I STARTED A FIRM, WHERE SHOULD I HANG MY SHINGLE?

By: Andy Brabender
Brabender & Chiang LLC

When an attorney is thinking of starting his or her own firm, one of the first and
most important decisions they have to make is the selection of an office. The choices
range from working at home to leasing a long-term commercial space and building it out.

This article aims to briefly discuss the most common options in the Chicago area and
outline the advantages and disadvantages of each.

WORK FROM HOME

Working from home is certainly the most cost effective office arrangement for a solo
attorney. Many solos, young and old, use the home office as their principal workspace.

A home office saves many traditional professional expenses in addition to the cost of the
office itself. Most notably, one can save hundreds of dollars each month by rendering a
commute unnecessary. A professional wardrobe is only needed for meetings and court.
Lunches will generally be cheaper as well, since the refrigerator is nearby. Avoiding
after-work drinks can also save money.

Aside from cost, working from home can save hours of commute time that is better spent
attending to personal needs, caring for children, completing client work and developing
your practice.

While working from home is the most cost conscious option, there are some important
disadvantages to keep in mind. The most important restriction is the lack of a meeting
space to see your clients. If you are not planning on practicing in an area where your
clients prefer to meet in their offices, working from a home office can be a challenge.

While you may be able to borrow a conference room from another solo attorney, a law
school, or rent an hourly room, these options can be problematic. Some attorneys meet
with their clients in coffee shops and other public spaces, but such meetings raise image
and confidentiality concerns.

Isolation can be a major concern for an attorney working from home. When you have a
fledgling practice most of your time should be spent networking and marketing. Your
efforts will be hampered if you never change out of your pajamas and leave your home.

A final concern is that working from home often results in many distractions and little
work being done. The loss of productivity can cost far more than renting an office space.

PROS:

  • Most cost effective
  • Eliminates commute
  • Usually improves the ability to meet family obligations
  • Pajamas are an option

CONS:

  • Difficult to meet clients
  • Reduces networking and marketing opportunities
  • Prone to distractions

VIRTUAL OFFICE

Virtual offices are a favorite of frugal solo attorneys just opening a practice. They
commonly offer about 10-20 hours a month of actual office or conference room time
(usually in 1 hour increments) as well as a mailing address, mail forwarding and a
receptionist to answer your calls. Virtual offices are mostly located in the Loop, though
they can also be found in some of the more populous suburbs.

Another perk to a virtual office is that some of the larger companies will allow you to use
any of their locations (for an additional fee). This can make your firm seem more
prominent and is also convenient for your clients. If you ever wondered why some two attorney firms list 15 office locations, this is what is going on.

A virtual office in downtown Chicago usually costs about $300 a month and the two most
well known companies that offer this service are Regus and Amata. Contracts are
typically offered either on a month-to-month basis or annually.

PROS:

  • Lowest cost (other than working from home)
  • Professional meeting location for clients
  • Potential for networking and referrals
  • Low capital required
  • Low commitment
  • Professional address

CONS:

  • High cost per-hour
  • Office is generally barren
  • Concerns about using more than allocated time
  • Only currently available in major cities and large suburbs

OFFICES IN A PROFESSIONALLY MANAGED SHARED SUITE

One step up from a virtual office is a full time office in a shared suite managed by a
professional company. This arrangement is becoming more popular and usually consists
of a company signing a lease for an entire floor of a building and dividing the area up into
individual offices. The management company then leases each office to a business,
typically on an annual lease (though month-to-month is available by some providers).

These offices provide nearly all the advantages of leasing your own suite without high
startup costs and long-term commitments. They are commonly used by firms that
outgrow their virtual office (often staying with the same company and location).

The quality and features of the shared suite vary from provider to provider. Some high end suites provide a receptionist, paralegals, furniture, copying facilities, a kitchen, an
ideal location and amazing view. On the other end of the spectrum, the most humble
facilities are in older buildings and provide only an empty office and usually a shared
conference room.

It is extremely important to determine what is and is not included in the price quoted by
the management company. Complaints of nickel and diming by management companies
are endless. Moreover, if you intend on using your mobile phone as your primary phone,
be sure you have reception in the office. Some suites are not wired for a hard-line phone
and others have very poor mobile reception.

The monthly rent in a professionally managed shared suite ranges from $2000 for a large
high-end office to as low as $400 for a small office in a more modest facility.

PROS:

  • Professionally managed
  • Wide range of quality and cost
  • Moderate commitment
  • Low overhead
  • Networking and referral opportunities
  • Wide range of services

CONS:

  • High potential for nickel and diming
  • Can be expensive per square foot
  • Often requires yearly commitment

RENTING FROM ANOTHER PROFESSIONAL

A new solution that is becoming more common is renting an empty office from an
established firm or other professional.

It’s hard to generalize this category of office sharing because the variation in price and
features is huge. Typically, all the features of a professionally managed suite may be
available plus the possible use of staff, multiple offices and availability of workstations.

One feature that does set these offices apart is that they often have practice-area
restrictions. Some firms do not want a competing firm in their office and others do not
want one who may be opposing counsel. It is possible to find a shared suite with a non-lawyer, but it often takes more legwork.

