Considering my first-year expenses
I'm facing a lot of expenses in starting up my practice. Even though I plan to work from a home office and save rent, there are a ton of other bills to be paid:
Bar Association dues. California charges $395 a year to maintain active status. There are also add-ons like section memberships for legal specialists ($65 - $70 each) and some "suggested" donations that for some reason don't appear all that voluntary (the amounts were pre-filled on my 2006 dues statement). Factoring in the partial year's membership for 2005 ($195), my total will be $825 - 900, depending on how many sections I join.
Other Associations. I also joined my county Bar Association, although this is completely voluntary. Regular dues are tiered depending on years of practice, but max out at $180/year. I got the first-year discount and only pay $25, plus another $25 to join the Probate & Trust section and network with local Estate Planning attorneys. I also intend to rejoin the Christian Legal Society ($87.50 per year for first six years of practice), and the Estate Planning Council of the Diablo Valley ($75 annual dues plus $25 application fee and $30/month to attend dinner meetings with guest speaker). Total: $597.50 for the first year.
Continuing Legal Education (CLE). Lawyers are required to complete 25 hours of CLE training for every three years. Although there are many ways to earn units for free, many programs are fee-based. I signed up for an introductory lecture in Estate Planning through West (the company that runs Westlaw) for $190.
Office Expenses. Cutting some corners here. I will probably print my own letterhead and business cards, so the expense will be minimal (ink and paper should run less than $100 total). We already own a Post Office box, a networked multifunction printer (including scanner, fax and copier) and a second phone line for the fax; still, I am considering adding a virtual fax line for around $20/month for the flexibility of being able to receive faxes anywhere I can connect to the internet. I bought a new cell phone ($45) and monthly service ($35/month) rather than install a third phone line in our home. Total: $805/year.
Technology. I intend on meeting clients in their homes or offices whenever possible, so I will probably need a laptop PC ($1,500). In addition, I will need some specific software, including a Wills/Trusts package for HotDocs ($995, plus $250/year for updates); encryption software to protect client data on my laptop hard disk ($150); and QuickBooks to handle my client billing ($400). Total: $3,045.
Research. I subscribed to Westlaw's Estate Planning database ($99/month) and bought a two-volume Estate Planning guide ($295 plus periodic updates). Total: around $1,500/year, depending on the number of updates to the Estate Planning materials.
Summed up, I am looking at around $7,037.50 in expenses through the end of next year. This is not even taking into consideration malpractice and Errors & Omission insurance, because I haven't found out how much this will be yet, and the not-insignificant matter of student loan payments. It will probably reach five figures before I know it. Just another reason why lawyers, even the home-office variety, have to bill at such a high rate.
posted by Brandon Wilson @ 4:48 PM
2 comments
2 Comments:
Brandon -
Welcome to the wonderful world of law. Since it is a Sunday morning, I am still a bit tired, but let me share some thoughts with you.
First, other than the mandatory bar dues, which you can get scaled, do not spend your money on the state bar's associations. I like the bar, don't get my wrong, but you will get more use out of other organizations. For instance, you are automatically a member of California Young Lawyers Association (disclosure: I am on the board.). So, get involved and you will meet a ton of people who handle probate work and can help you.
For the other associations, the county bar is fine, but make sure you join the lawyer referral service. At least you can make some money on the deal.
Ask West for a refund on the CLE program. Seriously. The ABA offers a lot of good CLE programs. And LMIC, who I see you posted about, gives you free MCLE. Save the $190.
Try ureach instead of efax. Ureach is only $5.99 per month. You pay a per fax fee, but I have never spent more than $20 in a month.
Skip the laptop for now. Its not necessary. You meet with clients in their homes, use a legal pad for notes, and go back to your home to prepare the documents. It is easier, and you do not have to deal with clients looking over your shoulder. Skip the encryption program and quickbooks, and go with a program like TimeMatters that can help you run your practice.
Finally, get out of the Westlaw contract. You can use Versuslaw for $20 per month and Findlaw for free. That should get you most of what you need.
Oh, and then go to Yahoo! and sign up for solomarketing, so you can get ideas about marketing your practice. (And you will meet Jennifer Sawday, who is a probate lawyer in southern California, who probably has more tips for you.)
I hope these tips help. Let me know if you want to talk about it some more.
-------Jonathan
I realize that $7000 a year in expenses (though the laptop is a one time purchase) seems like an enormous amount; and let's also assume $1000 for malpractice and $800/month in student loan payments ($9600 per year). Total of $17,000 annually. Let's say you bill an average of 10 hours a week at $100 an hour. That's $50,000 annually and even after taxes, you'll be taking home salary. Plus, you're building equity in a practice that will continue to pay back in years to come.
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