Lawyers - Why You Should Start Your Own Practice in 2022

February 7, 2022

Tips for lawyers

As we mentioned in this article, it used to be that working for the AM 100 was every young lawyer’s dream. However, as millennials start to become the driving force in the workplace and remote working becomes more practicable than ever, we notice a trend of young lawyers starting their own practice. Here are a few key advantages. 

1. You could make more money 

One could argue that one of the biggest advantages of working for big law is the high salary, as explained here. Many are blown away that an 8th-year associate makes an astonishing $500k per year if you count the bonus. However, if you actually do the math, the economics of working for big law all of a sudden becomes not so rosy. Apparently, big law partners make a lot more, more than $1M a year! How? You may ask. Well, the answer should be straightforward for anyone who understands how capitalism works: they make the money because they charge the clients more than they pay their associates, i.e., you. As we all know, many of these law firms charge their clients $1000+ per hour. Let’s be conservative and say that they charge $800. Typically a big law associate bills at least 2,000 hours per year. That makes $1.6M per year! Taking out the overhead, expenses, etc., the partners still take a large percentage of the value the associates produce! 

Let’s imagine that the same associate leaves the firm and starts her or his own practice. Let’s assume that this solo practitioner charges half of what they charge at big law, i.e., $400 per hour. That times the same $2,000 billable hours per year makes $800k. When you go solo, and if you have enough clients, your operating expenses are minimal, but let’s be conservative and assume that you spend $100k per year on expenses— that would still make $700k—a 40% premium over what you get paid at big law. 

2. You will have a much better lifestyle 

Big law is notorious for a heavy workload and cutthroat culture. Associates are at the mercy of the senior associates and partners and are on call 24/7. Not only that, but they also have to endure the “up or out” culture and compete to prove themselves worthy of staying another year, or in rare cases, make partners. According to the ABA Journal, the top law firm partner percentage is about 15%. Considering every year they hire a large number of new associates, the chances of an associate becoming a partner at such firms is very slim. The vast majority end up leaving to go in-house, go to a smaller firm, or start their legal practice. 

If you start your own law firm, you get to dictate how much work you want to take on and how you want to handle it. Even though emergencies and last-minute issues can’t be avoided, for the most part, you get to plan ahead and avoid late nights and weekend work unless that’s what you prefer. Also, because you no longer have to compete with others to make partners, your mindset will be more relaxed and less stressed. 

3. Instead of being bossed around, you get to be your own boss, or maybe even the boss of others 

We all know that big law has a quite grilling hierarchy where young associates are treated with not so much respect. The few lucky ones can find mentors or “sponsors,” while the vast majority are left in the jungle to compete brutally with others to make partners. Instead of being subject to others’ whim and capriciousness, imagine you can do your own work on your own terms. Instead of being the labor behind the busy work, imagine you get to get your clients and be treated and rewarded on your own. If you manage to grow your business big enough, someday, you may be able to hire your own associates. Hopefully, you’ve learned a thing or two in big law to not treat your associates like slaves. Build a good culture, mentor them, train them and treat them with respect and kindness. 

4. Acquire other skills 

The training of a law firm associate is very monotonous. You learn to draft, review documents, and maybe call the clients to discuss a few matters. Most associates never learn much about the business side of things, not to mention technology (unless you are a patent attorney), marketing, finance, and other important aspects of running a business. If you start your own business, you get to do it all. In the beginning, it may seem daunting, but it’s also fun to learn how to launch your own website and Youtube channel, do your own accounting (with the help of an accountant), set up your own technology, and ultimately, bring your own business by “rainmaking.” You will become a more well-rounded and hopefully more adventurous person, and grow as a professional in that process.

Lawyers - Why You Should Start Your Own Practice in 2022