Branching Out On Your Own?
Things to consider before
going it alone as a freelancer.
By Stacey Hunt, CLA, CAS, and Veronica DeCoster
March/April 2002 Issue
entertain the idea of becoming self-employed for a variety of reasons: a
retiring boss, downsizing, flexibility or a desire for independence.
Whatever the reason, it isn’t a decision that should be taken lightly.
While working from home sounds enviable — and often it is — there are
some definite downsides that bear careful consideration.
This article will
take you through the pros and cons of choosing to become a freelance
paralegal. Most importantly, it will arm you with information on how to
operate a successful business while
maintaining your sanity.
Do You Have
What It Takes?
The best thing about being self-employed is you are your own
boss. You have ultimate autonomy as to when, where, how long and how
hard you work. Other than meeting the deadlines imposed by your attorney
clients, you answer to no one. You get to enjoy professional interaction
with a variety of firms without subjecting yourself to office politics.
It’s an opportunity to expand your field of practice to meet the needs
of the diverse firms that retain you. And most of all, nothing can match
the sense of entrepreneurial satisfaction achieved by sending out a
stack of bills and watching the checks come rolling in … all made out
On the flip side, the worst thing about
being self-employed is you are your own boss. There is no one but
yourself to turn to when your paycheck doesn’t come in. There is no
guarantee one month will be as profitable as the next. No one is paying
you sick time or vacation time; paid holidays will be a thing of the
past, unless you choose to work on them. Promoting your business is an
ongoing necessity, even if it isn’t something that comes naturally to
you. You have to pay for your own health insurance and fund your own
retirement. You might be handed projects that none of the office
paralegals care to tackle. And your “office” is open round-the-clock.
Making the decision to freelance is a
balancing act that requires weighing the potential ups and downs to
determine whether it’s right for you. If you are a self-starter, you
might be driven to work more hours than there are in a day. On the other
hand, if not, you must resist the temptation to be distracted by
personal tasks or social engagements that steal your billable hours.
Remember the only structure your business will have is what you create,
but it’s your creation, not something imposed on you by an employer.
The most important thing is to know
yourself: Do you have the discipline to “get to work” when there is no
one to answer to?
Once you decide to take the plunge,
some preparations are in order.
One of the biggest mistakes some paralegals make is jumping
into freelancing without having a solid foundation of law office
experience. No amount of education can substitute for hands-on training
in managing case files, meeting local court requirements, and knowing,
without being told, the necessary procedural steps to accomplish your
task. Given the nature of freelance work, your attorney clients will not
have time to hold your hand, and you will be expected to work with
minimal supervision. Law firm experience also exposes you to many
different personalities and styles. This will teach you to be more
adaptable to the quirks of your attorney clients.
An often overlooked benefit of working
in a law office is the networking opportunity. For example, a litigation
paralegal is in daily contact with the staff members of opposing firms.
Each of these firms is a potential source of work when the time comes
for you to start marketing your business. If you have earned the respect
of staff members, they will more readily recommend you to their attorney
Therefore, it isn’t advisable to try to
forge a freelance career directly out of paralegal school. Take the time
to establish yourself in the legal community and absorb as much
practical knowledge as possible.
Once you have acquired the requisite
experience, your next step is to build a nest egg. This serves two
purposes. First, you will need to outlay at least $5,000 for equipment,
furniture, reference materials, software and supplies. Second, you might
need to supplement your income with savings while your business is being
established or during the occasional slow times.
Unless you are independently wealthy or
the recipient of a substantial inheritance, your nest egg will probably
come from your paycheck.
The best time to start soliciting
business is while you still have the comfort of steady employment.
In fact, many paralegals launch their
freelance businesses at home in the evenings while maintaining their
full-time positions. Ethically, you should exercise great discretion in
the assignments you accept to avoid any possibility of a conflict of
interest. Since you will be working with multiple law firms, which may
end up representing opposing interests, ethics require you to maintain a
system for conflict checks.
While law firms have sophisticated
software for this purpose, it isn’t necessary for you to incur this
expense. Simply keep a log of the names of all parties or individuals,
companies or entities involved in the cases or matters in which you have
performed work. Before taking on a new assignment, search this log to
make sure you have not worked for a competing interest. If you find you
have, all is not lost. You need not automatically decline the project.
Disclose the potential conflict to both sides and see if you can obtain
a waiver. If not, politely decline the new assignment. The professional
respect and trust you will garner by recognizing and disclosing the
conflict will reap benefits in the future.
Once you know the business is out
there, you will feel more comfortable cutting the cord with your firm.
Always leave on good terms, however, because your former employer could
become one of your future clients.
An excellent source of referrals is
through your local paralegal association. Some associations keep a
resumé bank of members who freelance and match them with attorneys
needing contract work performed. Often attorneys will leave it up to
their existing paralegals to find other legal assistants to help with
overflow work. Friendships made at association meetings might give you
an advantage in that you could be the first person they think of when
that time comes.
