It takes more than a law degree to grow your own firm

When Cayse Llorens got an idea for a business that would bring celebrities and their fans together virtually for private parties on the Internet, he knew he needed top-notch software engineers to make it happen.

As an engineer himself, Llorens said he knew how to lure them to his young startup: Pay a lot of money up front.

"My philosophy was that for top talent, you get what you pay for," Llorens said. "So I was front-loading the compensation packages with signing bonuses … That's my default perspective."

But Melvin Sims, Llorens' lawyer, told Llorens to take a step back and think about why paying someone gobs of money up front may not be a good idea for CelebTango, his young company.

An impressive resume doesn't guarantee someone will make the right fit at a new company, Sims said he told Llorens. The software engineers should prove their worth before getting big pay packages.

"That definitely cuts back on the risk," Sims said. "Because once you give somebody a big, fat signing bonus, that's a bell you can't unring."

Sims counsels a host of entrepreneurs like Llorens on a daily basis as general counsel to TLH LLC, a holding company for startups in Chicago.

He said the advice he gave Llorens about waiting to pay his new employees serves as an example of the distinctly different ways that lawyers and entrepreneurs approach business-development problems.

"Entrepreneurs and CEOs are hard-charging, seize-the-day and let-the-chips-fall-where-they-may kind of people," Sims said. "While an attorney is going to have to be a little bit more calculating and think more pre-emptively about how to mitigate as much damage as possible along the way."

Some lawyers choose to start their own law practice, which requires them to simultaneously act like both a lawyer and an entrepreneur.

That pits them in a battle with the inherent risk-averse nature of the legal profession and the necessary take-a-chance approach entrepreneurs must possess.

In addition to practicing the law, a lawyer who hangs his or her own shingle must possess traits used to define entrepreneurs. Specifically, psychologists describe entrepreneurs as comfortable in the face of ambiguity and also as driven by a need for achievement, a desire to do something better.

But Llorens, the entrepreneur from CelebTango, outlines the trouble lawyers face matching those definitions of entrepreneurs: He said he thinks of the two as opposites.

"I conceptualize lawyers as cautious," Llorens said. "And that kind of flies in the face of what entrepreneurship is. My understanding of it is you have to be able to go into the unknown. You've got to be results-oriented and say that this is a problem that nobody has ever solved before."

In his book, "The Achieving Society," now-deceased psychologist David C. McClelland found that entrepreneurs possess an internal drive that spurs them to take on risks. McClelland wrote that this internal drive — this need for achievement — actually proved vital for economic growth.

Countries that want to boost economic growth should actually boost their population's need for achievement, he wrote. People with high internal drives grow faster and bigger businesses.

Patrick Richards of Richards Patent Law said, "You want to be 'one' better, whatever that 'one' is."

Photo by Lisa Predko.

Patrick Richards, owner of Richards Patent Law, said he didn't need to hear the term's definition to know what entrepreneur meant.

"Good enough isn't good enough," he said. "It's a struggle for me to (look) at whatever aspect of my business it is, to look at it and say, 'This is OK.' Because I know there are improvements to be made in every possible way."

But when he first started his firm, he didn't even think of it as a business, he said.

Richards left McDermott Will & Emery in 2008 as a partner in its intellectual property practice. He planned to take a couple years away from the law to spend time with his family.

Yet even without a practice, he said he kept getting asked to work: McDermott gave clients who asked for it his cellphone number, others found him on LinkedIn and friends and family bugged him to draft patent applications.

He referred the inventors elsewhere at first, he said. After all, he didn't buy malpractice insurance and he didn't want to practice.

"And as I was passing on opportunities that I wasn't even looking for, I realized, if I just form Richards Patent Law, I could do this work whenever it comes to me," Richards said.

With a plan to practice part-time, he formed his firm on April 1, 2009.

Two months after Richards started his firm, he said he found the work fulfilling enough to scrap his part-time plans and turn Richards Patent Law into his full-time career.

If he did that, though, the firm needed to match his grueling internal standard for how law firms should operate.

He said he wanted to run a patent law practice "objectively better" than any other practice by focusing on drafting patent applications and developing client-specific IP strategies.

Mainly, he said he wanted to rid himself and his clients from the "understandable communication barrier" that the billable hour creates.

"Where does the information flow most freely?" he said he asked himself. "Where do I see the greatest benefit from the person I'm working with? And how do I make my law firm more like those places?"

The answer, he said, came in the form of a fixed-fee billing model.

That way he can pick up the phone and call a client without the person on the other end wondering: "Is he just calling because he has nothing else to do today?"

The client, too, can call Richards without worrying: "Is this worth it to call Patrick?"

"And I sat down and I wrote this out, and I said, 'Is this authentic and true? Is it something that I can really base the entire business on and is it something that I can accomplish?' " he said.

"And it wasn't until I had written that out and really felt a strong connection with that model … that I said I want to develop this business and I want to turn it into my career."

When Richards heard the definition of need for achievement — a desire to do things better than people did them in the past — he said, "I couldn't agree with that more strongly."

