Financing Solutions
It may have taken some time, but Gabriel Jimenez has learned the truth of three essential words: location, location and location.
When he first decided to open a solo immigration practice in Los Angeles, he took a space in an executive suite in a middle-class part of town not far from some of the area’s motion picture studios. He rented the suite because it was inexpensive and included amenities such as access to photocopying, receptionist services and the like.
“I had it in my head that I could go solo and have people pay up front, so having almost no money for startup wouldn’t be an issue,” Jimenez says.
What he didn’t think about was just how far his new digs were from where the immigrants he hoped to represent lived. Despite ads in local Spanish papers that garnered an average of 20 calls a day, few were willing to make the trek to his office once they knew where it was.
“I realized I should have been in a storefront in the neighborhood where my clients live,” says Jimenez, whose practice folded in a matter of months for lack of revenue. He has since joined a 10-attorney firm.
Given the success of his ad campaign–those 20 calls a day from potential clients–Jimenez sometimes wonders just how successful he could have been if he’d been in the right location.
Sharon K. Campbell also set out to start a solo practice on a shoestring. The Dallas-based lawyer joined a local barter club to help acquire the necessary office equipment to get her practice up and running. The club invited professionals to join for a small fee. Members received a checkbook tied to an account of “barter points.”
Campbell was able to use her points for a computer, fax machine, photocopier and even letterhead printing. Other members paid her in barter points for her legal services.
“There’s no way I could have afforded my startup costs at the time without this club,” she says.
Campbell remained in the barter club for the first five years of her fledgling practice. Eventually, she was generating enough business on her own that she no longer needed to barter for things she required–and she preferred to be paid in cash, not points.
Though the club Campbell joined 11 years ago no longer exists, she says the experience had benefits beyond helping her to afford equipment. For one, some of her former barter partners became regular paying clients.
A More Conventional Tack
While many attorneys take the shoestring route followed by Jimenez and Campbell, others are more inclined to follow the conventional wisdom and prepare financially before hanging their solo shingles.
Walter D. James III spent 17 years toiling in a larger firm environment, preparing for his solo adventure. The Grapevine, Texas-based environmental lawyer secured a $100,000 line of credit, guaranteed by his 401(k) retirement plan, his house and the current accounts receivable he would be taking with him from the law firm.
“I figured if this thing flops, at least I’m judgment-proof,” he chuckles.
He also knew that he had a tidy client retainer sitting in his trust account. All he had to do was perform the work and he’d be able to draw on that money. “I figured I’d need to use the credit line for all startup costs plus a couple of months for everything for the office and for my family’s support,” James says.
Now, two years later, he only uses the line of credit to front costs for depositions, travel, experts and the like. Regular operating expenses and his draw are covered by a regular flow of fees.
“It’s been very steady,” he says. “Somehow, the phone always rings.”