Another avenue to consider: Responding
to advertisements from firms or corporations seeking permanent
employees. The task of finding the right employee can be a protracted
one. Having someone in place to pinch-hit in the interim — even if only
temporarily — can offer employers the safety net they need to conduct a
thorough search without being rushed. With a properly worded pitch, you
can educate employers on the value of temporary paralegal work to keep
things moving while they search for their ideal candidate.
Although most people already have a home computer, you will
probably want a computer exclusively for your business use. Your family
must understand this computer isn’t for sharing. You would not want to
come home to find your son or daughter accidentally deleted the trial
brief you had been working on for two days while making room for
downloading MP3s. The computer should be set up on a comfortable,
ergonomically correct work station.
Most firms use either Microsoft Word or
Corel WordPerfect for their word processing program. For maximum
compatibility, it’s strongly recommended you have both programs
installed on your computer and be knowledgeable in the operation of
each. Your computer files should be password protected to ensure
confidentiality. Although time and billing software is convenient, it
isn’t absolutely necessary. Adequate bills can be created in any word
processing or spreadsheet program. You can either track your billable
time on the computer or on hard copies, such as time sheets, a calendar
or personal organizer, depending on your personal preference.
Another helpful tool is a calendaring
program, such as Microsoft Outlook, to track your appointments and
project due dates. You might need specialized software specific in the
area of law in which you practice. Having access to an online research
service is invaluable. Most importantly, you must have a reliable backup
system and use it regularly. Some attorneys may even require this of you
as a condition of contracting with their firms.
To create professional documents, you
will need a high-quality laser or ink-jet printer. A high-speed Internet
connection for performing online research or transmitting completed
materials to your clients is a necessity. You must have a separate land
line or cell phone so you are able to take calls in your home office
while online. Documents referencing case information should be kept in a
locked file cabinet. And, of course, you will need a reliable vehicle.
What Are You
One of the toughest things you will have to determine is how
much to bill for your time. If you charge too much, you will not get any
On the other hand, if you start low,
you may encounter resistance to a rate increase. You will also need to
consider your extemporaneous costs of doing business, such as paying
your own Social Security, health care insurance, disability insurance,
vacation pay and so forth. Some strategies for establishing your rate
- Talking to other freelancers, who
might be willing to share their rate information with you, or talk to
firms you know that retain freelancers to see what they charge. Your
rate should be comparable for the type of work performed.
- Asking what rate firms bill for
their in-house paralegals. Your rate should leave them a comfortable
- If you have particular expertise or
many years of experience, you might feel comfortable charging slightly
more than the going rate.
- Consider basing your rate on the
type of project. For example, offer a basic rate for simpler tasks
(summarizing depositions) and an advanced rate for more complex work
(researching and drafting dispositive motions).
- Another possibility is to bill the
client on a “per project” basis, also known as value billing.
Once you have properly researched your
potential billing rate, it’s time to consider how you are going to get
paid. There are some options to consider when billing, but you should
coordinate with your attorney clients on how they want to be billed. The
easiest method for you would be to bill all clients at the end of each
month. However, this might not work for all of your clients. Some firms
might want you to bill them at the conclusion of each project. Others
might have a billing cycle that ends at a different day of the month,
such as the 20th, which means they would need your bill by the 15th of
each month. Include language on your bill such as “Payment due within 30
days” so the recipient knows when you expect to be paid.
It might also be wise, when entering
into business arrangements with firms or corporations, to ask about
their billing cycle. Some law firms and corporations have policies that
state they will pay within a certain time period following receipt of an
invoice. Be sure to look into this matter so you can adapt or negotiate
Business can also still be done on a
handshake, but you might find firms ask for a more formal expression of
your business agreement. There might be a variety of reasons for this,
the most important being to protect the firm from violating Internal
Revenue Service (IRS) and workers’ compensation laws should there be a
question of whether you are an employee rather than an independent
contractor. Independent contractor agreements can also define the firm’s
expectations, the amount you will charge and the scope of your project.
Look for sample independent contractor
agreements in the form’s books published in your state.
Working for attorneys as a freelance paralegal isn’t much
different than working for them in-house. Many of the same rules apply.
For example, you should always try to get your assignments in writing,
if possible, and don’t hesitate to ask questions if you need further
clarification. Pin the attorney down on a deadline for the project, and
meet or beat it. Also try to get some parameters on how much time you
should spend on the project, so there are no surprises when the firm
receives your bill.
Since you will not be working down the
hall, make sure you have all the information you need before you leave
with the assignment. If you find you need further guidance once you
actually begin your work, using e-mail to communicate with the attorney
will provide you a written record of the additional instructions.
Each law firm has its own particular
way of formatting such things as legal memoranda, deposition and record
summaries, agreements, contracts and the like. For the sake of
consistency, and for your own efficiency, obtain samples of any forms
you might need for your project. If the firm doesn’t have samples
available, feel free to use something that worked successfully for
another firm. One of the benefits of freelancing is your exposure to
many different methods of streamlining the practice of law and your
ability to share those ideas.
Establish with your attorney client the
manner in which completed projects are to be transmitted. Possible
choices are to e-mail them to the firm or deliver them on a disk.
Because the firm will need to have an electronic version of the project
in its computer network for editing or future reference, hard copies
alone will not suffice.
