Wisconsin Lawyer: Before You Leap Into Solo Practice, Understand Your Motivations :

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    Before You Leap Into Solo Practice, Understand Your Motivations 

    The decision to leave an established practice group is both exhilarating and expensive.

    Charles I. Phillips

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    Wisconsin LawyerWisconsin Lawyer
    Vol. 82, No. 6, June 2009

    The decision to leave an established practice group is both exhilarating and expensive. Before deciding to leave a firm, whether you are an associate or a shareholder, consider the reasons why you are contemplating this action.

    • Is it because you cannot influence the direction of the law firm?
    • Is it an issue of compensation?
    • Are there personality conflicts with other partners?
    • Are your long-term expectations and goals inconsistent with those of the law firm?
    • Is it an issue of your ego?
    • Is there an ethics issue or trust issue?

    Once you’ve identified your reasons for leaving the firm, evaluate your reasons within the context of your past and future investment of your time, energy, and commitment to your current partnership. Schedule a meeting with your partners to discuss your interests, and the reasons you are unhappy with the current arrangement, to determine if your interests can be achieved within the context of the existing law firm structure. Although it is easy to leave and thereby avoid conflict, it is more satisfactory to resolve the conflict, achieve your interests, and remain with those with whom you have developed a successful business.

    What should you expect if you leave and start your own firm? Consider the economic and emotional costs.

    Economic considerations include the following:

    1) You will need to pay for moving, purchasing equipment and furniture, and establishing accounting, word processing, and other economic systems. These are capital expenditures, which you will need to finance or pay from savings. Change can create an emotional toll on you and your family that is incalculable, but for everything else there’s Mastercard.

    2) Prepare a pro forma budget for all your operating costs including rent, utilities, salaries, worker’s compensation and liability insurance, disability insurance, information resources, accounting fees and services, other consulting services like computer and human resources support, development and marketing costs, and debt amortization. Subtract these expenses from your gross annual revenue at your current law firm. Compare the net profit to your previous income and profit distribution to determine the economic viability of establishing a new law firm.

    3) Set reasonable and achievable goals. Where do you want to be in five, 10, and 15 years from the day you open your doors? Are you going to go solo? When are you going to hire an associate? Are you going to share office space or form a new partnership? What will be the additional costs and how long will it take to recover them? One can have high goals and expectations, but if they are not achievable then they are only dreams.

    Often the drive to leave and set out on one’s own is not economic. One cannot underestimate the emotional component of the decision process. Absent a fundamental divergence in direction, goals, and ethics, the ability to meet your interests within the context of your existing partnership may be far more beneficial to you in the long term.

    This is the process I employed 35 years ago when I decided to leave my position as an assistant district attorney and open my own law office. I do not regret my decision, but I did worry about the economic consequences to me and to my family.

    Charles I. Phillips is a principal in Phillips & Gemignani, Waukesha.