7 Essential Questions Every Lawyer Should Ask Before Starting a Law Firm

00:00 Jack Zinda Foreign Jack Zinda here. Welcome to another episode of the Effective Lawyer podcast. Today, I want to talk to you about seven questions you should ask yourself before starting your own law practice. We've all been there. You're frustrated, maybe your boss is difficult. You're not making enough money. You're bored. You want to work on something different, new, unique. And you think, hey, I know what the idea is. I should start my own practice. For some people, it is the best decision you could ever make. I started my firm in 2008 after being an attorney for about 18 months, and it felt right from day one. Other people I know have made that move and it has been a massive mistake, both for themselves, professionally and financially. 00:47 Jack Zinda So I want to give you some tools in your toolbox on questions you can ask before making that difficult choice. Okay, are you ready? Let's go through these seven questions you've got to ask yourself before starting your own law practice. Number one, do you know the why? Why do you want to start your own practice? What is the purpose behind it? Have you thought about what are the reasons why you want to do that? Is it because you want to make more money? Is it because you want to work on different types of cases? Do you want autonomy? Do you want to travel more? Do you want a lifestyle business? Do you think you're working too much? Do you think you're not getting paid enough? Do you think you want to run a company, run a business? Why? 01:29 Jack Zinda And I would sit down with a notepad and just be honest with yourself and think through what are the reasons I'm really wanting to make this move. If it's, say, just because you don't like your boss, maybe it makes sense to look at another law firm or try to move around in your own firm. You're at. If it is to simply more, have more freedom, really ask yourself, do I want to work as hard as it takes to start my own practice? Now, if you're a solo practitioner or you have a really unique practice where you have a high hourly rate and you don't have to be at the office much, that could work perfectly. But for a lot of people, they underestimate the reason how hard it's going to be to actually start the practice. 02:04 Jack Zinda And unless you figure out the why, you won't know the how in the when in the what. Some reasons you might say you want to do it. One, I want financial freedom. Two, I want autonomy. Three, I want to pick on. Pick the cases I work on and I want to work them a certain way. Some bad reasons might because you're having a bad day, you're having a bad week, you're stressed out, you're working too much. Those are reasons why it may be situational, and you want to take a little bit of a break before you make a big decision. I always tell people, you know, give yourself a little bit of time. If you're trying to make it in a rash, you're upset something bad happened. Hold off a minute before actually making the move out of the firm. 02:45 Jack Zinda I knew when I did, it was the right move for me. My dad had owned a restaurant growing up, so I knew what it take took to run a small business, and. And I was ready to make the plunge. And I thought about it for months before actually deciding to make the move. And I would advise you to do that, too. Number two, do you have a clear financial Runway? Okay. How long is it gonna take you to get your firm off the ground? Now? Be realistic and then add 50%. Okay. I always tell people to plan on having six months of expenses, both personal and professional, before you make the leap out. And that may require some really drastic cuts to your personal life. 03:23 Jack Zinda I know when I first got out, it was very difficult at first, the first three, four, five, six months to hit the type of money I was making when I was working at a firm. You know, once I got the flywheel moving, I was able to make much more money. But you have to be realistic in the beginning and don't underestimate. You know, it's the time to have savings or a line of credit or, you know, reduce your expenses significantly. And if you're considering reducing your expenses, do it a couple months before you leave so you can see, can I actually handle it. If you have a small family with your wife and kids, make sure they're on board for the decision you're making, especially your spouse or your husband. Do they. Are they on board for the financial sacrifice it's going to take? 04:01 Jack Zinda You don't want to surprise them. You know, you're telling your husband, hey, I'm going to go start my practice. And then all of a sudden they're like, well, I wanted to go on vacation this year. What about the kids camps? You've got to be on the same page with your partner if you're married or in a committed relationship, because you don't want to be on the different pages because they can create a lot of stress. And financial distress is one of the main causes of divorce, suicide, all sorts of problems. If you're Financially distressed. So make sure you have plenty of financial Runway. And if you're not good at finances, find someone who is, who can help you walk through that and help you figure out how much Runway you actually need. Number three, do you know how to generate business? 04:38 Jack Zinda This is another one. I see people not understand getting clients is the most important thing you do in a practice or one of them. Obviously you have to do great work and be good at financials, but getting business is in the top three. And if you don't get business, no matter how good of a lawyer you are, you're not going to have any work to do and you're not going to make any money. You're not going to support your family, you're not going to help any people in the community, not going to help your clients, or there's clients that don't exist. So map out. What's the approach that you're going to take to getting business? Are you going to get it via referrals only? Are you going to get it via AdWords, via billboards TV? What's your method? 