For maximum client satisfaction, you
should be willing to be flexible. There might be occasions when the
attorney client doesn’t wish you to take files off-site and wants the
project completed in his or her office. Although you may prefer to take
the work home, compromise is often required in order to keep the
assignment. And if you thought rushes would be a thing of the past,
think again. It’s a fact of life that freelance paralegals are called in
at the last minute to help with unanticipated work crunches or last
minute trial preparation. You may want to leave some flex time in your
work schedule for these expected “unexpected” situations. To make this
more palatable, you may want to build a rush fee into your billing
It isn’t always true that absence makes the heart grow
fonder. Where self-employment is concerned, the old cliché “out of
sight, out of mind” often applies, so it’s important to maintain open
lines of communication.
Initially, marketing will get you
started, and in the long term, it will keep you going. In “Paralegal
Career Guide,” Third Edition, author Chere B. Estrin recommended
marketing on a continuous basis.
“Many freelancers have down periods because they were too busy working
on one assignment to market for the next. … It’s better to present
yourself to a firm as booked up and looking ahead for the next
assignment, than willing to take almost anything.”
Marketing can be as easy as dropping
flyers in attorney drop boxes at the courthouse or placing an
advertisement in the local bar association newsletter. More
sophisticated ideas include writing articles for the bar association on
procedural issues or use of paralegals, or volunteering to hold brown
bag seminars for local firms on a familiar topic.
Be careful not to get so focused on
courting new clients that you neglect your established ones. There is
greater security in having a handful of clients who use you exclusively
than in getting piecemeal work from multiple clients who retain you for
a single assignment only. Sending holiday cards and gifts to your
clients or inviting them to lunch is one way to help keep your name at
the top of their lists. Another nice touch would be to bring the firm a
basket of cookies or other goodies for no reason other than to express
your gratitude for their business.
Don’t forget the other people who help
you in your day-to-day business. A box of chocolates for the law
librarian who helps you with your research or the process server who
delivers your subpoenas will be appreciated and not forgotten.
One of the great dangers of working from home is you can
never get away from the office. It’s imperative you separate your work
space from your living environment so you can literally “leave” work at
the end of the day. Moreover, creating a separate work space will lessen
the likelihood of your family intruding during your work hours.
Establishing these boundaries for you and your family will maintain your
productivity during work time and allow you to relax during your off
When you are getting your business off
the ground, you may need to be prepared to take all projects offered so
you can prove yourself and establish your clientele. This may require
some long hours, but will give you the reputation of reliability. Once
you have created your niche and are convinced there is enough work to
keep you busy, you should begin to feel more comfortable declining
assignments that will overburden you.
While it’s never easy to say “no” to a
potential or current client, your sanity may depend on it. You should
overcome the fear that turning a client down will turn him or her away
for good. If you have a solid reputation and a good working relationship
with your clients, an occasional “no” will cause no harm.
An alternative to saying no is to have
an on-call relationship with another freelancer, with whom you can
subcontract to take on your overflow work. This person should be someone
with skills comparable to your own, so you don’t have to redo or edit
the work before turning it in. A relationship like this can allow you to
take a vacation with piece of mind.
Since you are a paralegal and not a bean counter, it would be
wise to defer tax preparation to a bookkeeper or accountant (unless, of
course, you are a tax paralegal). Your energy is better spent staying
abreast of the law, not keeping up with the ever-changing availability
of itemized deductions.
There are a variety of tricks you might not be aware of which could be
money out of your pocket when tax time rolls around.
You will need to track all business
expenditures, as well as all monies coming in, so those figures can be
turned over to your tax preparer in a usable format. Opening a separate
business checking account will consolidate your accounts payable and
accounts receivable into one ledger. You should keep copies of every
invoice, every check received and every expense receipt. These amounts
can be posted to a manual ledger, an electronic spreadsheet or financial
software, such as Quicken, for transmission to your tax preparer. If
record keeping doesn’t come naturally to you, a bookkeeper can also help
you set up a system and choose software to make your life easier.
There are many ways to run afoul of the
IRS. The easiest is not paying your taxes. Make sure you budget for your
state and federal quarterly estimated tax payments, as well as any
additional amount you might owe with your annual tax return. Make sure
your bookkeeper has the necessary information for issuing 1099’s to your
subcontractors. In the event you are audited, you will need
documentation proving your business income and deductions.
A more subtle danger is the possibility
of inadvertently losing your independent contractor status in the eyes
of the IRS. Should that happen, both you and your attorney client may
face monetary penalties. The IRS draws a distinction between employees
and independent contractors based on several criteria.
Paralegals who have only one attorney
client or who don’t exercise enough independence in how they perform
their work are at risk of being considered employees of the attorney.
Your tax advisor is your best resource in determining whether you have
crossed the line to employee status.
There are a myriad of issues to consider before proceeding to
launch your own freelance paralegal business. The effort is by no means
cut and dry, and having a solid foundation of paralegal experience and a
network of professional peers to fall back on is imperative. However, if
freelancing is right for you, it can be a tremendously rewarding and
fulfilling experience. With hard work and the support of your family,
your paralegal career will take on new dimensions as you expand your
role in the legal community.
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