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July 30, 2007

"You Ask...I Answer" - I"m a Solo Growing By Leaps and Bounds. Should I Hire an Associate?

There will come a point in your solo career when you will feel the pinch of too much work and not enough hours in the day.  You begin thinking, "I can't service my clients properly, this is impacting my profitability, and I don't want to turn away business."  In my experience this happens anywhere between the three to six year benchmark, the time most solos are comfortable with their flow of business, their reputation has grown, they've networked well and referrals keep coming in. (Yes, Virginia, there is a Santa Claus!)  And this is when the million dollar question gets asked, "Should I hire an associate." 

The following question is a composite of several questions, the answers come from myself, two respected fellow entrepreneurs, Carolyn Elefant of My Shingle and Lisa Solomon of Question of Law . and a 38 year verteran lawyer, Dick Howland who offers his valuable insights.

Question:

I have been a solo practitioner since 2003. This year I have experienced a tremendous surge in referrals as well as an increase in my 'ideal clients.,  As a result I am consistently
inundated with more work than I find myself able to handle while still maintaining the level of excellent service I am known to provide. 

The hallmark of my success turns on quick turn-around times and rapid response to my clients' needs.

I know this is defined as a good problem to have. It appears I may need to obtain the services of another lawyer to assist me. I need someone who can cover routine motion hearings and can do high-caliber legal and research writing.

Should I hire an associate? The conventional wisdom from my peers is 'yes,'
that I would profit off of an associate, I would not be chained to my office and
my overall well-being would improve.

Will  I really be able to afford to pay an associate, can I really count on an associate to increase my firm's profits or will it be a net drain on profits?, what about providing benefits like health care, unemployment, worker's compensation and the like?

First Answer:  Lisa Solomon, Esq.

"There are many lawyers who work as independent contractors.  There are many benefits to this kind of relationship.

One benefit is cost. Hiring an associate requires a significant investment in both time and money. When you outsource to a contract lawyer, you pay only for the time it takes to complete the project, but when you hire an employee, you immediately add to your fixed expenses. Searching for and training a new associate (particularly a junior-level associate) is time-consuming. Your practice may be busy enough to benefit from project-based outsourcing, but not busy enough to support another employee. 

Hiring an associate has other downsides that can be avoided by retaining one or more contract lawyers. An employee adds to your administrative burdens, especially if you are a sole practitioner. Your malpractice rates will rise, and you will be subject to all the financial and legal responsibilities that accompany "employer" status. Retaining an independent contractor is much less complicated, both initially and on an ongoing basis.

In fact, outsourcing to other lawyers can help your firm's bottom line. With one exception, all of the bar associations that have addressed the issue - including, most notably, the ABA - have determined that an attorney may charge the client a premium or reasonable measure of profit in excess of the contract lawyer's cost to the attorney, as long as the total charges to the client are reasonable. (The sole exception is the Maryland Bar Association, which did not give any reason or cite any rule in support of its position). Regardless of whether or not you choose to charge your client more than you pay for the services of a contract lawyer, outsourcing is still cost-effective for your client, since even a rate that includes a reasonable profit to you will generally be lower than your own hourly rate.

You could hire a local lawyer to handle routine motion hearings, and a legal research and writing specialist to handle those tasks (the research and writing specialist can be located anywhere in the country). Many lawyers on this list do contract work.

I'll be speaking on this subject, on a panel moderated by Carolyn Elefant, at the ABA 2nd Annual Solo & Small Firm Conference, on October 6 held in Philadelphia."

Lisa
Lisa Solomon, Esq.
Concentrating exclusively in legal research and writing, including appeals
Located in New York | Serving attorneys in all jurisdictions
Read Lisa's Article, "Taking an Appeal," at www.QuestionOfLaw.net
e-mail: Lisa@QuestionOfLaw.net | phone: 914-674-8573 | fax: 815-346-3468

Second Answer:  Carolyn Elefant, Esq.

As Lisa has already commented, you can find highly qualified 
attorneys to use on an independent contract basis.  In addition to 
all of the benefits that Lisa listed, you can also use independent 
contractors to assess your need for a full time employee.  If you 
hire an IC lawyer and it turns out that you're still understaffed and 
scrambling, at the time, you could ramp up.