05:17 Jack Zinda And do you have a proven approach or are you taking someone's proven approach to figure it out? Then once you get the business, do you know how to intake it? Do you have a process or an approach where you can vet, you know, what types of cases you want, you know, what cases you don't want? Now, you don't have to have all of that figured out in the beginning, but you need to have an idea of where you're going to get the business and once it comes in, how you're going to decide whether to keep it or not. You. And believe it or not, most lawyers, especially personal injury lawyers, go out of business because they take too many cases on. They try to help everyone. 05:47 Jack Zinda They haven't figured out what their sweet spot is, and they end up being able to help no one. You know, one year we looked at our law firm, this is about five or six years ago, and we saw 28% of our cases made up 4% of our revenue, which is crazy. That means were spending a quarter of our time, over a quarter of our time on 3% of our cases or 3% of the cases that drove revenue for us, which was not a great idea. So you want to try to figure that out on the front end. And also how long are the cases going to take to resolve so you can figure out how much you can pay per case to acquire them? That's a really important number to know. 06:21 Jack Zinda So that's the next question you have to ask yourself, where am I going to get the clients from? And once I get them, what kind of clients do I want and how many I vet them, and what's my intake system and what's my approach to that? Okay, number four, this is another one I see people not really think about. Do I want to be a CEO and a lawyer? Do I just want to be a lawyer? Do I just want to be a CEO? I personally love the practice of law, and I also love running my company. And that felt right for me. Some people hate the idea of running a business. I see some attorneys kind of wear as a badge of honor, like, I'm not a businessman, I'm a lawyer. 06:57 Jack Zinda Well, that's great if you work for someone or you have a partner who takes care of all those things. But if you're going to start your own practice, you have to be a sound business person. You have to be a sound businesswoman. You have to know what you're doing. You have to know how to approach financials, P and L budget, things like that. And you have to be prepared to put in the work to be a good CEO. If you're just going to be a solo practitioner and just have yourself in a paralegal, that's one thing. But if you actually want to have a business that can survive while you're on vacation, survive. 07:24 Jack Zinda You know, if you decide you don't want to work as hard someday, or maybe even potentially sell your law firm, you're going to have to understand what it takes to run a successful business. There's great books for that one's the Lean Law Firm. Lean Law Firm is a really great one to read. Scaling up by Vern Harness is another good one. There's a book called Fireproof by Mike Morse. It's a good one. And there's a lot of good books that can teach you how to be a CEO of a law firm. But you have to make sure you're ready to both do it and commit the time to doing that part of the business. People underestimate how much time that takes. So really, you're adding an additional job to your plate. Back to question one. What's the why? Because it's going to be hard. 08:00 Jack Zinda Okay? There's no way around it. Starting your law firm is always difficult. It can be the most rewarding thing in the world, but it is not easy to do. Otherwise, everybody would do it and everyone be successful, I should say. I guess it's easy to do. It's hard to do it and be successful and get out of it what you want. Number five, can you handle risk and uncertainty? This goes to the mental component. Are you prepared to not know where your paycheck comes from? That is something a lot of people underestimate. How freaking scary that is. You don't know if you're going to get a paycheck, you're responsible for it, and then on top of it, you're accountable for your team's payroll and paychecks. 08:42 Jack Zinda And most business owners, if things are struggling, they cut their own pay first before they have to lay people off or don't pay someone else. And that can make it really difficult time, both financially. Back to the other rule we talked about, Financial Runway, that can help with that. But you want to have someone you can talk to about it. Ask them what it's been like for them to go through it, what sort of stressors did they have? And think about other times when you've had a lot of uncertainty and stress and how did you handle it? You know, maybe we're waiting for your bar results. Maybe we're waiting to see what law school you got into or where you were going to be a lawyer. 09:12 Jack Zinda If you didn't handle that stress well, it may be a situation where it's going to be very difficult to handle the stress and uncertainty of being an attorney. When I started out, for example, I was doing a contingency fee practice. So you know when a case hits and how often is very difficult to determine. When you have a limited number of cases. As you get more, the odds are if you're doing a good job and working them efficiently, you can relatively predict how many roughly will settle on a monthly quarterly basis. But until you get to that point, it can be very difficult to be sure about it. And it can create major cash flow issues which create stress, uncertainty, distress with the family, distress at home. So make sure you know yourself and whether you can handle that type of pressure. Okay. 09:51 Jack Zinda Number six, do you have systems or just hustle? Like working hard, working your tail up will only get you so far. You've got to have good systems processes, and you have to be good about creating them, executing them, ensure your team is actually doing them. That's how you scale up. If everyone has their own system on approach, it becomes very disorganized. Also, it's really prone to errors. I think Beth does the counting, actually, Steve does it. Or this team handles a motion for summary judgment this way. This team hands it another way. This team likes to work on this software program, this team works on that software