Starting a Law Firm | Working for Friends and Family

A funny thing happens to all attorneys once they actually become attorneys, whether they choose to start a law firm or not - friends and family begin to ask you all sorts of legal questions from all sorts of different areas of law. You've got your buddy that got a traffic ticket, you've got a cousin that needs you to look at her lease. The list goes on and on - and I'm not saying this is bad by the way, just a fact - remember, I have family too :).

The question of the day is, what do you do with these questions?

I received a comment on this blog today from someone that wants to start a law firm. She had several concerns, which many people typically have, and then she left this at the end:

4. I do alot of legal work for my family and friends right now because I am out of work. I don't get paid because I don't feel comfortable charging people I know when I am unemployed and don't have a practice. Please give me some suggestions on how I should market and gain clients?

It was something I just couldn't pass up talking about.

I guess the easiest way to do this is to answer the question, and then explain why. Here you go -

the only free work I do for anyone is family. And even then, I strongly consider charging for it. And I don't typically give discounts to friends.

I know, I know, I'm cold hearted, I hate my friends, and I'm just trying to make some money off my friends. In fact, the opposite is true, and here's why.

1. Free work has little perceived value.

I get the idea of wanting something to do and jumping on the legal issues your friends and family members have. And I'm okay with that. It makes you feel like a lawyer, like you are doing something good, and it helps out a close friend or family member.

But here's the problem, when you do work for free, it's impossible for your friends and family to understand the level of value you are providing them. When you charge, they get it. And most importantly, they get it enough that when their friends have problems, they will remember that you are a lawyer (and that you do great work but you aren't cheap). You might not believe this is true, but trust me, it is.

2. Free work doesn't count as work when you are starting a law firm.

If you want to be busy, go down to the courthouse, tell people you'll work for free, and start signing people up. But if you want to make some money while helping people (which is sort of the point of starting a business), you've got to be making money for the work that you do. If you aren't, then you're doing yourself a disservice because you're working for well under your value and you are taking yourself away from other things that you should be doing (i.e. marketing to get paying clients).

I see this all the time in criminal defense. People are running around working their butts off for people that are probably never going to pay them. Until they look at their bank balances they feel like their business is really taking off. Bottom line, if you aren't getting paid, you don't have a successful law firm.

3. Family and friends can be a crutch that can hurt you in the long run.

This blends points one and two together, in a way. What I mean is, if your friends and family keep bringing you work and you keep doing it, for little or no pay, then not only does it make it hard to market to outside sources, it gives you a reason not to step out there and take some marketing chances. And you can't fail if you don't try, right? So you'll just keep languishing, wondering when business is going to pick up, when in fact you are doing it to yourself by leaning on your friends and family to make you feel like you're busy.

I know, I know, it's uncomfortable asking for money from friends and family for work that requires your expertise, knowledge, and will provide them with tremendous value. But if they aren't happy to pay after you've talked to them about what you can do for them, it's your fault not theirs. You haven't done a good enough job of letting them know why they should be more than happy to pay you for the work you are about to do for them. Here are a couple of starters.

First, they are going to get a level of service they won't find anywhere else. For example, you have a dentist? Ever try to get a hold of the dentist personally? Not easy to do. For your friends and family, they have your cell phone number at the ready. They have a level of access to their attorney, someone that is going to be helping them with a problem, that they wouldn't otherwise have.

Second, they have a level of trust with you that they won't have with any other attorney. Ask people what the number one concern is with hiring an attorney and it's whether or not the attorney is going to perform as advertised. With you, they know what they are getting, and as long as you don't make outrageous promises, they are going to rest easy knowing you are giving it everything you have.

Third, and finally, they are showing their support for you by investing their money in your services. What better sign of "this attorney is good and can be trusted" than when family and friends are paying you to help them?

Now, to back track just a bit. Here's the part where I say you don't have to charge everyone full price all the time. That just doesn't make any sense. But, if you're going to give a discount (you should only do something for free as a last resort - do it for free and if anything goes wrong your client is going to think you weren't giving your full effort because you weren't getting paid), make sure you spell out to the client what you would normally charge (printing it on the bill is a good way to do that). That way they will know what your services are worth.

