Celebrating 10 years! 2007-2017

Expenses with office sharing

I've been solo for awhile but have been offered a chance to ncattorney02/04/17
40% of your billing sounds ridiculously high, but it depends cranky02/04/17
sometimes I'm truly amazed at how little attorney's rates ar dingbat02/06/17
40% is crazy high unless you're getting a dedicated paralega blakesq02/04/17
I was offered one at 35%, and I turned it down because I tho fettywap02/04/17
I have run a small firm with 3-7 associates for the past dec napoleone02/05/17
"The trouble with this system is low performers don't cover jeffm02/06/17
ncattorney (Feb 4, 2017 - 5:28 pm)

I've been solo for awhile but have been offered a chance to practice with a firm where they will take a cut off of what I bill, based on expenses. Currently expenses are around 40%- includes office, utilities, supplies etc. There is a receptionist but no secretary. Firm will pay my bar dues & CLE costs. There is no website, marketing or advertising--- old school type firm but very secure with many established clients. Rent is around 25% of the total exoensrs of the firm (the 40% cut). I think the rent is high. Also, firm only bills at $150-175 an hour, even though the attorneys have been practicing over 20 years. Anyone else in this type situation? Is 40% reasonable?

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cranky (Feb 4, 2017 - 5:39 pm)

40% of your billing sounds ridiculously high, but it depends on how well you're currently doing on your own, and whether this place is going to generate enough extra business for you to make it worthwhile. E.g., how much is your current rent and overhead? Do you really need that receptionist and is she going to make your life that much easier, given the cost you will share? $150-175/hour sounds low for such experienced attorneys.

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dingbat (Feb 6, 2017 - 5:36 pm)

sometimes I'm truly amazed at how little attorney's rates are in some places. Talked to a partner at a mid-size in a tertiary city, who's a widely acknowledged expert. Fee was something like $180 per hour. Then I talk to a solo in a small town who charges $500/hr, or a 1st year associate in NY who's billed at a similar rate.

I'm not surprised when companies give more and more (non-essential) business to smaller firms in smaller markets - those guys are idiots

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blakesq (Feb 4, 2017 - 6:03 pm)

40% is crazy high unless you're getting a dedicated paralegal, and they are paying your health insurance, and other things. I would make a counter offer of simply paying what your share of expenses actually are.

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fettywap (Feb 4, 2017 - 8:19 pm)

I was offered one at 35%, and I turned it down because I thought I was getting screwed.

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napoleone (Feb 5, 2017 - 11:59 pm)

I have run a small firm with 3-7 associates for the past decade. The trouble with this system is low performers don't cover the overhead and high performers pay too much. At my firm associates get 50% of collected fees for doing the work, 15% for originating the work, and the firm gets 35%. Remember the firm is paying payroll tax, unemployment, workers comp, telephone, Internet, computer and IT support, malpractice insurance, receptionist, office supplies , etc.

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jeffm (Feb 6, 2017 - 4:07 pm)

"The trouble with this system is low performers don't cover the overhead and high performers pay too much."

Yes, that's a strange way to share rent. I think, OP, you should figure out what is a fair fixed amount you should pay for rent and just pay that amount.

More important that rent-sharing, though, could be business referral. If you can leverage them for a chunk of business, it could make over-paying for rent perfectly fine.

Best to make the arrangement a month-to-month one no matter what. That way, either side can quit the deal on 30 days' notice.

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