for example. There was a time just recently, maybe about a year and a half ago, when I did have something that was sort of like a virtual office setup out of necessity because I was in between office space and I just couldn't find anything that was going to be suitable in the right area. And my lease was up with the previous place. So that turned out to be almost a disaster because there were just so many people all sharing that same office space. And I would end up oftentimes lugging my printer with me in case I needed to print out legal representation agreements or documents for the clients. It was really hard to predict in advance what documents I needed to bring to these meetings where I would just run and use the conference room and then my hour was up. So I really don't like that idea at all unless you're so desperate that you just have no other options. Another thing that you may want to do is schedule an appointment with a CPA to make sure you have all your ducks in a row and make sure you know all the record keeping requirements that you need so that you don't run afoul of the IRS rules. I've always been a sole proprietorship and the reason I didn't incorporate is because basically, even if you create a corporation, if the corporation really is just you, you have no business partners or anything, it's just basically you running the show and trying to hide behind a corporate name. Well, then in that case, they can still, quote, pierce the corporate veil if anyone wanted to sue you and still get at you personally. So incorporating doesn't necessarily mean that you get to shield all of your own personal financial assets if there is any judgment against you. One of my favorite things to do and one of the things I did early on when I was starting my business was to go to the Barnes & Noble and look in the business books section. So I managed to find a really good book that was all about starting your own business in North Carolina. So that's how I learned about how to register a business entity name and the requirements for the tax filings. And of course, when you start your own business, you want to get your own website and your own stationery. Print it up. So those are additional things where you could end up spending a lot of money or just a little money. I know there are companies like GoDaddy that will help you create a decent looking website for low cost, for example. So you could look into that or you can ask around and find someone to help you custom design the website. In terms of supplies, though, that's something that you can really scrimp on, especially at the beginning. I mean, you could just go to big lots or Staples, buy a big stack of fancy paper and then just print out your own stationery to really cut down on costs. On the other hand, you could get nice custom printed stationery from the same place like Staples or even look for some places online like Vistaprint. You can order some small quantities of stationery that way. But it's not really a necessity. I've seen some very established lawyers still printing out their own envelopes and stationery just obviously from their own laser printers. Lastly, let me tell you about my special supplier, eBay. eBay is like the greatest place to get cheap business cards printed up for less than $10. And it's also a great place to get generic printer toner cartridges and any sort of supplies that you might need for your printer. Be sure when you buy a printer to buy the kind that lets you use generic toner cartridges because over the lifespan of that printer, it could cost you thousands of dollars buying tons of brand name printer cartridges. But instead, for example, I use a Brother multifunction copier slash scanner and the generic toner cartridges cost less than $20 to $25 a piece, especially if I buy them in bulk on eBay. So hopefully these tips will help you in terms of budgeting and saving money when you start your own law practice. There are so many other considerations and I'm going to cover them in a future episode. Most importantly, how do you get those clients? I mean, there's no use starting up a law practice when then you end up just sitting around twiddling your thumbs waiting for the phone to ring, for example. So we'll cover that in a future episode. Thanks so much for watching this episode. Hope you press the like button, send me any comments, and subscribe.