If you are looking for someone local, one tremendous source of talent that you can tap are female attorneys who've left the practice of law and want to return.   
At a contract panel that I hosted here in DC, I met at least 20 
female attorneys who'd left jobs at BigLaw to stay home with kids and 
now that their kids were older, were looking to find some part time 
work or a way back into the law.  These women are incredibly smart, 
will have the kind of experience with complex issues that you need 
and are very motivated.  So you might try that as a potential source 
of steady work - perhaps two attorneys on a part time basis.

Third Answer:  Dick Howland, Esq.

Over some 38 years in practice I hired over a dozen associates, all of whom
(save two) I was very fortunate.  This is reminder that colleagues are more than mere employees.  They have their own careers and aspirations.

You need to do your home work if you accept an associate much more, a partner.
An associate should never be viewed as a revenue source for about three
years.  The cost of supplying, teaching, coaching, correcting, reviewing,
the individual takes considerable time.  I have always felt that hiring a
young lawyer needed special handling.

Today's young men and women hunger for praise and recognition as much as
income.  Many will not think they are paid what they are worth if below Wall
Street salaries and benefits.  Many will not know much, if anything, about
practicing law day by day without frequent recourse to Constitutional
issues.  If law school is their only legal experience they need more
attention and guidance. 

One other point, numerous restaurants in my area have enjoyed lines out the
door, back up and superb reviews.  They doubled their dining area and
offerings.  Most closed within a year or two.  Having too much business is a
pleasure indeed and rewarding.  If I were doing it again, I would prefer to
do my job for my clients and new clients I could not assist reasonably for
any form of space/time problems, I would refer.  When you add another lawyer
in any fashion it is your practice and what the new lawyer does is your
reputation one way or the other. 

As in your practice, only you can judge which make sense in your practice and life.  Don't forget the quality of life component -- schedule it.

Fourth Answer: Susan Cartier Liebel, Esq.

You are in an interesting place in your growth.  The most important
question was eluded to in a previous reply.  "Do you want to grow beyond
your current position of one attorney/one paralegal?"  This isn't a trick
question.  You are apparently very good at what you do and whether your
business is growing through word of mouth or a strong marketing effort or
both you have to figure out what you want to be 'when you grow up? :^)
Is all this new business 'equal' in terms of revenue and personal reward?
Are these all your 'ideal' clients, the ones you have actively sought
out?  If you sifted through the business you are getting does it match
your overall short and long term goals for your professional (and
personal) life?
If the answer is no, you need to establish a referral relationships (if allowed in your jurisdiction) with other comparable attorneys and keep the cream.  If you
have not achieved your financial or personal goals for your practice and
envisioned more attorneys working in your firm with you to elevate you to
where you want to be both professionally and personally, then you need to
consider all the discussion previously about expansion...slowly with
contracted work to determine the needs you really have and limiting your overhead
costs PLUS learning your capability to supervise contract lawyers.
If you then decide to go the associate route are you ready to supervise and
mentor/massage new associates and willing to financially support these
individuals with the hope of creating an environment they want to continue
in so you get some longevity from your investment?
These are all critical decisions and you've gotten some great input
from those who responded before me.
But you have to decide first, how big (or small) you want to be, why, and
if you are truly capable of handling growing your legal practice beyond 'solo'and all this entails.
If you have suffered growing pains or can offer advice on this common predicament, please contribute to the discussion.

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Comments

Keith Vick

Everyone,

As a reader, I thank you for the advice. I strongly desire to establish my own firm as soon as I gradutate from law school. I follow various solo blogs.

I suppose there is one question I have and it is this: the use of technology to put off hiring someone. Because of my engineering background (ten years) I am used to using techology to drive productivity improvements.

This experience coupled with the recent ABA article entitled "Million Dollar Solos" or the like makes me raise my question.

Does everyone see use of technology as allowing one to put off hiring associates for awhile?

It seems that quantifiable metrics (such as grammar, punctuation, style, dates, various other checks, etc.) could be controlled with software. Thus, the potential downside of an associate could be mitigated. That is, the associate would get feedback from the computer rather than from the partner who talked to a displeased client.

I work at a small firm and am coding programs to do the above for the very reasons outlined on this page. I hope to be able to hire someone ten years from now, put them in front of a computer and have them learn and produce without having to worry too much about basic issues.

Any thoughts?

PS. I am not soliciting this kind of work from anyone, the programs would just be for my firm. They would really only work for someone who was familar with what the code is doing.

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