Entrepreneurs don't see as much risk in uncertain situations as other people, says the 2008 study headed by Duke University professor Luca Rigotti titled "Tolerance of Ambiguity and Entrepreneurial Innovation."

This study on the psychology of entrepreneurs says they "are the most ambiguity-tolerant individuals."

Rather than letting the unknown scare them away from taking a chance, entrepreneurs disproportionately place more weight on the possibility that a risk will pay off, the study says. They take an optimistic view of their own endeavors.

Daliah Saper of Saper Law Offices said, "I knew I wanted to have my own business. I had toyed with other ideas, but without a budget or investment money . and being a 24-year-old, the only thing I really had to start a business with was my law degree."

Photo by Lisa Predko.

When Daliah Saper started Saper Law Offices as a 24-year-old law school graduate with zero clients, a laptop and her apartment as her office space, she said she felt like she "really had nothing to lose."

When asked about what qualities make her a good entrepreneur, she said, "I like the opposite of a set routine. I enjoy the unknown and the thrill of creating something and making it happen and not knowing exactly what the outcome will be."

Despite the risks she took on and the uncertain future she faced trying to build a practice, Saper said she didn't find her back up against the wall.

"I wasn't walking away from anything," she said. "I knew I wanted to have my own business. I had toyed with other ideas, but without a budget or investment money … and being a 24-year-old, the only thing I really had to start a business with was my law degree."

While Saper said she never sat down to write out a business model for her law firm, she knew the type of practice she wanted to develop and the type of clients she would work for.

She wanted to work with young entrepreneurs like herself dealing with IP issues for Internet startups and technology companies, she said.

Her IP focus came from her time as president of the Intellectual Property Law Society at University of Illinois College of Law, she said. The little experience she brought to her new firm — mainly, a summer associate position at Brinks Hofer Gilson & Lione and a summer internship in IP law at Playboy — made that practice area a natural fit.

"I didn't take in personal-injury cases, I didn't do real estate, I didn't do wills and estates," she said. "And that was a business plan in and of itself. It just wasn't put down on paper."

She said she felt comfortable knowing that the future of her business rested squarely on her own shoulders — and she likes being her own boss.

"I think some people who start law firms have unrealistic expectations, especially if they have come from a bigger law firm or a more comfortable setting," she said.

"They may have other expectations or preconceptions of how a law firm should be. I didn't have that really. I just saw legal work, knew I needed to produce a document and figure out how to file it in court. And I just did it."

An entrepreneur's willingness to take a chance without fearing failure matches how Sims, the general counsel at TLH, said he describes the business leaders he counsels.

"You don't want a CEO who is stifled into inactivity because of his fear," he said. "You want him to charge and bound and let the lawyers run alongside him to pick up the pieces and mitigate risk as much as possible."

Solo and small-firm practitioners need to share more than a mindset with entrepreneurs, though. They also need to create innovative ways to grow their business.

Gemma Allen of Ladden & Allen said, "You have to keep putting yourself out there and you cannot necessarily count on last year's business being an accurate assessment of next year's business."

Photo by Lisa Predko.

Gemma Allen, a partner at Ladden & Allen, said about 70 percent of her family law business comes from new clients.

That kind of new inventory makes marketing and networking — the main ways these lawyers grow their business — vital for small-firm divorce lawyers like herself, she said.

"You have to keep putting yourself out there and you cannot necessarily count on last year's business being an accurate assessment of next year's business," she said

One of the most useful ways she said she marketed her firm in the past came via a quarterly "think tank" her firm sponsors.

She invites about 100 to 125 people — judges, attorneys, family therapists and financial consultants — to discuss marriage topics ranging from "intimate terrorism" to the finance of a divorce.

A yearlong, think-tank series she hosted in the 1990s on premarital education put her on the public relations map after it led to a series of appearances on "The Oprah Winfrey Show," CNN, numerous TV networks and radio broadcasts, she said.

The think-tank series led her to supporting a bill in the Illinois General Assembly requiring three hours of premarital education — the basics on what can go wrong in a marriage — before a couple gains a wedding license, Allen said. With various religions supporting her cause and hotels, wedding halls and tuxedo shops lined up against it, the bill got a lot of press, she said.

"That caught the public eye because it was a cause that people related to," she said.

But she continues to stay in the public eye on divorce issues after taking the advice she said she gives to other lawyers: "Get help."

Just as she did with someone to handle the firm's legal issues and accounting, she hired a public relations professional to help her "parse out the wheat from the chaff" after she felt inundated with media requests, she said.

"Once your name is out there, you'll get calls," she said. "It's important to know how to get some sound bites."

Today, she writes a blog for Today's Chicago Woman magazine.

She co-wrote a book that will be published this year or next with Terry Savage, a financial writer and Chicago Sun-Times columnist, and Cook County Circuit Judge Michele Lowrance, who wrote "The Good Karma Divorce."

She also wrote a series of columns on "Secrets of Successful Partners" and a chapter in a law journal on marital law.

