Lawyers hang out their shingle for a variety of reasons:
- Some do it for autonomy.
- Some do it out of necessity.
- Some do it because it sounds like fun.
There are probably as many rationales for opening a practice as there are for having or not having children. No one can really judge what is and isn’t a good reason. It’s a personal thing.
Regardless of the rationale for making the decision, if you want to make smart business decisions, it’s critical that you establish certain limits BEFORE you open the practice.
Here’s what I mean.
Starting a practice requires that you contribute two primary things.
- First, you’ve got to contribute your time (lots of it).
- Second, you’ve got to contribute your money. The money covers your living costs as well as the costs of getting things going.
You need to determine how much time and how much money you’re going to contribute. You need to make those determinations now, before you’re immersed in the day-to-day emotion of the practice, so you’ll have bright-line limits you can adhere to if things don’t go as planned.
Here’s a hypothetical plan limiting time and money:
“My objective is to take home $4,000 per month. To do that, I’ll work at building my own practice for 24 months. I’m willing to spend the $35,000 I have saved (or was given to me by my family) plus the $15,000 I have in available credit. When either the time or the money runs out, if I’m not taking home $4,000 per month, then I’ll walk away.”
You should write yourself a note and put it somewhere safe. This is a promise you’re making to yourself, and you should keep it.
- If the money starts to run out, don’t be tempted to borrow some more, no matter how close it seems you are to achieving your goal.
- If the time runs out, then you should walk away, no matter how close it seems you are to achieving your goal. Your time is worth even more than your money. Don’t keep borrowing time to fulfill an objective that isn’t going to happen.
You’re laying out this plan now, in the calm period before you get started, because you can be rational now. When you’re working hard and struggling, it will be much more difficult to be objective. That’s why you’re developing the plan now. This only works if you’re willing to commit to your plan.
Of course, you need to make this plan jointly with anyone playing a major role in the creation of this new business. Most importantly, you should involve your spouse or significant other. Anyone who will be affected financially and emotionally by the decision should participate in the discussion.
If you’re successful with the practice, then you’re all set, and you can work on improving what you’ve already built. If, however, you’re unable to achieve your goal, what will you do? You’ll do something else, somewhere else. You’ll close your practice and start over. You’ll look for a job in the law or elsewhere. What you won’t do is keep doing something that isn’t working. You’ll cut your losses and you’ll move on.
