Celebrating 10 years! 2007-2017

Rural - Small firm or Solo?

Hey everyone. I need advice from people who have "been there thelincolnlawyer10/24/17
With regards to the small firm position. If I had heard t jdcumlaude10/24/17
You dont know how to practice law. Let someone else pay you mississippilawyer10/25/17
Have an experienced lawyer review the partnership documents anothernjlawyer10/24/17
He is a new grad - he has very little negotiating power. Eit uknownvalue10/24/17
That is a very dangerous mindset. Especially if he is coming thirdtierlaw10/24/17
You probably won't be doing a lot of bankruptcy/tax debt res jeffm10/24/17
Regarding the Bankruptcy work - Does it change your opinion thelincolnlawyer10/24/17
That's all well and good, but bankruptcy tends to be a volum pauperesq10/24/17
Exactly. The divorce rate is much higher than the bankruptc jeffm10/24/17
Yeah I am going to have to challenge this line of thinking. thelincolnlawyer10/24/17
I apologize - I undershot the population of the area. There thelincolnlawyer10/24/17
1.5 hours is a long drive for bankruptcy clients, or really thirdtierlaw10/24/17
You should plan to work this job for about 1 year and then m uknownvalue10/24/17
I know somebody who does bankruptcy work out of a rural town fettywap10/24/17
Taking the firm's offer will also help you learn the busines fiftyplus10/24/17
Joining an established firm, where you'll be the only attorn thirdtierlaw10/24/17
Opening a solo bankruptcy shop in rural America with relativ themapmaster10/24/17
Even cut and dry consumer bankruptcy can be complex so not a nighthawk10/24/17
The reality is that with no client base, you'd probably do m anothernjlawyer10/24/17
Didn't you already ask this question a few months ago? Or wutwutwut10/24/17
learn on their dime. Remember, you can always leave and go dingbat10/25/17
Are either of the partners older? Is there an opportunity to mrtor10/26/17
So your base salary is 30k in year one, less than 20k in yea onehell10/27/17
thelincolnlawyer, how can I get an offer like you did? Perso kyiv10/27/17

thelincolnlawyer (Oct 24, 2017 - 12:31 pm)

Hey everyone. I need advice from people who have "been there done that."

I am a 3L. I will be moving back to my hometown of about 10k population after graduation. Including the surrounding areas, which most attorney's practice in, there are about 1,500-2000 people per 1 practicing attorney.

I may have the opportunity to join a small firm of 2 other attorneys. This firm is pretty established. Between the two of them, they practice Criminal, Family, Estate planning, Contracts, and other similar areas. If I joined their firm, I would be doing so as a partner and would be practicing Bankruptcy, which neither of them do. Assuming I went this route, this would be the setup:

I would be guaranteed a draw of $2,500 per month, regardless of how much money I generated. Every dollar I make over that amount, I keep 2/3 of and they keep 1/3 of. I would not pay any overhead for the first year, and then after that I would pay an equal share (probably 750-1,000 per month). After 3 years total, I would no longer be guaranteed the draw, would keep everything I earned, and would split overhead evenly.
My other option is that I can go solo right off the bat in my hometown and practice bankruptcy/tax debt resolution. There are very few attorneys in the area that practice this type of law. My wife works as a teacher making 35k per year and we have a side hustle, which would just about cover all of our living expenses. We have 15,000 sitting in an emergency fund, 6,000 set back to throw some money in a new firm bank account, 6,000 for firm "startup" expenses, and money to make the move back home. I estimate that I could get my overhead for the firm at about 1,000 - 1,500 per month tops.

What do you guys think? What would you do? I appreciate any insight whatsoever. Thanks!
Just to clarify: I want to practice bankruptcy and tax debt resolution no matter what. I love the work. I am studying bankruptcy on my own right now (After having taken a class) and am reading through several practice guides and getting mentors in the field. I am working in a low income tax clinic at the law school this semester and next.

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jdcumlaude (Oct 24, 2017 - 12:37 pm)

With regards to the small firm position.

If I had heard this my 1L year-----"that is a poor offer wait it out

If I had heard this my 2l year-----keep looking but hold this one in my back pocket

If I had heard this in my 3L year----cool I have a fallback

4 years out from graduation------TAKE THE DEAL THERE WILL BE NOTHING BETTER

I was never so lucky to be offered such a deal

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mississippilawyer (Oct 25, 2017 - 1:44 pm)

You dont know how to practice law. Let someone else pay you and teach you how to practice at the same time. You will develop awful habits if you go solo without any experience. Take the job.