The best part about renting from another professional is that there are some really great
deals out there, especially if you find them yourself. The disadvantage is that the office is
not professionally managed and you are likely subject to the whims of the firm that leases
the suite.

The cost of an office in a shared suite is usually between $500-2000 a month in
downtown Chicago.

PROS:

  • Great deals exist
  • Opportunities for referrals and networking
  • Wide variety of options available

CONS:

  • Can be hard to find
  • Subject to idiosyncrasies of landlord
  • Possible conflict and confidentiality issues
  • Can be abruptly kicked out to make room for expansion of the landlord

YOUR OWN SUITE

The old-school route and that chosen by most well established firms is signing a long
term lease for an office, building out the suite and handling all the utilities and
accouterments in-house.

Clearly this is the least flexible route and the most capital intensive of them all. It does
give you near total control and may be cost effective if you have more than one attorney
or multiple staff, especially as compared to the high cost of multiple offices in a
professionally managed shared suite.

I have met only a few solo attorneys who signed long term leases, as the commitment and
capital costs tend to be too great, at least in Chicagoland.

PROS:

  • Can be the least expensive per square foot especially as a firm grows
  • Near total control

CONS:

  • Huge commitment
  • High capital requirements
  • Low flexibility
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I Have a Potential Client to Refer to Someone… so Now What?

By: Jenny R. Jeltes

Referring cases can be a mutually beneficial and profitable practice among solo
attorneys. Referring a case to another attorney raises many questions, however, therefore
it is important for attorneys to know when compensated referrals are appropriate.
Referrals are handled in several different ways, but there are fundamental requirements
that must be followed in all cases.

The ethics of attorney referrals are guided by Rule 1.5(e) of the Illinois Rules of
Professional Conduct. Rule 1.5(e) states:

(e) A division of a fee between lawyers who are not in the same firm may be made
only if:

(1) the division is in proportion to the services performed by each lawyer, or if the
primary service performed by one lawyer is the referral of the client to another lawyer
and each lawyer assumes joint financial responsibility for the representation;

(2) the client agrees to the arrangement, including the share each lawyer will
receive, and the agreement is confirmed in writing; and

(3) the total fee is reasonable.

Adopted July 1, 2009, effective January 1, 2010.

Referrals are most common in personal injury cases or other contingency matters.
In Illinois, a reasonable and common split is for the referring attorney to receive 1/3 of
any fees should the main attorney win and recover fees. Rule 1.5(e)(1) states, however,
that each lawyer must assume “joint financial responsibility” for the representation.
What does this mean? The notes under Rule 1.5 state that the lawyers must assume the
financial costs of the representation “as if they were in the same firm.” The referring
attorney is “on the hook” should the other attorney be sued for malpractice, which means
that he or she remains liable for any mistakes made regardless of his or her involvement.

A close reading of Rule 1.5 raises an important consideration regarding liability.
First, be sure that you know and trust the attorney to whom you are referring. Get
something in writing between the two of you and confirm that you both have current and
effective malpractice insurance. To be on the safe side, you may choose to ask the
attorney to whom you are referring whether or not they have been sued for malpractice in
the past. Although it may be an uncomfortable conversation, it is worth the discussion
when high stakes are involved. Due to liability concerns, some attorneys choose not to
be compensated for referrals. That decision can be difficult, however, when the
compensation is potentially high. There is nothing wrong with receiving compensation
for a referral. Many attorneys thrive on it and it can be very lucrative. If the referral is compensated, however, ensure your compliance with Rule 1.5 and remember you are not
immune from liability.

In addition to financial liability, Rule 1.5 contains a few other requirements. A
client must agree to the fee-sharing arrangement. If a client will not agree to the
arrangement, than the referring lawyer cannot be compensated. Attorneys must put their
agreement in writing (typically in the client’s Retention Agreement) stating that the client
understands the fee arrangement and consents to it. Lastly, Rule 1.5(e) states that the fee
must be “reasonable.”

Compensated referrals are less common in other practice areas, especially in
contentious, hourly work such as family law or probate litigation. In practice areas that
are not contingency fee based, compensating a referring lawyer can be an administrative
headache. If the total cost of representation is unknown and could go on for months or
even years, it is difficult to “share” the fees, especially when an attorney charges an upfront
retainer and cannot guarantee that future payments will be made.

Many attorneys agree to refer cases to each other when appropriate. A family
lawyer and an estate-planning lawyer may refer to each other, for example, or a real
estate attorney and an estate-planning lawyer may forge a good relationship. There are
several arrangements that may be mutually beneficial. Although these reciprocal
referrals are not necessarily exclusive, many attorneys will operate under the assumption
that they will give each other a case here and there on a good faith basis. This type of
practice can promote good will, test the waters for a more stable and continuing
relationship, and/or lay a foundation for a future partnership.

Jenny Jeltes
j.jeltes@jelteslaw.com
www.jelteslaw.com

Law Offices of J. Jeltes, Ltd., Copyright 2013

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