10 02 2012
The True Cost of Starting Solo (as cheaply as possible…)
Due to the times and state of the profession, many recent graduates and experienced but unemployed lawyers are hanging up a shingle and starting their own shop. For those who are unemployed and without personal connections, the options currently are to take a massively underpaid job from a firm looking to capitalize on the desperation or start your own practice. In my research on the costs of opening up shop, I found many citations to an article on the Lawyerist, entitled “Start a Solo Law Practice for Under $3,000.” I took issue with many of the omissions and recommendations in the article and expressed such thoughts to the blogger, who stuck his ground. Fortunately, since this is the internet, every idiot with a keyboard can have an opinion. Here’s mine.
License, Insurance, and Research
These may seem obvious but they are still worth stating. You will have to pay bar dues, which in California are currently about $500 per year. Malpractice insurance is also a necessity, which the California Bar’s preferred provider’s Strong Start program offers for $500 per year. Before you’ve even started, that’s $1000 off the top.
As for legal research services, this is going to be a really hard section to project, as your needs will vary based on your experience, practice area, etc. For those of you lucky California-admitted lawyers, new attorneys are provided with CEB OnLaw service for free for a year, which includes practice guides and template forms in most practice areas. For others, if you really need to be cheap, you can look for a local public law library and use their services or take advantage of an unpaid law student intern and use their student LexisNexis and/or Westlaw account.
Total for this section: $1000 per year for license and insurance, unknown for legal research.
Office Space, Internet, and Phone
Some new lawyers prefer to practice out of their homes. Personally, I hate the idea. Not only do you have the annoyance of family running around and the problems of getting motivated everyday to get out of bed and start on time without getting distracted, but there’s also the issue of projecting a professional image. Some clients truly will not care if you practice out of your home. Many will. One of the few benefits of this disgustingly terrible economy is the rate that office space is being rented at. In Los Angeles, the city which I currently call home, the prevailing rate is $400-600 for an individual office in a commercial tower. Since I’m an incredibly cheap bastard, I’m going to go for the cheapest spot, which runs about $400 per month.
Often, electric is included, but you’ll usually have to cover internet and phone service. If free internet is included, I’d still consider getting your own if possible, as shared internet has a tendency to s l o w d o w n when the entire building is streaming videos and downloading junk off the internet. There’s always that guy who downloads large amounts of bootleg torrents at work and spoils the connection for everyone. You can’t afford to have large amounts of downtime. Budget about $50 a month for business internet.
As for phone service, a lot of people will recommend cell service. And yes, you should have a cell phone. I’d recommend something cheaper than traditional service, especially if you are going to maintain separate business and personal lines. Companies like Straight Talk and Boost Mobile offer prepaid cell service for $45-$55 a month for unlimited talk/text/data, which is half of what a traditional post-paid company would charge. Straight Talk will soon be selling the SIM card to activate service on any unlocked phone as well, so you can hook up that iPhone that you desperately crave and use that for your business line. To supplement the cell service, I’d recommend adding a Google Voice account, which allows for free calling to the United States and Canada through your Gmail inbox or you can hook up a traditional phone through a VOIP device connected to Google Voice, such as the Obi110 VOIP bridge. They are a little tricky to set up, but Google has free calling through at least 2012, which means your phone bill for 2012 will be $50… total. Google also provides free transcription of voicemail, which is a feature that is indescribably useful.
VOIP Box: $50
Total for this section: $6050 ($1250 if you have a home office)
This is probably the most debatable area. The blogger at the Lawyerist insisted that a $1100 Mac was the best option and an $1100 Lenovo laptop was the only other resonable choice. Poppycock, I say! What do you need your computer to do? Internet research, Microsoft Office, and other miscellaneous office software. You do not need that much computer for such elementary tasks! Indeed, my ten year old Compaq desktop can still run any office software you can throw at it.
What I would recommend, especially for those just starting out straight out of school, is to stick with your current laptop if it is in good condition. Back up your old data that you need and then format it with a clean installation of Windows and Microsoft Office so that it runs reliably and virus-free, but your existing equipment should be sufficient.
Now, if you lack a computer, or yours is falling apart, or you just want something new and shiny in the office, you still don’t need to buy a $1,000+ laptop! I’d recommend having at least one netbook or laptop in the office, so if you meet with a client off-site, you can still access your files and draft that last minute settlement agreement while everyone is still in the room. Netbooks can be had for as little as $200 due to the surging popularity of tablet computers. They are also great for video conferencing via Skype, especially if you want to Skype on the netbook while bringing up work materials on your desktop computer.
For your “daily driver” or regularly used office PC, I’d recommend the cheapest thing you can find. Why? It’s an office PC. It won’t be abused by children. It doesn’t need a lot of power. And if they are cheap, you can replace them IF they manage to fail. It is very unlikely that they will fail, but it is a possibility. If you are a Mac person, the Mac Mini can be had for around $500. For PC users, an Acer Veritron N or Dell Zino will provide all of the power you need for around $300 with Windows preinstalled. I’d go Acer over Dell due to bad experiences with the later in the past, but then again, the Dell Zino that my father has on his desk is three years old and hasn’t had a single hardware issue. For either the Mac Mini or PC, you’ll need to add a monitor for about $100.
As for printers, do not get an inkjet printer. Do not get an inkjet printer. Do not get an inkjet printer. Go for a laser printer. You will almost certainly not need color printing except on the rarest of rare occasions. You can pick up a laser printer for $50-$60 on sale on Amazon or at your local electronics store. Before you buy, check the cost of replacement toner. Generic is usually better, in terms of cost, but certain companies like Canon have resorted to installing patented microchips in their cartridges that monitor the ink level. Generic cartridges will read as empty since they cannot infringe on the patent, so you will have error messages popping up every time you print. If you look up the generic replacement cartridge on Amazon, the user reviews will usually discuss this if it is going to be an issue.
Another great feature to have: auto duplexing. This will print on both sides of the page and allow you to save a ton on paper, especially if you tend to print a lot of drafts. Obviously, you won’t want to file double-sided documents with the court, but for internal work product, it can be a very useful feature.
Keep an eye out for leftovers from other people’s upgrades. Personally, I scored a couple of free laser printers off of a friend’s law office that he was replacing due to paper jams. I fixed the jams, got new cartridges at $10 a piece, and I’m good to go.
Finally, there is one more thing to note. You will want a sheet fed scanner. My Lawyerist nemesis (kidding…) recommends a standalone machine that costs $400, the ScanSnap. Personally, I’d get a multifunction printer that has the sheetfed (as opposed to flatbed) scanner. The ease of putting the documents on the printer itself and hitting “Copy” far outweighs any arguments against multifunction devices. Plus, if you get a landline phone, you can use the fax machine features as well. A multifunction laser printer with sheetfed scanner and fax will run you about $100 on average, $60 if you get it on sale.
If you are going to have multiple computers, budget for a wireless or wired router and consider paying the extra money for a network-enabled printer so that you can share one printer with all of your users.
Also, toss in another $100 or so for a three computer license of the most basic version of Microsoft Office if you don’t already own it.
Computer and monitor: $400
Microsoft Office: $100
Grand total for your first year: $7,810 which includes bar dues, malpractice insurance, rent, internet, cell and VOIP phone services, and a basic computer setup.
Add more for legal research, case management software, and accounting and billing software if needed.