Your wife has a job to pay the bills. It will take you 3-5 years just to learn basic. You can also start building your client base. I think the firm's deal is a good one. Better than I had, and after my second year (I have been out for 11) I was still making over $100k.

Make sure your agreement includes contingencies so you can get out. I would have a clause about bigger personal injury cases, and you getting a big cut of those fees you originate. You should have an experienced/white haired lawyer look at your agreement.

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anothernjlawyer (Oct 24, 2017 - 12:57 pm)

Have an experienced lawyer review the partnership documents before you sign anything.

My major concern would be how much work the current partners expect you to put in on their active cases. If the majority of your time will be devoted to building your bankruptcy practice, that's great. On the other hand, if you are going to be doing 40 hours a week of scut work on their files for $625 (while responsible for your own taxes, etc.) while "building your practice" on the side, it's a terrible offer.

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uknownvalue (Oct 24, 2017 - 1:09 pm)

He is a new grad - he has very little negotiating power. Either sign the papers and see how it goes or potentially starve as a solo. Don't waste your money on reviewing a document that you can't change. Besides lawyers are not subject to non-competes so who cares; if it turns out rotten, quit and do something else. If this job and solo are your only options, the job is less riskier.

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thirdtierlaw (Oct 24, 2017 - 1:52 pm)

That is a very dangerous mindset. Especially if he is coming in as a partner, he is assuming a whole host of responsibilities that an associate doesn't need to deal with. How does the firm handle taxes? What debts do the firm actually hold? What plan is there in place to dissolve the partnership? It's much easier to say, "just leave" if it's not working out. But if he is still on the hook for 1/3 of the expenses and debts of the firm after a year, that is not a good position to be in while trying to launch a solo shop.

It'll cost him an hour's worth of time with an attorney to review the contract if it ends up saving him a year's worth of 1/3 of the firm's expenses, or even half a month, that was money well spent. As my old law school professor used to always say, "no one enters into a contract in the hopes to end up in a case law textbook."

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jeffm (Oct 24, 2017 - 1:04 pm)

You probably won't be doing a lot of bankruptcy/tax debt resolution in a town of 10,000. Family, criminal, real estate, estate-planning and probate. Those are the staples in a small-town practice. Re: joining the firm, if you do, just be sure that the others are motivated, qualified and diligent. You can as easily be harmed by a bad reputation as helped by a good one.

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thelincolnlawyer (Oct 24, 2017 - 1:14 pm)

Regarding the Bankruptcy work - Does it change your opinion any that...

1) The town is 10k, but the attorney's in the area practice in a surrounding area (within 1 hr drive) of 250k? There are a LOT of small towns and 1 125k pop town in this area all with bankruptcy attorney shortages. My plan would be to try to get bankruptcy work in all of these areas.

2) The state id be practicing in has 10k bankruptcy filings a year, coming out to about 1/300 people filing bankruptcy each year, most of which (70%) are CH13.

Regarding the firm. For sure the best reputation in town. Very motivated attorneys. Do great work.

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pauperesq (Oct 24, 2017 - 3:27 pm)

That's all well and good, but bankruptcy tends to be a volume practice and you're in an area that doesn't have much volume.

There's certainly value in establishing yourself as the go-to lawyer for a particular practice area. I would seek experience in other practice areas though.

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jeffm (Oct 24, 2017 - 3:29 pm)

Exactly. The divorce rate is much higher than the bankruptcy rate.

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thelincolnlawyer (Oct 24, 2017 - 3:53 pm)

Yeah I am going to have to challenge this line of thinking.

I do not doubt there are more divorces filed per year than bankruptcies, however:

There are a TON more divorce attorneys as well.

I have not done the research, but from what I see (at least in my state) I would bet that there are far more family law attorneys per family law issue than there are bankruptcy attorney per bankruptcy issue.

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thelincolnlawyer (Oct 24, 2017 - 3:58 pm)

I apologize - I undershot the population of the area. There are at least 700k people in the area that I am looking at practicing in. Within a 1.5 hour drive of my office location (including the area of trustee offices). There are a maximum of 10 full time consumer bankruptcy attorneys in this area. Only 4 of them have a website/advertise.

Even if it broke down evenly and they all get 70k pop to drain from, at a rate of 1/300 people filing bankruptcy, that is 233 bankruptcies per attorney, at $2,000 per filing (most are 13s), that is 466k in billables per attorney. Obviously the real amount will vary, but I really think the work is out there to be harvested.

