Paul L. Caron
Dean


Wednesday, July 10, 2019

Advice For Young Lawyers: Choose Your Path, Soon

Daily Report op-ed:  Advice for Young Lawyers: Choose Your Path, Soon, by Doug Chalmers (Managing Partner, Chalmers & Adams, Atlanta):

Having practiced law now for nearly a quarter of a century, I frequently get questions from younger lawyers on how to develop a law practice. Here are a few of the more important lessons I’ve learned over the years.

Lesson 1: Choose a Specialty and Become the Go-To Lawyer in That Area. ... Successful lawyers often pick practice areas in which prospective clients satisfy three criteria: They have money, they have significant legal issues, and they will pay you well for your expertise. ...

Lesson 2: Until You Have Your Own Clients, You Are Always at Risk. ... That lesson was brought home to me years ago when I watched closely the divergent career paths of two excellent lawyers. The two lawyers had much in common. They graduated from similar law schools at about the same time. They spent their careers in private practice at big law firms. They also worked roughly the same number of hours each year. But they spent their time very differently.

The first lawyer was a service partner, one who did the work for other lawyers’ clients. He went to the office early and worked late. He knew the law cold and did a great job. He was a nice guy, one whose door was always open. But his career was spent in his office, sitting at his desk, with his head down, researching, writing or sending emails. He didn’t spend time developing his own client base. He did his work well and then went home at the end of the day.

The second lawyer was a rainmaker, the best I’ve ever seen. He was only rarely in the office. He was always out in the field, working to develop personal and professional relationships with prospective and existing clients. ... He didn’t rely heavily on email and was instead always on the phone or in an in-person meeting.

Unsurprisingly, the different uses of roughly the same amount of time by these two lawyers led to very different compensation. The rainmaker was earning literally five times the amount paid to the service partner. Five times the amount, for roughly the same number of hours. It is important to work hard, but it is more important to work smart.

The difference in the value that these two lawyers provided to their firm also became apparent when the service partner started to press management to make him an equity partner. He accurately and fairly pointed out that he had paid his dues and met his hourly requirements and that he had been a loyal and hardworking member of the team for years. He told them that if they couldn’t make him an equity partner, he would regretfully need to leave the firm. The firm’s response was to tell him that he had been a great partner and good friend, and they wished him the very best at his next job.

Lesson 3: Understand Law Firm Economics and Develop a Path to Equity Partner. ...

Lesson 4: Choose Your Own Life and Work Balance, and Only Work at a Law Firm That Matches Your Goals and Priorities. ... I spent the first 12 years of my career working hard in Big Law, and I eventually became a non equity partner at a large law firm. Eventually I realized, however, that I was unable to strike a work and life balance there that made sense for me. In a number of those years, I spent the Friday morning after Thanksgiving calculating where I was in relation to my billable hour requirement for the year and trying to figure out how many hours per day I needed to work between then and Dec. 31 to keep my job. The stress of attempting to meet those hourly requirements, while spending roughly 2.5 hours every day fighting Atlanta traffic to get to and from the office, was placing strain on both my marriage and my health. I wasn’t able to be the kind of father my kids needed, and I wasn’t actively involved in their lives. ...

In 2010, I formed my own firm, a boutique that focuses on litigation and political law. ... All of our lawyers are equity partners, meaning that they are members of the firm with the opportunity to earn leverage. There are no billable hour requirements—each lawyer works as hard as he or she prefers. Our compensation structure is objective and transparent, one in which we use fixed percentages of revenue to reward the categories of contributions that lawyers make to the firm: originating business, serving our clients and managing the firm. ... Any lawyer who brings in a client keeps a fixed percentage of the revenue from that work, regardless of who does the work. As such, all lawyers have the opportunity to earn passive income. We try to keep our overhead and costs to a minimum, which maximizes the amount that our attorneys keep.

While it is not for everyone, this model has worked much better for me. Because lawyers in this model keep roughly 80-85% of the revenue they generate, it is possible to earn a nice living on fewer hours.

In my first year out of Big Law, I earned 80% of my prior draw working 20% of the billable hours—my own personal 80/20 rule. My marriage improved, and I got involved in my kids’ lives. ...

Our model is not for everyone. I know many outstanding lawyers who have done very well in large law firms while simultaneously living very happy family lives. For younger lawyers, the point here is not that you should choose our model; it is just that you must think these issues through and make a deliberate, conscious decision about how you want to live and work. Do not let years slip by while you are keeping your head down and doing your work without thinking these issues through. Find a balance that works for you and your family and then choose a law firm and model that works best for you, given those priorities. Good luck!

https://taxprof.typepad.com/taxprof_blog/2019/07/advice-for-young-lawyers-choose-your-path-soon.html

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Comments

"In my first year out of Big Law, I earned 80% of my prior draw working 20% of the billable hours—my own personal 80/20 rule. My marriage improved, and I got involved in my kids’ lives. ..."

Am I understanding this correctly? Let's say he worked (billed) 84 hours a week at big law, which would be 12 hours a day 7 days a week. When he left big law he worked about 17 hours a week? I'd take a 20% pay cut to work 20% of the hours I am now.

Posted by: Nick | Jul 10, 2019 5:30:19 AM

What lawyers and CPAs do may be complicated. But practice is simple. Money comes in, and money goes out. No money in, no money out.

Posted by: Dale W. Spradling PhD, CPA | Jul 10, 2019 5:47:05 AM

"Having practiced law now for nearly a quarter of a century, I frequently get questions from younger lawyers on how to develop a law practice."

It's like that axiom about racecar driving: the best way to make a small fortune in it... is to start out with a large fortune.

Posted by: Unemployed Northeastern | Jul 10, 2019 8:53:37 PM

Unsurprisingly, the different uses of roughly the same amount of time by these two lawyers led to very different compensation. The rainmaker was earning literally five times the amount paid to the service partner. Five times the amount, for roughly the same number of hours. It is important to work hard, but it is more important to work smart.

IOW, the money's in sales. I think that's an indicator that the field is decadent.

Posted by: Art Deco | Jul 11, 2019 6:20:47 AM

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