Entering solo practice is a scary decision for any attorney who has considered the option. After all, it means putting everything on the line and taking a chance on your ability to create and grow your own business. Of all the things you’ll need to worry about, cash flow will most likely be the most important of your concerns. So it’s not an uncommon question for attorneys to ask: “How much money do I need to go solo?”
The answer is that there is no definitive answer. This is, in part, because the answer to this question will be different for everybody and will depend on your personal circumstances. For example, you need to consider how much can you reasonably expect to make in your first month. Will you have any paying clients on day one? Finding clients isn’t easy. You’ll need to market your practice and network in order to make connections in order to land clients. Sure, social networking provides free tools for networking, but you’ll still find that nothing beats the opportunity to meet potential clients face to face. In part, that means you’ll want to attend networking events from time to time. Networking events cost money.
Even more importantly, you’ll need money to survive on while your finding clients and networking. Do you have significant debt to repay? Loan deferments are often available, but you may need some credit to help cover your operating costs while getting your feet on the ground. As a related question, do you already own necessary office equipment to run a practice? You’ll need equipment such as a reliable computer with word processing software, a fax machine, a scanner, and other basics including paper, pens, manilla folders, etc. You’ll also need to stay on top of all of your professional obligations such as bar licensing, MCLEs, and malpractice insurance (which, depending on your jurisdiction, may range from mandatory to just being a really, really good idea).
Do you have a partner who is contributing income (and insurance benefits) to your household? If not, you’ll at least need to consider insurance costs in your analysis. Either way, you need to consider how much money you’ll need to survive comfortably. Are you (and your family) willing to live on a shoe-string budget while your practice gets settled? By nearly all accounts it can take nearly a year (and probably longer) before you start bringing in significant income.
Do you have any additional sources of income? If you do, it may help. When I started my practice I was able to rely on no less than two other income sources. It made all the difference for me personally. Nonetheless, I haven’t had the time to spend marketing my practice at the levels I’d like to. It should be obvious, but it’s also worth mentioning that other sources of income most likely translate to other demands on your time and attention. In fact, some solo practitioners will tell you that should be able to dedicate your attention solely to your practice. I’d agree that this would be ideal, but that it is also impractical for some would-be solo attorneys. If you need to take contract work, side-jobs, etc. to make your practice succeed, by all means do so. Just be certain that you are still have enough time left over to promote your practice and, even more importantly, to ethically and effectively represent those clients you do score.
If you’re considering going solo and need to know how much money you’ll need to succeed, consider those factors and then evaluate your financial situation to determine whether now is truly the right time for you.
Are you a solo practitioner? If you have tips or additional feedback to give to would-be solo practitioners, please share your thoughts in the comment section. We’d love to hear from you.