If you have read Parts 1 and 2 of this article, you will know that I think that new lawyers who start their new solo practices by doing residential real estate when they really want to specialize in some completely different area of law are, to be charitable, misguided.
I promised that I would provide some practical reasons for this position. So, here goes:
1. Although perhaps it is easier to get established in residential real estate than some other areas of practice, there is still a lot to learn in order to: (i) become competent, efficient, and profitable; (ii) comply with ethical rules; (iii) guard against negligence claims; (iv) comply with anti-money laundering regulations; (v) avoid identity theft and other scams; and (vi) comply with trust accounting rules. All of that takes time and mental energy away from learning to practice, and developing a reputation and client base, in the lawyer’s preferred area of practice.
2. The new lawyer who decides to do everything themselves without adequate support from a paralegal will quickly discover that it takes a lot of time. It will be difficult to do the work both competently and profitably. There will be no time left to develop expertise in their preferred area of practice and to market for clients in that specialty.
3. If instead, the new entrepreneur chooses to hire staff members with more experience than they have, they will have embarked upon the path of delegating work that they do not know how to do themselves. There are a good many reasons that this approach often does not end well. In an area of practice where millions of dollars flow through a trust account and it is against the rules to delegate certain functions, hiring the wrong person, or failing to supervise staff properly, can have disastrous results. Even where that is not an issue, it is easy for a lawyer to fall into bad habits when “supervising” volume transactions being done by others when the lawyer does not have the required knowledge base to do the work themselves.
Whichever way you look at it, a lawyer trying to generate cash flow doing residential real estate transactions is likely to get caught up in that world and struggle to find the time and mental energy to escape it.
They say that inertia is a power force. Things headed in a certain direction will continue to head there unless another force intervenes. Think about that in the context of a lawyer whose time and energy is wrapped up in practicing residential real estate. It is not going to be easy for them to end up with a successful career in employment law unless something changes.
Which takes me full circle to where I ended Part 1. If your plan is to start in residential real estate and end up somewhere more challenging, rewarding, and profitable, I think that you should think it out again.
This article was originally published by Law360 Canada, part of LexisNexis Canada Inc.