Solo law firm owner shares advice on running your own business

Patrick Olmstead didn’t realize he wanted his own legal practice until well after law school.

After spending several years working at Thompson Coburn LLP in St. Louis, followed by Indianapolis-based Hoover Hull LLP, Olmstead took the leap and opened his own firm. It offers general legal services but also has niches in representing other attorneys as well as designers, artists and publishers in the board gaming industry.

He wanted to be “as close to the apex” of an organization as possible, he said, leading him to become the owner and sole attorney at Greenwood-based Patrick Olmstead Law LLP. His desire to be at the heart of the operation, as well as seeing struggles among partners at small firms, caused him to make the move.

For Olmstead, operating a law firm has come with plenty of trial and error, an awareness of one’s strengths and weaknesses and the acknowledgment that one attorney simply can’t be good at everything. That hasn’t hindered Olmstead, however, and he encourages young attorneys to not let it stop them, either.

“As long as you’re willing to do the work and learn how to do it, you can say yes,” he said of accepting new and unfamiliar challenges. “You just got to make time to do the work.”

In a conversation with The Indiana Lawyer’s Maura Johnson, Olmstead shares more about what it’s like running his own firm and how he encourages attorneys to do the same thing.

When did you choose to start your own firm and why?

When I didn’t make enough money and it was time to kick me out of the nest, I interviewed with some firms and also thought about opening my own. I was very lucky to have a supportive spouse, so we took the risk.

I’d been a member of the Solo and Small Firm listserv from the Indiana State Bar Association for a long time … so I went up there and met some neat people, and that really sparked an interest. I stayed on as a member of the programming and planning committee for the small firm conference and stayed involved with the listserv.

So when I wanted to go out on my own, I had a lot of people I could reach out to and talk to about it. That made that transition a lot easier for me.

What challenges did you face when you first opened your solo firm?

The technical challenges were the ones that hit me the first week. Other things that were a real challenge were lawyers (he represented) not paying me. I had not really been used to that, and that was devastating.

Another (challenge) was judges no longer ruling in my favor. I’d had a lot of success as a lawyer. All of a sudden, when you don’t have John Hoover or Andy Hull’s name under yours, for some reason, I didn’t get rulings anymore. Judges were delaying cases, and so that made it really difficult to price things out for my clients, as well.

Can you give me an example where you didn’t get paid?

They were each disciplinary matters. One was set for a final hearing. Luckily, I had included ‘magic language’ in my engagement agreement that allowed me to withdraw. Incidentally, that led to one of my favorite days practicing law. I spent a Sunday reviewing the file, explaining how we got to this situation, the informed decisions along the way, etc. That way, I could get my client or any successor counsel up to speed. It was a cathartic experience.

How did you learn to build your reputation and establish your law firm?

One of the things I did very early on is realize my limitations. Luckily, through the Solo and Small Firm Conference and the listserv, I developed a list of people I was interested in working with, and I’d reach out to them and co-counsel. Where that really helped me was watching how they did things. Watching them interact with clients and how they interviewed a client and how they dealt with delicate situations, that was really helpful for me.

If you want people to know who you are, there will be questions that come up on listservs, and if you answer those in an erudite manner, using citations and stuff like that, it will impress people. I always encourage people to put your name, your phone number, your email address in every email that you send out, in every listserv post. That way, I can copy your contact information and put it into my contacts. Then, when I have someone who’s interested, I just copy and paste. And sometimes I would send them the actual listserv post and say, ‘Here’s an example of how they think.’

How did your experience working at other firms prepare you to run a law firm?

There’s two great ways to get wisdom: Go out and make your own mistakes and hope you survive them. Then there’s learning from others’ mistakes. Watching longtime lawyers who had been partners in firms and have the firm implode, and talking to them … I would ask them, ‘What did you do well?’ ‘What do you wish you’d done differently?’

One of the most difficult things is handling success. Anyone can be poor together. But when there’s a big case that comes in, I’ve seen that that causes more firms to fail than anything else. It helps to discuss that up front, ‘What are we going to do when [an attorney] gets a $300,000 fee? Do they get a lot more?’ Because all of a sudden, they might think that they’re a lot more valuable than anybody else because they’re the one who happened to hit it big that year, and that causes a lot of things to fail.

The other thing is how much money you’re going to keep in your firm. I’d learned watching other firms struggle. They have a good year; they hire more staff. They’re slow to fire their staff when things get slow at the firm. And all of a sudden, expenses stay static or are rising, but income falls off. Taking lines of credit is something I always viewed as very dangerous. I don’t want to be in business with the bank.

How have you handled periods of time when work is slow?

I kept money in the firm … that saved me. About five years into my practice, I just had a dry spell, and this was after some people didn’t pay me. The phone wasn’t ringing, and I talked with my wife, who had chosen that year to start working for me, and I said, ‘We just need to wait it out.’

One of the things I was taught early was when you have downtime, take a break. It’s hard to do, but I was told that you’re always going to have the situation where something comes up, and you can’t be there for your anniversary or your spouse’s birthday. But when things are slow, make time for them. And keep a list of all the things you need to get done at your firm. That way, at least you’re working productively.

What advice do you have for attorneys who may want to start their own firm?

Talking to friends and mentors first really helps.

You need to inventory your strengths and weaknesses. You need to really know: Do you know how to run a business? Can you say no? One of the most important questions to ask [clients]: How are you going to pay me? And if you can’t ask that, that’s going to be difficult. Knowing how to price your services and how to take various forms of payments, learning to be creative on that.

Are you self-motivated? Do you like to sell yourself, sell your services? Are you going to be able to run the firm? Are you going to be able to do the work? Are you going to be able to do the books? Will you be able to collect the money? If you’re not good at one of those, then you need to hire someone because otherwise, [that] will harm you.•