Hang up a shingle, throw open the door and watch the clients stream in.  This is the fantasy of every lawyer who starts a practice, the promise of happiness and success on his terms.  And it is, alas, a fantasy.  For most, the phone sits silent and the door swings in the wind.  The only thing in the mail is the bill from the social media marketing guru.

Not always, however.  Some new practices target an underserved niche, and draw an immediate response.  That’s what happened to Jorge Sanchez in Las Vegas.  From the Vegas Review-Journal :

In August 2008, just a couple of years out of law school, Jorge Sanchez launched what turned into a thriving Bankruptcy Court practice with hundreds of mostly Spanish-speaking clients.

At its height in 2009, the Sanchez Law Group, with its 12 employees, was taking on 42 new clients a month and incurring annual operating expenses of more than $600,000, Sanchez said in court documents this week.

But it all fell apart in March after Sanchez said he realized that he had acquired too many clients, too fast, and had hired some employees who weren’t loyal to him.

Now, after suffering an emotional breakdown, the 33-year-old Sanchez, a 2006 Michigan State law school graduate, has lost it all and is fighting to keep his license to practice law in Nevada.

Success?  Not exactly.  The niche isn’t merely bankruptcy law, though it’s the sort of practice that lends itself to the problems Sanchez suffered.  It’s the combination of low price, volume, and the comfort level of being trusted because of the appearance of ethnic camaraderie.  We see this in criminal defense as well.  And, it’s not a problem limited to new lawyers, who might be accused of not appreciating the nuts and bolts of understanding the business aspect of law.

There’s a disconnect on the part of the lawyer and the client.  The old saw is “fast, good or cheap, pick two.”  Even two may be more than a lawyer can reasonably produce.  Low cost, high volume, is one way to structure a practice.  It’s likely to work, given that the cost of legal services is more than most people can afford, or more precisely, are willing to pay.  Sure, they need lawyers.  No, they don’t want to lose their life savings on what is almost universally deemed dead money.

“After 18 months of spectacular growth and success as a young attorney, I saw that everything had been undone,” Sanchez wrote the court, while offering to help repair the damage he caused. “I had given everything for it and sacrificed my physical and mental health. I tried hiring more and more people — attorneys and experienced paralegals. I fired those who were being deceitful.

It appears that Sanchez cared about his clients, and wanted to serve them well.  He just couldn’t do the math.  The staff required to perform the work  he took on cost more than the fees he charged.  The time required to do the work required adequate staffing.  The numbers didn’t add up.

There was a way in which Sanchez could have made it work.  Overpromise, undeliver and lie to the clients about why they didn’t get what they thought they would get.  To his credit, Sanchez didn’t do this.  To his detriment, he paid the price.  Many other high volume, low price, practices aren’t nearly as well-intended as Sanchez.  The shame is that the success of these practices is usually predicated upon one skill:  The ability to successfully lie.

Some lawyers will make the decision to take on a particular matter for a fee below what the representation will cost.  Maybe even no fee at all.  But that’s an active decision in a specific matter.  It’s not a basis to establish a practice, as no practice can survive when the fees don’t cover the costs. 

The logistics of a law practice that is survivable aren’t rocket science.  There’s a certain amount of money that needs to be earned to pay the fixed and variable costs of a law practice, plus an amount above the costs that constitutes profit, the amount the lawyer gets to take home and use to feed the kids.  When the client is told that a fixed fee will take care of the case through trial, he need only take that fee and divide it by a reasonable hourly legal fee to understand what the lawyer anticipates as the amount of time he will expend on the case. 

Not sure what a reasonable hourly fee may be?  Not sure how many hours the lawyer would anticipate the case to take through completion?  Ask.  You might find that the numbers don’t make sense.  The lawyer might find that the numbers don’t make sense either.  For many, the anticipation is that the case will be completed with a plea after a few court appearances, maybe some motion papers.  They might say that it includes trial, but they haven’t included the time for trial in the fee.  There’s a message in there for you.

It could be that the lawyer, since most of his cases are concluded with a plea, is prepared to take the case to trial in the off-chance that it goes that far, and will eat the extra time.  But then, be clear about that up front, rather than find out on the eve of trial that he’s got no intention of going forward and instead, getting the full court press to plead guilty.

Jorge Sanchez’s practice may have ruined him professionally, but it apparently took a huge personal toll as well.  His clients are out their money and the legal services they sought in the first place.  Sanchez is broke and broken.  The machinery that’s supposed to prevent this from happening has failed, and the machinery that’s supposed to fix it afterward isn’t up to the job.  Other local lawyers are stepping into the breach to help them, despite the assumption that lawyers are such evil people that they would never do anything except for selfish reasons.  They are helping Sanchez’s client because his clients need help.  Not so evil, these lawyers.

Still, the better solution would be to not have this problem arise in the first place.  It’s easily avoided if you just do the math.