My columns in this forum have argued that that law schools do little to prepare graduates for dealing with "The Business of Law®" (finance, practice management, client relations) that determines practice success. This puts the onus on new lawyers to do the preparation themselves, whether they are starting practice on their own or joining a major firm. These are two entirely different challenges, and different preparation is needed for success in each.
Solo or small firm lawyers need all the traits of an entrepreneur: motivation, acceptance of risk, resiliency, commitment, persistence. But you also need (and often lack) adequate capital. It's easiest to start a new solo practice for those legal specialties where capital requirements are less, where it's easier to reach prospective clients who have immediate and personal needs and are less concerned about the team behind you. Practice areas that meet these parameters include personal injury, family law, bankruptcy, immigration, personal real estate and the like.
Don't assume you'll immediately make money from such clients. Even if you do work for them immediately, it takes up to 120 days on average between when a law firm sends out an invoice and when it is paid. Even if you get paid "in advance," those monies usually must go into the clients' trust account and drawn down only as and when earned. For that reason alone, having a financial reserve helps ease the angst of starting your practice. The ideal number would be a minimum of six months of living and professional expenses, and preferably a year.
Managing money is your number one consideration for success. Practice needs should always be met first, and personal needs should be the minimum expense necessary to maintain a standard of living. The one essential is to emphasize collections. When you bill clients, you are extending them credit. Lax collections mean you need more cash to stay in business while waiting for clients to pay. The new lawyer who stays on top of receivables will have the cash to survive.
The economics of joining large firms have changed dramatically. Many such firms have cut starting associate pay, reflecting the economic reality that it takes them from three to five years to break even on the investment in a new lawyer straight out of law school. It is thus essential for new lawyers in a firm setting to determine and demonstrate their worth to the firm. The calculation requires knowing how many hours the firm has billed out for you, versus an individual or average associate markdown for some of the work. Subtract from that the direct expenses (compensation, clerical help, technology, office space) and indirect expenses (the percentage of insurance, utilities, marketing and education that each associate accounts for) you cost the firm. The result shows your individual net profit value to the firm: Billings - [Associate's Total Compensation + Direct and Indirect Expenses] = Net Profit. Showing a positive balance in this kind of calculus is essential to a successful law firm career.
You can have a dramatic impact on this bottom line by bringing a sense of ownership to business development efforts, rather than just taking work that partners assign you. Build relationships with potential clients by getting into the public eye through attending lunch or bar association functions, doing "blawging" (either individually or on behalf of the firm), contributing to client news updates, and writing articles in trade or legal publications is another key strategy. Keep the visibility purpose foremost and don't get lost in the message. Be sure to include all your contact information (especially email and phone), and make certain that you have reprint rights for the material. At review time you can make a convincing argument about what you have done to promote yourself and the firm. If you make the effort, eventually there are members of your audience who will become your clients.
In any setting, small firm or large, developing your career requires planning to set overall goals and specific strategies. The issue is not more billable hours, it's what kind of billable work and what that work contributes to the firm. The firm must be able to measure your growth by specific standards of billable time, training and client development effort, measured against near-term targets that are realistic. By taking an empowered approach to such a process, you won't just have a legal career - you'll create one.
For more insight on this topic see "How Associates Fit in the Profit Mix," at http://www.lawbiz.com/pa_1.html, and "Launching a New Solo Practice," at http://www.lawbiz.com/article_new_solo_practice.html. Also, participate in discussions on this topic at LawBiz Forum discussion group (www.lawbizforum.com