In the end, starting a law firm is as much about running a business as it is being a lawyer. So you've got to start thinking about your law firm as a business, as something that helps you accomplish the goals you have in life. Bottom line, if your business isn't making money, it's not working for you the way it should be.

Starting a Law Firm | The Most Important Lesson

Today I had lunch with a guy who was thinking about starting a law firm. He hadn't even started law school yet, but he was sure that he wanted to do his own thing when he got done. So I sat down with him over lunch and we talked about what it takes to start a successful law firm. And it was interesting where the discussion went, leading me to a bit of a light bulb moment that made me run to the computer and start writing this post. Are you ready?

To have a successful law firm you must have a keen business mentality.

By the way, I didn't intentionally write that huge revelation to be so murky and hard to understand, it just came out that way. And I'm too lazy to change it. So I'll just explain what I mean.

When I began talking about this guy one of the first questions he asked me was "what is the most important thing to know when starting a law firm?" I immediately told him to always remember that getting clients is the ultimate goal (now before you get to snarky let me explain). That if you are the best attorney in the world but have no clients you'll be a failure.

He said "okay" and then we started talking about what kind of firm he wanted to open. And in that instant I knew he hadn't really understood what I was saying. We talked it out and I think he got it, but the bottom line is this - a law firm is a business. If you aren't thinking like a businessman at all times when making decisions you are going to at best tread water and at worst lose ground to your competition.

And here's where most people mess up when they are starting a law firm. They fantasize about what it's going to be like to be a big time lawyer making a bunch of money doing the work that they love, like it's going to be all roses and stuff like that. Here's the truth of the matter - you've got to hustle your ass off to have a successful law firm. You've got to spend a large amount of every waking day doing things to make your business better.

I was driving in the car from court today and I was thinking about the lunch I had and I was trying to figure out how to say this in a way that everyone can understand. And this is the best that I could come up with: don't create your law firm because you want to practice law, create your law firm because you want to have a successful business. If I want to be just a great lawyer I can go do that anywhere. I opened my law firm because I want to do two things - I want to create a business in the mold I envision, and I want to make a boat load of money. Practicing law and the firm, while a part of each other, are not the same thing.

And don't take that to mean I don't treat my clients well. It's actually the opposite. I provide the best service in the state in all likelihood. I answer my own phones, I attend all my court hearings, and I have systems in place to make sure my clients and my former clients know how much I appreciate them. But in the end it's all part of a larger plan to create a successful business. Let me put it to you this way, you think Nordstroms takes back anything as a return because they like you? It's great for you, but it's also great for them.

Now, back to the talk. After a little while I learned this guy had already owned and operated a successful business in the past, and that he was trying to find something to do in his industry that he could start a business in. The reason he chose law was because he thought (as we all do before we become lawyers) that once you get that license people just line up to give you money. He liked what he did at his last job but the funding fell through and he was let go (it was a government position). And here's what thinking like a business person gets you.

I asked him what I thought was the best next question - "they still need that work right? Do they farm it out to private contractors?" He said the work still needed to be done, and that the few people they still had on staff could not keep up with the work. So, (and I know you all already know what the next question is) I asked him the next obvious question - "why aren't you that guy they are contracting with?" He couldn't answer that question, but I hope he explores that idea.

Here's the god's honest truth for all of you. I love being a lawyer. I love getting up in court and arguing. But I like business better. A lot better. And just like I told my new friend, I'm going to tell you. My plan's not to just start this firm, be successful, and rest on my laurels. In a couple of years my law firm will run like a well oiled machine. And then I'll start another business, build it up, and then start another. I don't know about you, but my goal isn't to work 10 hours a day for the rest of my life, it's to golf every day and spend the rest of my time managing my businesses.

I've got a couple of other things I'd like to talk about, but I think we're going to explore some of this a little bit more in upcoming posts. You can't just start a law firm and expect people to show up. It just doesn't work like that. So I'm going to pose a couple of questions to you and let you start to mull them over. Once you answer them, assuming you still want to start a law firm, you'll have a thousand times higher chance of success.

See you soon.