Lawyers starting out on their own should take a good look at their expenses, which are just as important as revenue when it comes to building a business, Toronto employment lawyer Doug MacLeod tells Lawyers Weekly.
MacLeod, principal at MacLeod Law Firm, started his own practice in the early 1990s and says he remembers going to a half-day seminar put on by the law society around that time. At the presentation, he heard a horror story of one lawyer who was bringing in $1 million a year in revenue, but was struggling because his expenses were out of control.
“It’s not what you make, it’s what your expenses are. If you’re going out on your own, look at your personal and business expenses and cut them to the bone so you’re not staying up at night worrying about how you’re going to pay the mortgage, and you can focus on building the business,” he tells Lawyers Weekly.
Initially, MacLeod says he had some second thoughts about striking out on his own. How many other lawyers couldn’t answer the phone at their home office because their six-month-old daughter was crying in the next room, he says in the article — the call could have been a potential client.
“I didn’t rent office space for a while. I’d meet people at boardroom space that I could find or other places, like coffee shops,” he says.
Some lawyers, he adds, may be more open to working for a fixed fee shortly after starting their practice, just to ensure cash flow.
“Normally it wouldn’t be done that way but you want the income certainty. If a file takes more time than I expect, I’ll eat it. At least I’ll have enough money to pay the rent this month,” he says.
At the same time, MacLeod says he was not prepared to work outside of his area of specialization. Although friends would ask him to do their wills and he was tempted to take the work just to get the paycheque, he decided to stick to his area of law.
“You can really get into trouble if you get into an area and you’re not really that familiar with it. In a place like Toronto or big urban centres, you’ll have more success if you restrict your practice in one area. It’s a way to distinguish yourself from other people,” he says.