It’s time to talk dollars and cents.
One of the most frequent questions that new solo attorneys ask before hanging a shingle is this: How much money can I make?
I get it.
I struggled with the same question before going into solo practice.
In this post, I’ll break down the data on solo law practice income and help to keep both your hopes high and your expectations in check.
Solo attorney income – what the data says
In researching this article, I came upon several different studies that purported to look at solo law firm income and draw some conclusions.
Let’s take a look at what they say:
Professor Benjamin H. Barton – a look at IRS data
In 2015, University of Tennessee law professor Benjamin Barton published an article on CNN.com in which he looked at IRS income data to derive an average annual income for solo attorneys: $49,130. This, as he points out, is for all solo lawyers, including those who have practiced for a full career. It comes at the tail end of a period in which solo practice attorneys “have struggled for a quarter of a century.”
The article is essentially several paragraphs of doom and gloom for the profession, with a bright side for clients.
Stephen F. Diamond – a rebuttal
The following year, law professor Stephen Diamond published a rebuttal, taking Professor Barton’s methodology to task. Among the main criticisms are:
- The IRS data is “polluted,” in that it contains not only attorneys, but also legal services providers who earn much less on average than attorneys (paralegals, process servers, etc.). This has the potential to bring down the number considerably.
- Additionally, the IRS data only includes sole proprietors, and not incorporated solo law practices. As incorporation of one’s practice has become increasingly popular and an indication of the seriousness that an attorney may take their business activities (just a guess), you can see how excluding these numbers can skew the data.
- Lastly, and the first one I thought of as a counterpoint, is that they’re using net income rather than gross income. In reality, there is a ton of stuff that solo attorneys can deduct from their gross income which are business-related expenses, but also benefit the attorney’s personal life. It’s a muddy picture, to be sure, but somewhere between the net and gross amounts is where a solo attorney’s “actual” income lies.
By his own calculations, using self-reported American Community Survey data, shows that solo practice lawyers are making an average of $165,000 instead – a big jump from the dismal $49,000 of Professor Barton’s article!
Following this, Professor Barton published a rebuttal to the rebuttal, which you can read if you’re interested.
Paul Campos – using Barton’s data to paint a worse picture
In another article on the subject, Paul Campos of the Lawyers, Guns, and Money blog posted in 2015 that the median solo practitioner was making just $35,000! Note, this is “median,” not “average,” meaning that the middle point between the highest-earning and lowest-earning solos is $35,000.
I’m skeptical, to say the least. Particularly because it’s based on the same data as Barton and that already has some holes in it, as pointed out by Diamond above.
Better move on before we get depressed again:
Bar Associations – a prettier picture
Another source for data on solo law practice income is the various state bar associations. They will often survey the lawyers in their state, asking a large volume of questions (not just about income).
There’s ton of great info there, but the real treasure for us that that income data.
I’ll just highlight a couple of the survey results here:
- State Bar of Texas – The data’s a little old (2009), but according to their surveys, the average income of a solo attorney is $97,142. That’s a far cry from the doom and gloom above! Note that this is self-reported, which lends itself to possible inflation by the attorneys in question (sort of the opposite problem of the IRS data)
- Florida State Bar – The latest data I’m seeing specifically on average income for solos is from 2005, sadly. But it’s extremely encouraging, at $105,000.
I’ll update this post with more, as I discover them.
Martindale-Hubble – a bright future?
Last, but not least, we’ll examine the most recent look at solo law practice income levels. Ubiquitous lawyer directory service Martindale-Hubble has released their 2018 Martindale Attorney Compensation Report.
It’s good news, folks.
The survey looked at data from nearly 7,000 full time practicing solo and small firm attorneys. There’s some very interesting info on the state of attorney compensation contained in the report:
- Average annual compensation for full time solo/small firm attorneys was $198,000
- There was a year-over-year increase in compensation from the prior year for around 45% of respondants
- When broken out into solo versus small firm attorneys, the solos averaged less at $148,000, which ain’t too shabby
- The “western” region, including California, Hawaii, and Alaska, was the highest-earning group of states for solo and small firm attorneys
So, based on this latest data, the consternation about low income for solo attorneys seems overblown.
It’s worth looking at why attorneys are making less than their big firm (and even small firm) counterparts, though.
Why do solos make less than bigger firm attorneys?
Less work, by necessity or by choice
Solo attorneys generally work less on billable legal matters than their counterparts in law firms.
This is to be expected. There’s so much more to being a solo attorney than just practicing law:
- Client development
- Speaking gigs and other networking with lawyers
It’s not for everyone, as we’ll see below.
Another reason for working less is that some attorneys strive for a better work-life balance and simply don’t want to work more.
I’m one of them.
I could work 60 hour weeks and probably make more money. But I’m happy working 25-30 hours a week. I make a comfortable 6-figure income, while having time for my wife, exercise, and playing video games.
(I’m a video game lawyer, after all – it’s research!)
So this isn’t necessarily a negative, unless you’re talking strictly about money. I’d argue that there are more important things than money, though.
Not trained in running a business
Another issue with solo attorneys is the complete lack of education on actually running a law firm.
It’s a completely different skill set than practicing law, and many lawyers just aren’t cut out for it.
Or, at least, they haven’t been taught how to do it properly, efficiently, and in a way that they can actually enjoy.
We’ll address this more at the end of the post.
A lot of solo attorneys charge lower fees than their law firm counterparts.
This could be for a few reasons:
- Less experience
- Lack of confidence in their abilities as an attorney
- A feeling that if they charge higher fees, they won’t get clients
- Don’t know how to accurately price their services
Either way, it’s a reason for overall billing to be lower.
If you’re doing what I advise and going into a specialized niche where clients have money, you can increase your hourly rate. This is because you have very specific knowledge and experience that they need.
They’re usually willing to pay for that.
For me, my clients are happy when they don’t need to explain every detail about their industry to me. Many have come to me specifically because I operating in the game niche, and were frustrated with previous lawyers who just didn’t get it.
If you follow my advice and build up a good amount of authority through guest posting and blogging, you’ll be able to demonstrate that authority to clients before they even send you the first email.
Because of that, they’ll be less likely to turn to another attorney once you tell them the costs.
Wrapping it up – get out there and make money
So, we’ve gone through the data and hopefully have a good outlook on the future of solo law practice income.
It’s time to start making money.
One great way to do this is by establishing yourself online, through a great website targeted at your ideal client. Sign up for my mailing list below to be the first to know about my step by step, no bullshit course on creating your site and getting great clients online.
I’ll be talking with you soon!