When starting out in their career, many young lawyers consider owning and running their own firm someday. But with rumors about a shrinking legal market, concerns about credit and business capital in the air, some wonder if that will ever be a real possibility.
“Don’t let anyone discourage you,” says Michael Burg, preferred shareholder of Burg Simpson. “We still need great lawyers.”
Burg, while now heading a multi-state firm with over 70 attorneys and 100 staff, started his own firm in the months following law school. He often gives talks and speaks with new lawyers about opening their own firm and is often willing to share insights with young attorneys.
No matter the time, if it’s today or back when he started his firm in the 1970s, Burg said that opening a firm is a big task. It’s important to have integrity and credit and be business-minded.
“You really have to recognize that if you’re going to build a firm, you have to crawl before you walk, and walk before you run,” Burg said, noting that patience is a necessity. In his own practice, Burg said he faced many lean years.
When thinking about starting their own firm, Burg said an attorney must do what they know how to do and avoid trying to do everything. He advises new lawyers to keep practicing in the areas they’re passionate about and take the time to develop their expertise in those areas. In his own firm, he said there are specialists in construction defect and mass tort, which are not areas you can’t “dabble” into.
To start your own firm, Burg said that there are two basic rules that must be followed.
First, is the rule of business — you must have more money coming in than going out, Burg said. While that seems very simple as a concept, it isn’t just because of the costs associated with doing business. A person needs the capital to prepay or pay filing fees, depositions and experts.
When looking at banks to work with, Burg said there are several things to keep in mind. Banks want complete transparency and disclosure, and for you to be both a lawyer and a business owner with integrity.
Speaking with banks about how your practice is done, for example how a personal injury lawyer may do contingency work, helps banks understand why money may be required before a case is settled, he said. Finding a bank that takes the time to understand your business and practice is critical for young attorneys who want to start their own firms.
One of the main things attorneys striking out on their own needs is to have a line of credit, Burg said. As he started his firm, it took Burg a while to find a bank willing to supply him a line of credit — but the bank required him to put up all his assets, home and car, to obtain it. He said he pledged everything for a $20,000 line of credit.
Finding a bank that works with you is important, according to Burg. In the past, Burg said his firm had an issue of embezzlement. Once false financials were discovered, he immediately went to the bank and explained the situation. Needing to borrow more money, the bank was willing to work with Burg through this situation because they knew the firm to be a good client and trusted Burg would pay back the money borrowed.
And when looking at work to take on, the second rule comes into play — choose work and clients factoring in your end goal of getting paid and completing the work. Bug said there are basically three ways for small/solos to do their work and get paid, no matter the practice area. They can do the work and get paid, not do the work and not get paid or they can do the work and not get paid. He added that it’s always best, in those situations, to not do the work and not get paid.
Another major aspect of running your own firm is to learn from mentors, Burg said. Be that from watching experienced lawyers on cases or reaching out to attorneys to pick their brain on important cases or questions, don’t be afraid to look for help.
Working as a solo, he found he had a lot of people he could reach out to for advice — even people from the other side of his litigation cases, Burg said. If any lawyer called him up and asked for help, he said he would try to help them, but noted they had to reach out and make that connection first. “And I’m not the only one,” he said.
Burg said all young attorneys should know that no one can stop them from accomplishing what they want to accomplish. Only an individual person can decide whether they can or can’t do something — great lawyers in every practice area are still needed.