I talk a lot on this blog about my net worth, but so far I haven’t talked much about my income. As most of you know, I’m a self-employed lawyer by day, and a financial blogger by early morning/night. Right now I’m struggling to decide whether I should find a job at a law firm or company (as in-house counsel), or remain self-employed.
But before we get into why I would want to leave the life of the solopreneur to sell my soul to a corporation or large law firm, let me give you a little backstory.
The entire reason I went to law school is that I wanted to start my own business. And by obtaining a law degree and bar license, I presumed that by virtue of my specialized knowledge, I would be able to attract clients and grow a law practice that I could control without having to work for someone else. It turns out, I was only partially correct.
It is relatively easy to get clients as a lawyer. You put up a website, start blogging about the legal topics you are interested in, maybe throw up some AdWords and voila, your phone starts to ring. Get out into the community and do some networking with other lawyers and referral sources and you are just adding fuel to the fire.
But here’s the thing… Unless you build your firm correctly, and with systems, you don’t really have a business. You have a job that is 10 times more stressful than any other job out there. Not only do you have current clients to service and worry about, but you also need to be concerned about:
- Generating more business for the firm
- What happens if the computers go down
- Making sure you don’t commit malpractice
- Managing (and paying) staff
- Handling the finances of the firm
Frankly, managing a law firm is a full-time job in and of itself. So by owning a firm, and managing it at the same time, you basically have two extremely stressful and time-consuming jobs to deal with.
And the kicker – unless you grow your firm correctly, neither of those jobs pay nearly enough to make it worth your while.
The Finances of Running a Law Firm
Most lawyers bill anywhere from $200 to $400 per hour. My rate falls right in the middle at approximately $285. That sounds great, right?
But the reality is that I can only bill, on average, 2-4 hours per day, and that is a best case scenario. Let’s say, for the sake of argument, that I could bill 4 hours per day, every day. (I don’t, but let’s just say…)
There are 52 weeks in a year, and we need to deduct at least two weeks for vacation, as well as an additional two weeks for holidays and sick time and other crap that comes up. So realistically, and this is probably high, I can bill 48 weeks a year.
That’s 240 days per year of billable time. $285 per hour times 4 hours per day times 240 days equals $273,600. I’ve been at this for 12 years, and I’ve only been able to generate that much revenue per year once or twice. Most years I generate between $200,000 and $225,000.
The expenses for running my law office are between $4-5k per month. Again, being conservative, let’s say they are $5,000 per month or $60,000 per year. Deduct that from the $200,000 gross revenue my firm earns and my net profit, before taxes, is approximately $140,000 per year. This is NOT what I actually have earned over the years, but is a close approximation.
Don’t get me wrong, this is a good living by any means. I’m not suggesting it isn’t.
But the hours I work and the stress of running a law firm has begun to take its toll, and I have to ask myself…
Is it worth it?
What Other Options Do I Have?
The way I see it, I have several options at my disposal.
- I could continue to practice law in a solo capacity while working on this blog as a side hustle. My goal is for the passive income from this blog to surpass my law firm income and then I can ditch the lawyer thing entirely. End Result = More or Similar Money, Less Time, More Stress Short-Term and Less Stress Long Term
- I could go in-house with a medium to large corporation and make an equivalent amount of money each year – perhaps even more, when you consider stock options, 401(k) matching, health insurance, etc. Not to mention a steady paycheck each month. This sounds extremely sexy, I’m not going to lie. However, searching for a job is a full-time job in and of itself, and could take 6 months to a year or longer to find. End Result = Potentially More Money, Similar or Less Time, Less Stress (theoretically)
- I could ramp up my marketing efforts with my current firm to really start building something bigger than me. But this would require additional staff (and overhead and headaches), a bigger office, and a gazillion other issues that I probably haven’t even foreseen. I’m confident that I could earn significantly more money – but again, I have to ask myself, would all of the extra headaches be worth it? End Result = More Money, More Time, More Stress
What Is Our Time Worth?
Ever since I went to law school I dreamed of owning a medium sized law firm generating millions of dollars a year in revenue.
Several things have happened that have altered that dream for me over the years. First, the internet is a complete and total game-changer. When I was in school, we could only dream of what the internet was to become today. There was no Facebook. There was no Adwords. There was no O-Desk. If you wanted to build a blog (what was a blog?), you coded it with Dreamweaver or Microsoft Frontpage (now you know how old I am ;)).
If I was that young twenty-something contemplating law school in today’s internet friendly world, I probably would not have gone to law school. I would have started an internet business or done freelancing instead.
Second, I’m older and wiser (at least I like to think that). I recognize that I’m only going to be on this Earth for so long and my kids aren’t getting any younger. I want to spend more time with my family, travel, do Dad stuff, etc.
Running a large law firm isn’t going to get me there anytime soon – and while I’m working 80 hours a week to build up the firm, my kids will grow up without me. If that was the life I wanted, I could have started building it 12 years ago – but I didn’t and I have to believe there was a reason for that.
Working at a traditional job, while it may be great financially in the short-term, could also cause me to work long hours, travel (for work, not pleasure), and miss time with my family.
So What’s the Bottom Line? Should I Get a Job?
As much as I like the idea of getting a job, I just don’t believe it aligns with my long term goals of spending more time with my family and having more time and location freedom.
For now, I’m going to continue to work with my current clients, bring on new clients as I can, and blog about money and being a dad in my spare time. But I’m not going to lie, I want (and fully expect) that this blog will make money at some point in the future. At the same time, I’m realistic and understand that this is an organic process. It may take 6 months, a year, or longer.
But I’m confident I can get there. And since blogging is, has, and always will be, my one true passion – something I could do all-day, everyday, and then some – then sitting here writing on this keyboard is where I need to be.
For now anyway.