It became absolutely obvious to me that I needed to start my own law firm when I sat down and did the back of the napkin math on the sort of money that I was earning for the law firm that I worked at versus what I was taking home myself. If you really sat down and you took every hour that you spent towards professional pursuits, I’m talking about hours from the minute that you walk out of your house in the morning till you get to the office until the time that you come home, all the time that you spend marketing, doing business development, all the time that you spend teaching and writing or sitting on committees, working at your law firm, basically you take all the hours that you spend doing things other than having fun with your friends and family. If you’re anything like me, it was way north of 3000 hours, even though I was billing considerably less than that when I was a partner at the big law firm.

You take that number and you divide it into the actual dollars that you’re taking home. And I think that you would find that your actual take home hourly rate is astonishingly low. It might be a little bit of an exaggeration to say that people who may mow your lawn or clean your house are making roughly the same dollars, but we’re not far off. And when you sit down and you realize that the law firm that you work for or the people that you work for are taking the vast, vast majority of the money that you bring in and that your take home wage is actually quite small, it puts everything in a different perspective. I mean, for me, not only did it become an imperative for me to capture more of the value that I was creating with the time that I was going to spend doing things other than pursuing fun, it also became obvious to me that it wasn’t that high of a bar that I had to get over.

I think that a lot of people that are charging seven, eight, $900 an hour, you might find that you only need to bill 100, $150, $200 an hour and collect those dollars in order to have the same lifestyle that you have right now. And obviously over time as your firm chores and as you are able to regain the level of productivity when you’ve slayed the operational challenges, when you’ve built up a nice roster of clients, when you’ve got your hourly rate back to exactly where it is before you left the big law firm, you have the ability to make multiples more money. And that’s what I’ve really enjoyed. It is true that when I came out and I started my own firm because I only brought two clients with me from the large law firm, I cut my hourly rate considerably, but I knew that the hourly rate that I was charging was far more than I needed to collect in order for me to make the income that I was used to making and have the lifestyle that I wanted.

And now that I’ve been in business six years and I enjoy hundreds of clients as people that I get to interact with every day, my hourly rate is pretty close to what it would’ve been if I didn’t leave the big law firm and I’ve set up the systems and the processes that free me to spend most of my time billing. And so not only is there this tremendous upside for you when you’re able to get yourself operationally organized, where you’re not distracted by administrative things and you’re able to glide path and to do the legal work that you’re used to doing, but even in the short term, as you are doing the back of the napkin math to try to figure out what hourly rate do you really need to collect on in order to not go broke in order to maintain your lifestyle, I think that you’ll find that that number is astonishingly low if you divide the number of hours that you spend doing professional things, things other than hanging out with your friends and family into your actual take home pay.

For me, as soon as I did that back at the napkin math, it was undeniable to me. The math compelled me to move forward and start my law firm. And so I would hope that some people who are watching this video are encouraged by the fact that the hurdle that you need to get over is a lot lower than you think. You do not need to bill 2000 hours at your current hourly rates to significantly increase your income and certainly to make it a worthwhile decision to have started your own law firm.