Statues of Liberty: Behind the Books, How Your Local Law Firm Makes Money (or Not) | ARLnow
This sponsored column is by Law Office of James Montana PLLC. Any questions regarding this matter should be directed to James Montana, Esq., Doran Shemin, Esq., and Laura Lorenzo, Esq., practicing attorneys at The Law Firm of James Montana PLLC, an immigration-focused law firm located in Arlington, Virginia. The legal information provided here is general in nature. If you want legal advice, Contact us for an appointment.
Note: This column was written by James Montana, owner of our small law firm. The opinions expressed herein are his own.
Your local lawyer, on the phone, applying for a loan or making his next appointment for some frosty Guy Fieri advice. Photo via Doran M. Shemin.
Every time I walk into a business, I find myself thinking, like Admiral Stockdale: Who am I? Why am I here? After overcoming these philosophical hurdles, however, I generally wonder: Am I getting a good deal? This is an important question, and the purpose of this column is to answer that question for you. I hope this gives you some insight into the finances of a local law firm.
The balance sheet has two sides: income and expenditure. Revenues are determined by the number of cases and the price. Outside of our corporate immigration work, we charge a flat fee, and fees range from $300 for a work permit to $5,000 for deportation defense. The three attorneys here typically have a caseload of between 100 and 150 cases. Does this mean that, at (say) 100 cases, and (say) $3,000 per case, a lawyer here generates $300,000 a year? Certainly not. Most immigration cases take over a year to get to the finish line. Court cases sometimes take more than a decade. So managing our income means having a long-term view. If we think we can’t bear the load in 2023, 2024, or 2025, we refuse the money today.
Balancing our need for income with our professional obligation to keep cases at a manageable level is tricky. We try to keep fees low and customer numbers high. Given these commitments, a good rainmaker could generate very low six-figure fees.
Let’s move (perhaps) to the most interesting side of the balance sheet: where does this money go?
By far the largest expense is salaries. I don’t want to divulge lawyers’ salaries to the entire internet, but you can infer (1) gross income described above and (2) expenses described below that (3) we’re not kidding to our third home in Cancún.
We spend approximately $20,000 on rent, utilities and maintenance each year. (That’s not much – we squeeze three avocados into 500 square feet, and when we need something fixed, I buy the supplies from Ayers Hardware.)
We spend about $10,000 a year on paper, toner, free customer coffee, and other office supplies.
We pay about $20,000 a year for a remote host service. Our friends at Ruby Receptionists answer calls twelve hours a day, five days a week, in English and Spanish, and are even worth that extraordinary amount of pennies. Picking up the phone is an important part of our job.
We spend about $8,000 a year on postage. (13,793 first class stamps? No, not really. We ship almost all of our government correspondence by priority mail or certified mail because, with all due respect to our friends at USCIS, we trust , but check all shipments with immigration.)
We spend approximately $12,000 a year on payroll, workers’ compensation and accounting services, and when you factor in the cost of our practice management software, commercial insurance and malpractice insurance, you get about $20,000.
The health insurance of our three lawyers — we cover 70% of the costs, for both workers and dependents — costs a modest sum of $20,000 a year.
Amidst other odds and ends, we have a small advertising budget, most of which goes to our friends at ARLnow. No, we won’t tell you how much. But it is money well spent!
Do you have questions about the economics of the practice of law? Are you planning to start your own law firm? We want more people to work in our field, and we’re happy to mentor anyone who is considering trying it out. And, as always, we welcome feedback and will respond to whatever we can.