Practice Management

I communicate with lawyers starting out all of the time, and most often they ask how to get law firm start up money.  They are, in terms of law firms, talking about borrowing money. But, there are two main problems with borrowing money.

First, the reality is that raising money to start any business, including a law firm, is excruciatingly hard unless you have a track record. And, the reality also is that new lawyers do not have a track record. Law school is not a track record. Further, the time spent trying to raise money could be spent defining your practice and finding paying clients, thereby helping to eliminate the need to raise money.

Second, and I think more importantly, too much debt can be ruinous in the short run and the long run.  It really does not do much to accelerate earnings for a law firm presently. Most of the money goes to living expenses. Also, it might very well decrease earnings as it gives the young lawyer a false comfort level. Then, for course, it decreases earnings long after the firm is established as the funds have to be paid back with interest.

For these two reasons I would argue that the best thing to do is to avoid fund raising to start a law firm. Concentrate your limited time and resources and focus like a laser beam of locating paying clients and cases.