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thirdtierlaw (Oct 24, 2017 - 4:10 pm)

1.5 hours is a long drive for bankruptcy clients, or really any clients. I'm not going to challenge the numbers. Obviously, your future partners believe that you are bringing something to the firm. I see one of the advantages of working with the other partners in an established firm is that you can pick up other practice areas by working cases with them, or with their help. I.E. a low-income divorce comes through the door, they can't your partner's full rate, but you'll gladly take them at half price.

You are also in a position where your basic needs are going to be met if you make zero dollars a month. So you can gamble a bit more. I have no idea what the bankruptcy market looks like, I know that since the economy started doing better my state has seen a massive decrease in small bankruptcy firms. Nothing wrong with positioning yourself for the next recession...

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uknownvalue (Oct 24, 2017 - 1:05 pm)

You should plan to work this job for about 1 year and then make this decision at the expiration. This gives you time to have guaranteed income for 1 year while you to learn how to run a practice while building a referral base. Solo will always be there.

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fettywap (Oct 24, 2017 - 1:20 pm)

I know somebody who does bankruptcy work out of a rural town. He gets more work than he can manage because there are no other attorneys doing it in that part of the state.
I would not start out as a solo unless you have no other option.

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fiftyplus (Oct 24, 2017 - 1:23 pm)

Taking the firm's offer will also help you learn the business of law, evaluating cases, billing and managing office staff. They can introduce you to all the judges and opposing counsel. If you work hard, learn as much as you can, and leave after a few years on a positive note, you can have a referral source for life if you handle it right. I think it sounds good and you should use as a new doctor would do a residency.

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thirdtierlaw (Oct 24, 2017 - 1:44 pm)

Joining an established firm, where you'll be the only attorney doing your type of work can be great. My one concern would be year 2. Your guaranteed income, due to expenses, will be automatically slashed by 30-40%. Even in an established firm, it'll take a few years to get your practice launched. But being able to cover your current expenses with your wife's income and side hustle may tilt the scales in favor of the job. Especially compared to being a solo. But make sure to have a 3rd attorney review the partnership agreement.

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themapmaster (Oct 24, 2017 - 2:05 pm)

Opening a solo bankruptcy shop in rural America with relatively little capital investment is not feasible. If you're really set on bankruptcy, you should strongly consider mailing applications to every bankruptcy court in your region and hoping and praying you get a clerkship with bankruptcy court. They're not as hard to get as many other federal clerkships and if you can show a genuine interest, maybe you get lucky. Such a clerkship can catapult you to a firm that represents businesses in bankruptcy court, which is where the money is. Barring that, try getting experience at a bankruptcy mill in a major metropolitan area. Or work for legal aid somewhere in a bankruptcy or tax resolution section of the legal aid. Or a firm that has an active bankruptcy practice. Perhaps look for an old solo who does some bankruptcy who would like to retire. If you join this small firm that doesn't already have a bankruptcy practice, you're not that much better off bankruptcy wise than just starting solo. Especially given the terms of your deal. It's not fair that they would require you to share overhead evenly after just one year. I don't know where the 750-1000 per month overhead estimate comes from, but it seems way low. Our rural practice firm has overhead more like 4000 per attorney per month. If you want to practice in your hometown, conform your interests to the opportunities that exist there, which as JeffM suggests, is far more likely to be estate planning and probate (where the money is in rural America), family law, tax, criminal law, real estate, and perhaps some other specialty areas that a long established firm has managed to grow like a small garden in the desert. Sure, there's bankruptcy work in rural America, but it's going to be mostly chapter 7 garbage and intermittent at that. You may have to choose between your bankruptcy aspirations and your hometown. You'd know within a year of practice whether there is a market for what you're trying to sell.

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nighthawk (Oct 24, 2017 - 2:42 pm)

Even cut and dry consumer bankruptcy can be complex so not a good idea to do on your own right out of school. If you join a firm, you can be the "newbie" who is learning. Plus you will pocket 30k in a rural area, which is not bad. You can leverage the firm's name to establish yourself and later do your own thing. Hustling for clients out of the chute with no prior experience can give you the name as the inept lawyer, which would be very difficult to shake. Provided that these guys are decent and that the deal with them looks good, join them for now.