When asked how she finds the time to do all this writing, she said, "I don't need a lot of sleep. And I tend to write late at night. … You can't really do it during your work day."

Saper, from Saper Law Offices, called the work solo attorneys do to find clients "hustling."

"I was at every event that I could find and I was just trying to meet as many people as possible," she said about when she first started her practice.

For instance, she picked up her second client from talking about her work at a wedding. She said she struck up a conversation about her work as a trademark and copyright lawyer with a friend of the groom's who sat at her table.

"And he has been a client for the last seven years, he has used my firm to file a portfolio of trademarks," she said.

Her networking skills extend beyond that kind of luck, though.

Her new program, the Saper Law Immersion Program, for instance, couples new attorneys with young businesses. It solves two problems: young attorneys can get much-needed experience and young businesses can get affordable legal representation.

Much like Allen's think tanks, Saper said she also holds conferences at her law firm on topics she finds her clients asking about.

She said she hosted a conference on "The Legal Implications of Social Media" in 2009 and spoke about cloud computing before that term meant much to the common person. She discovers these topics through a rather simple business plan: Put herself in touch with people and businesses on the "cutting edge" of her two major interests — IP and Internet startups.

"I'm trying to be one step ahead of what's cool," she said. "And I guess I was doing social media before every firm started talking about the legal implications of social media."

She said the culmination of marketing and "being at the right place at the right time" as "social media blew up" helped her firm's growth.

"Everyone had to be on the Internet and there were all these online issues involving copyrights and trademarks and hacking and trade secret misappropriation … and they suddenly became issues that most small businesses weren't going to be able to handle," she said.

Richards, from Richards Patent Law, said he grew his firm through only one marketing tool: his website.

He gets so many potential clients from simple Google searches that he can't respond to them all, he said.

His website's 3,011 hits in September, for instance, came by answering common questions clients ask.

Answering the question: "How much does a patent cost?" grabbed 48 clicks in September.

While that might not equate to 48 clients, he said providing answers to those basic questions proves important. They make Google's search engine recognize his site as a popular one for patent law.

So when people search terms with the intent to hire a lawyer behind them, say, "Chicago patent attorney," he shows up second or third on the list. "Chicago patent attorney" resulted in 61 hits in September, he said.

After tweaking his website for the past three years, he said he knows a list of ways to make it fetch even more results. But he doesn't want to put them to use because he can't find time for more clients.

"I'm afraid to improve it," he said. "That's obnoxious. That makes me cringe. But I know a way to triple the traffic to me and I can't do it."

Over the course of his work with entrepreneurs, Sims, the general counsel from TLH, said he finds himself learning from entrepreneurs.

The relationship between lawyer and entrepreneur becomes more nuanced after a while, he said. Where one role ends and the other begins tends to blur.

Llorens, for instance, stopped paying large, up-front bonuses to his employees, heeding Sims' initial advice. And Llorens said the result didn't suffer — he got the talent he was looking for without the risk.

"You've got to have a synergy," Sims said. "As you get to know your client, you can almost predict the areas where you're going to want to advise them to slow down."

(From left to right) Attorneys Daliah Saper, Patrick Richards and Gemma Allen found that traits they share with entrepreneurs helped them grow their law firms.

Photo by Lisa Predko.

Saper, from Saper Law Offices, said some aspects of entrepreneurship get easier with time.

"I have less hustling to do. I have a lot more consistency with cash flow," Saper said.

But as her business grows, it can bring new headaches, she said.

The legal matters she handles became more complicated, switching from registering a trademark for a client met at a wedding to handling multimillion-dollar litigation or taking a case to the Illinois Supreme Court.

"So the stress goes up because the sophistication of the work goes up," she said. "But I like that, because it's always a new process."

Allen, the family law attorney from Ladden & Allen, said things got easier for her after she began her practice as "a reluctant entrepreneur."

"It always has its moments where you realize there's more paperwork coming in," she said. "So, it's not perfect but we're really happy controlling our own destiny and being able to really help clients control their destiny."

For Richards, from Richards Patent Law, he said he no longer needs to improve his marketing due to a website that overflows his calendar.

But he said he can't stop looking for ways to make his practice work better for clients, continuing to work toward the definition of an entrepreneur as a high achiever.

For instance, as he struggles with his time becoming scarcer due to a growing list of about 250 clients, he said he considers switching to a subscription-based model of services inspired by his doctor's office.

A smaller group of clients — say, 40 or 50 — would pay Richards a retainer for his services and he can respond to them within a guaranteed amount of time.

"I remember receiving the letter from the doctor and thinking there are some very good reasons for doing this," he said.

Another problem he wrestles with will occur when the U.S. patent system switches to awarding patents to the first person who tells the government about their invention as opposed to the person who can prove they made it first.

Because his clients will need to get their applications done quickly, he plans to solve their problem by selling a do-it-yourself patent application on his website.

"You want to be 'one' better, whatever that 'one' is," Richards said.

"And that can be a trap. It's obviously positive in that you're trying to improve your business … and you're trying to make a better mousetrap. But by the same token, nothing's ever good enough for the entrepreneur."