Is Now The Perfect Time To Start Your Solo Practice?
History tells us when economic times are their shakiest, it is the perfect climate to start a new business. (No, I'm not insane :-) The following is information collected from disparate sources:
Did you know that 16 of the 30 companies which make up the Dow Jones Industrial Average were started during a recession or depression? These little companies include Disney, McDonalds, Proctor and Gamble, Alcoa, General Electric and Johnson & Johnson.
Fast forward to 1973-75 when the U.S. was captained by an unpopular president, embroiled in the infamous Watergate scandal AND at the hind end of the Vietnam War, a highly controversial and expensive war which polarized the country. Within two years gasoline prices had increased by more than 50%. Credit was very tight. And, you guessed it, consumer confidence was at historic lows. (Does this sound painfully familiar?)
And in these terrible times a few entrepreneurs you may know figured 'what the heck.' Those tumultuous early 1970's saw the beginnings of Famous Amos Cookies, Supercuts, Chili's, Cablevision, Oakley and the start of a fairly well-know company (their products you might be using as you read this) called, that's right, Microsoft. (wonder where Bill Gates is expanding to right now?)
Other notable businesses launched during recessionary times: Costco, Applebees, J. Crew, Whole Foods and Intuit.
You're asking yourself, 'how is this possible?' Don't most businesses fail? With times so tough starting a new business seems the height of insanity. Not really. It is during these times that entrepreneurs (and very smart business people) realize they have nothing to lose and everything to gain. The world is crashing down around them anyway. The very things which might have prevented those from starting a business before are no longer present - the opportunity cost is low.
Yes, it's a little concept called 'opportunity costs.' When times are good and you already have a safe job and many law firms are hiring, turning down a paying job with a paycheck means giving up the 'opportunity' of a good job and there is a quantifiable cost associated with turning down that job such as salary, health insurance, paid vacation and sick time, matching 401k. You are giving up this known and quantifiable opportunity offered by another for the unknown adventure called solo practice, something for which you are totally responsible.
Now, a few select lawyers will always have these 'job' opportunities and if the jobs offered align with their professional goals they should grab it. However, what if there are no good jobs being offered to you? What if you are just finishing law school, passed the bar and no one is hiring? You can stay home and watch reruns of 'The Practice' and 'Damages' or you can open your own solo practice. There is little opportunity cost to do the latter as the alternative is sulking, fretting and eating lots of junk food or competing for a minimum wage position only to be told you are over educated for the cashier's position.
When bad times hit, the world as we know it changes. Economies experience severe upheaval and disruption. The earth moves as it deconstructs and rapid change becomes the norm. For most, paralysis sets in. But those who shake off the paralysis, those who see opportunities where others only see misery, are the entrepreneurs. They search the rubble of 'what was' and look for opportunities to create 'what will be.'
What's happening in our legal world (and the rest of the world, too):
•Competitors weaken. We are all reading about Big Law layoffs, partners jumping ship, small firms who became complacent and forgot the business components of running a law firm...well, they are freaking out. Many of those lawyers you viewed as competition with tremendous overhead, fancy offices, excess staff are facing challenging times. Maybe they are deciding its time to close up shop or downsize and outsource work.
•Clients are seeking alternative and cheaper ways of getting legal work done. When the status quo is acceptable, clients are more likely than not to stay with their current lawyers even if there are more innovative and creative and better lawyers out there. Complacency and disinterest in shopping around go hand in hand with good times. When money tightens, clients start shopping around. Whether for cheaper legal services or more value for the dollars they spend, they still are shopping. This lends validity to the statement, "in difficult times market, market, market." There is a palpable shift in the flow of business and those with a great message pushed into the public arena WILL get new business. It is not a time to tighten your belt on marketing. Clients still have needs. You better be promoting your solutions.
•Big Law cuts back. They make the huge mistake of reducing their marketing budget and even services especially to their smaller or less valuable clients. These smaller clients may be a perfect fit for you.
•Client Disloyalty Can Benefit You. As your competition reduces services and clients look for more creative and cost-effective ways to save their scarce resources and get their legal service needs met, it means they are less likely to remain loyal to even their long term legal service providers if there is a better alternative which improves their own bottom line. You need to recognize this and be their innovative, cost-effective solution.
That means opportunities for you when you open your solo practice. Specifically, what you can do:
•Be the other white meat. Target those clients who are using more expensive, traditional legal service providers and show them there is an alternative to what they currently know. Show them in lean times fixed fees are superior to billable hours.
•Market aggressively. As the ties that bind clients to their lawyers unravel, your competitors' clients are more willing to try a new legal services provider. However, they won't find you unless they are receiving your message loud and clear. And if you are not shouting it out, I guarantee you some other lawyer(s) will be.
•Innovate. Be the low cost and/or high value solution to your competition's clients and they will be receptive to listening to your message.
•Present yourself as an 'outsource' to Big Law. Big Law is laying off left and right. You can be the less expensive alternative to the associate who is being axed because you can be used 'as needed' without the carrying costs of a traditional employee. And the sooner you start leading the pack, the harder it will be for others to catch up.
Very few clients will make a change unless they are forced to. The economic times we are in will rock many a client's world. Be entrepreneurial, innovative, aggressively seek out business while still maintaining your ethics. When the dust settles, those who realized this was a time of great opportunity will be profitable. Now is not the time to fade away and lick your wounds. Now is the time to gather yourself up by your professional bootstraps and say, "It's time to take charge."
(And in case you didn't see, check out our recent faculty announcements at Solo Practice University.
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