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anothernjlawyer (Oct 24, 2017 - 3:56 pm)

The reality is that with no client base, you'd probably do much better the first 2-3 years as an associate with a 35K salary. If you develop a clientele, you could always reevaluate your position / partnership opportunities.

Ah, Law, where a Costco level salary is the "better option".

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wutwutwut (Oct 24, 2017 - 6:44 pm)

Didn't you already ask this question a few months ago?

Or is this a different "join a small 2-partner firm as a newgrad newpartner" firm question?

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dingbat (Oct 25, 2017 - 2:51 pm)

learn on their dime. Remember, you can always leave and go solo whenever you want. If six months from now you feel confident and you're bringing in enough business, dump em and move out.

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mrtor (Oct 26, 2017 - 9:53 am)

Are either of the partners older? Is there an opportunity to inherit the firm? Can you generate business outside of bankruptcy, or do you have to pass that to the attorney "assigned" to that practice? I agree that a single specialized practice like bankruptcy in a small rural community is not sustainable.

Honestly, new graduate solos are usually a joke. They're the guys/gals who couldn't get a firm to hire them. You don't want to be one of them unless it's your only option.

There are so many things law school did not teach you. You need to work with experienced attorneys who can show you how to practice law. I also credit some of the concerns about entering the practice as a partner -- there are a host of legal responsibilities and liabilities that accompany that title. You don't want to assume those without knowing anything about the practice. Plus, new graduate "partners" are a joke. Is there any way you can join as an associate with an understanding of partnership in 2-3 years?

If things go south or it turns out to be a bum deal, you can walk as an associate. If one of the other partners commits malpractice while you are at the firm, or runs up firm debt, you could very well be on the hook for it as a fellow "partner."

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onehell (Oct 27, 2017 - 3:41 pm)

So your base salary is 30k in year one, less than 20k in years 2-3, and in years 3 and beyond, it's pure eat-what-you-kill but they don't even take a cut other than overhead?

Normally, a firm would just take all the fees in the aggregate, pay the overhead, and then split whatever's left in accordance with each partner's equity stake. But this isn't that. There is no equity in this partnership. You're essentially just a solo sharing office space but with all the conflict-imputation of a law firm. That can be problematic in a small town.

By all means take it if the only other option is going it completely alone. As others have said, you need to learn (though if they know nothing about your bankruptcy practice area, idk how much they'll actually be able to teach you). But by year 3 it's no better than going solo unless they're sharing a lot of their work with you, overhead is lower than what you could do on your own, AND you're not finding yourself getting conflicted out of too many clients.

As an aside, a lot of lawyers in my town just share office space without actually associating as a firm to avoid the conflicts issue. Because they're just a group of co-located solos, theoretically you could have two lawyers in the same office working opposite sides of the same case. It usually doesn't go that far, as it would be awkward, but they don't want to have to turn away a paying client because of some imputed conflict if they're not going to have equity in a firm anyway. I wonder why they chose to associate as a firm if they're not splitting fees. I also wonder where they're getting the $ to pay your base in year 1 and 2 if they aren't splitting anything other than overhead at the partnership level, and whether this means the other partners have a different deal than you.

In your shoes I'd take it, but I wouldn't plan to still be there by year 3 because by then you might find you'd be better off solo.

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kyiv (Oct 27, 2017 - 7:42 pm)

thelincolnlawyer, how can I get an offer like you did? Personally, if I was in your shoes, I would gladly take the offer. Gladly. I would find a way to get an extra $1.5K/month on the side, and funnel that into Google AdWords and advertisement in local church pamphlets and/or bulletin boards (since the area where you are practicing is dominated by small towns, then I assume that the local churches are major community meeting areas). $1.2K can buy a lot of Google AdWords in an area dominated by small towns. Once you will work out a decent advertising strategy- "decent" meaning a 1:5 advertising ROI minimum- then I will proceed to the following formula: 1/3 to the partners+1/3 to personal living expenses+1/3 to advertising (not including the side hustle- that will proceed solely towards advertising). I would continue the side hustle until I hit a monthly revenue of $15K, and, then I would continue with the 1/3 formula above. Nevertheless, I would be hesitant about being restricted just to BK via the partnership agreement. I would see if that 2/3you-1/3partners arrangement applies to anything else in addition to BK. What if a divorce case comes to me? I do know that you plan to do reduction of tax debt on the side (property tax debt, right?), but, I am not sure how profitable that is without having years-long relationship with the local zoning boards (if you have that, then all the power to you!).

But, seriously, how can I get an offer like yours?

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