As the breadwinner of my family, the number one concern that I had when I was starting my law firm in 2019 was whether I was going to go broke and whether I was making a big financial mistake. At the time, I was a partner at a large law firm and I had four young kids, the oldest of which was not yet 10 years old. And I was certainly the breadwinner in the family. I’m also not a trust fund baby. I don’t have any particular financial backing from family. And I hadn’t saved up any huge amount of money that I could afford to burn through in that first six months or year. And I was not going to tap my 401k or anything like that. And so I was very concerned about whether or not this was a crazy idea, particularly because I was only bringing two clients with me from the large law firm, certainly not enough for me to feel comfortable.

And so I spent a couple years looking at the arithmetic, trying to figure out whether this is the kind of thing that I could survive financially because I was going to have to finance the first six months or so at least of my law firm on a credit card. And now that I look back on it and I talk to a bunch of people who are thinking about starting their own law firm, I’m really glad that I took the time to stare this problem down and to realize that it’s not as complicated or scary as it might seem. And I hear a lot of fake excuses from people who are thinking about starting law firms now about, “Oh wow, it’s too expensive. It’s too risky. I don’t have the money saved up.” And it’s one of those things where I think that if you let that kind of a hurdle get in your way, you might doom yourself to stay working for somebody else forever because there may never be a perfect time.

And it really is quite simple math. I mean, there’s only two variables. It’s revenue and it’s costs. And the cost side of the arithmetic is really simple. All you need to do is take a piece of paper and write down everything that you need to buy and everything that you’re going to incur in the way of costs in that first month. And so computer and internet and insurance and bar license insurance, whatever it is that you need to buy, you write that all down on a piece of paper to figure out what is the amount of money that you are going to spend in the first month, how deep is that hole that you’re going to be digging because this is a dip that we have to push our way through the first six months or so of the firm, unless you’re bringing a full practice over with you, which was not the case with me.

And I was very comforted that at the end of the first month when I didn’t have a ton of revenue and I was just getting started, the amount of debt that I went into was exactly as I had predicted. And in the second month when I was doing a little bit better on revenue, it was exactly as I predicted on the cost side of things. And so it gave me a lot of comfort to sort of see the kind of hole that I was going to get into. And then the question is, is how do you get out of that hole? And that is the revenue side of things. And that’s a little bit more complicated. At least for me, I had a lot of ideas about where I was going to get work from. I thought about all sorts of different referral sources, partners at my old law firm, other attorneys I’d worked with over the years, political and social organizations and groups that I was a part of.

Is there going to be work that comes from LinkedIn and from the internet? And I had all these ideas about where work would come from in the first six months. And I said, okay, some of it’s going to be general counsel work. Some of it might be negotiating contracts and some will be just helping people through construction projects. And then a little bit of mediation, maybe arbitration, litigation. Okay, what are the hourly rates that I think it could charge for the different kinds of clients? How many hours does it take to get a task done? Am I flat feeing some of it? Am I doing it all straight hourly billing? And I looked and I said, okay, on this spreadsheet now where I’ve set out all the places where I think I could reasonably expect to get referrals or work from, how much is here?

And what I realized is it was like four or five times the work that I actually needed to dig myself out of that financial hole and to stay in business. And at the time it was very comforting for me to feel like I had a handle on what the hole I was digging for the cost side was. I knew how deep that was going to go. And I had an idea about how over time revenue was going to generate and was going to dig me out of that hole. And over that first six months or so, it was so comforting for me as I went into a fairly significant hole of credit card debt to finance the law firm that it wasn’t a deeper hole than I expected. And you get to about three, four months out and I really started to see the table turn and not … And at that point I wasn’t digging the hole deeper.

I was filling it in. And by the time that I got to six months out, I had completely paid off the debt that I went into. And then it was a great time when I really felt like I had a handle on things and I could throw myself into marketing and growing. And I was beyond the fear of going broke. And now that I think back on that spreadsheet that I created eight years later, I was spot on on the cost side, but I was really wrong about the revenue side. It turns out that I got very little revenue from any of the places that I had put down on the spreadsheet as likely sources of work. However, because I have been friendly over the years with lots of attorneys and I’ve stayed in touch with my network, when I launched the firm, there was so much goodwill and there were so many people that were willing to give me a digital high five that the work came from places other than I predicted.

But I knew because that revenue spreadsheet had way more work than I needed, that even if I was 75% wrong and 25% right, I would survive. And so I would say that if you are a breadwinner, no fake excuses. If you aren’t a trust fund baby, you don’t have a lot of money saved up. Well, you know what? You’re a good company. I think you’re probably like most people. And so how can a breadwinner calculate a comfortable margin of financial safety before getting started? It’s not hard. You got to do a cost projection, you got to do a revenue projection. And this is certainly easier than a lot of the work that you do as an attorney in your day job. And so I would say sit down with a pencil, sit down with a spreadsheet, try to figure this out. It’s not as hard as you think.

And as you dig that whole of debt, as if you can see the projection and you can see the light at the end of the tunnel, as I was able to, I was able to feel good about what I was doing even as I was digging that hole deeper because I had a feeling that I would see myself come out of it. And it was so reassuring to see not exactly what I projected, but something pretty darn similar come to fruition and bring me back to level ground at about six months out.