program. All of a sudden it's a huge mess. You someone commits malpractice by even knowing it. Because I think someone else is handling the ball in the air. 10:31 Jack Zinda And before you know it, you're out of business, out of luck, and you let some clients down. So systems, systems. A lot of people hate that idea. When it comes to practice of law, you can still be creative. In fact, I think systems help you be creative in your practice. It gives you the freedom to work on the stuff you want, like an opening statement. How are you going to approach a client? What's your trial strategy? So you're not thinking about, hey, how am I going to calendar this case? How do we vet expert witnesses? You know, it's going to be done the right way and done your way. So there's a really great book called the Checklist Manifesto that is great about teaching the importance of systems and how to set them up. 11:06 Jack Zinda And I would encourage you to read that when you're going to start your practice to get how do I set up systems that are going to help me and help my firm? Okay, number seven, who's in your corner? This is a hugely important question. Okay, who's on your team in this process? You want to have a team of advisors and people you trust, people that can be your support. For example, my wife has been incredible throughout. When I started my practice, she always supported me. I started in 2008, about a month after we bought our house and the market crashed and our house value went down a third and we had no money. And she was on board for that roller coaster ride from day one. Also, my parents and then other lawyers I knew who were older were great mentors of support. 11:49 Jack Zinda I had people that were great CEOs that helped advise me. I read a ton of books and I kind of had an imaginary board of advisors of people that I would think, what would they do? How would they handle this? TTLA was a great resource for me. But have a group of people that are in your corner ahead of time that you can go to for advice, that have been there before, that have done this so you're not on your own. It can be so lonely starting your own company, especially if you don't have a partner. And that brings up to another point. You know, it can be great to have a partner in the situation, but make sure you negotiate your exit with each other on the front end. A lot of people don't do that. 12:22 Jack Zinda And then it creates, you know, hurt Feelings and it kind of be hard, like, well, what do you mean? I need to negotiate the exit. We just started this. That sounds. That's such a downer. Well, do it now while you're friends and you can agree, hey, what would if things didn't work out? You know, maybe someone wants to move. Maybe someone decides they want to do something different. How would we divide things up and have a plan of that ahead time? And it can be very difficult to unwind things if you haven't thought about it after the fact, especially if you're 50. Okay. So I hope these questions were helpful. You know, just to recap the 7 things you want to think about before you start your practice. Number one, why do I want to start my own law firm? 12:59 Jack Zinda That's probably the most important. Make sure you're being honest with yourself. A lot of people think they want to be a CEO. They run and run a business, but they really don't. They don't want to put in that work. They don't want to. They don't like doing those types of things. And then it's really tough to go back to the firm you're at or close down shop and you have a lot of debt or expenses you didn't anticipate. Number two, do you have a financial Runway? Do you have the Money, Resources IDevised? Six months of expenses laid out ahead of time? Number three, do you know how to generate business and where's it going to come from? And then how will you vet those cases? Adwords, billboards, referrals, clients? What's it going to be? 13:31 Jack Zinda How are you going to get the business in the door? Number four, are you ready to be a CEO, not just a lawyer? Are you ready to put in the extra work that's necessary to do both? Are you ready to hone the skills of being a CEO, just like practicing law? If not, is your business partner ready to do that? Are you going to hire someone outside to do that? Number five, can you handle uncertainty of risk? Are you ready for the scariness that goes along with starting on your practice? And number six, who's in your corner? Is your wife, your partner, your husband, your friend, your brother, your parents? Do you have a therapist? Do you have a coach? Do you have other lawyers that you can trust? You have other advisors that run businesses? 14:05 Jack Zinda Who's on your team of advisors you can go to when you're in those tough times? And believe me, the first year is always hard, even the first 18 months. It was a while before I felt man I've got this down. We're in good shape. I don't have to be stressed out all the time. And so you have to be ready for that. And you have to have a great group around you, surrounding you. And don't be afraid to ask for help. You know, you can always call someone like myself or, you know, I know I'm always honored when people ask me for advice. So don't be afraid to reach out to an attorney that's been there. It's going to save you so much time and headache and heartache. 14:37 Jack Zinda You know, I probably ran over every landmine I could have the first three or four years of my practice. And, man, if someone had told me, there's landmine here, avoid it, I would have been so much better off. And maybe my ego got in the way a little bit. Maybe I didn't know who to ask. But don't make that mistake. Reach out to people that can help you, and you will have a great success. I hope this wasn't discouraging for anyone, but I wanted to show both the positives and the negatives and how to break down that decision because it can be tough and it's only just for you. If you have a family, your family's involved and there's a lot of other things that go into it. Well, I hope you make the right call. 15:10 Jack Zinda If you want to talk about further, please feel free to reach out. Until next time, thanks.