SPICE-ing Up Solo & Small Practice: Taking Legal Incubators to the Next Level

Gregg Doucette is a practicing attorney in North Carolina and the former SBA President at NCCU Law. He gives a thoughtful look on taking Legal Incubators to the next level. 

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 One doesn’t have to look far in the blawgosphere to learn the employment picture for lawyers is far from ideal.[1]  From the entire genre of “scamblogs” to near-daily tweets about layoffs in BigLaw or the crushing burden of law school debt, it’s tough being a lawyer these days.

The prevailing assumption -- of dubious accuracy, in our view -- is that this reflects a permanent realignment for the legal profession.  A “new normal.”  After all, the collapse of legal employment started long before the broader 2008 economic meltdown; if the legal market hasn’t recovered yet, why expect a turnaround any time soon?

All this “new normal” punditry rests on the assumption there is a fundamental mismatch between the public’s demand for legal services and the supply of lawyers willing to provide them.  To the pundits this is all basic economics:  until supply and demand come back to something vaguely resembling equilibrium, generations of new lawyers are going to be hard-pressed to find meaningful work in their chosen vocation.

Yet at the same time of this supposed imbalance, we see a news story in the ABA Journal on a spike in pro se litigants who can't afford legal counsel in this recession.[2]  Or a column a week earlier in the National Law Journal insisting all the unemployed lawyers have to do is cut their rates to get flooded by a mass of underserved middle class clients.[3]  That’s all without mentioning the reports in most states, North Carolina included, finding legal aid programs swamped with backlogged cases and also turning away folks who aren’t sufficiently poor to qualify for their services.[4]

The reality is not an aggregate mismatch between the supply of and demand for legal services, but a relatively simpler issue of pricing.  New lawyers need an avenue to keep their overhead low while also training them on the basics of law practice management, so they can make a living while still offering rates lower than the $200-per-hour the typical client can’t afford to pay.

SCHOOLS RESPOND TO BAD ECONOMY WITH TRADITIONAL INCUBATORS

To their credit, many law schools recognized the collapse in legal hiring early on -- if only because the rise in unemployed graduates started to have an impact on their rankings in U.S. News & World Report, where placement rates at graduation and nine months after graduation determine one-fifth of each law school’s rank.[5]

Beginning with CUNY School of Law in 2007, some of the more-innovative law schools created “incubators” to help graduates start up their own solo firms as a way of addressing the challenging hiring environment.[6]  Similar incubator concepts were already commonplace at tech-focused universities like N.C. State, [7] giving waves of entrepreneurs their start throughout the 2000s, but the application of incubators to the legal field was still a novelty.  If it took the typical solo practitioner three years to build a “stable” practice, the incubators would help practitioners reach that threshold faster while also providing an additional source of attorneys offering pro bono legal assistance.

Since CUNY Law got its program off the ground half a decade ago, law schools across the country have jumped on the bandwagon, including at the University of Missouri-Kansas City, the University of Maryland, and Pace University.[8]  Here in North Carolina, Charlotte School of Law announced plans for its own incubator last year, [9] which is getting off the ground this month.

The exact contours of each incubator vary but they share certain common features.  With each, the law school is the primary funder through either tuition revenues or grant receipts; the schools then create a “walled garden” into which recent graduates are admitted through an application process.  Some compensate those participants in the form of a modest stipend; most also compensate participants in the form of below-market rent charged for office space and other support services.  The time a graduate can use an incubator typically ranges from 12-18 months, with nearly all providing attorney mentors on-site, regular seminars on law practice management, and a tight-knit relationship with the sponsoring law school’s alumni association.  And all of the programs (appropriately) expect participants to devote time to serving pro bono clients.

TRADITIONAL APPROACH IS NECESSARY, BUT NOT SUFFICIENT

The creation of law firm incubators is a laudable development, not only for helping newly minted attorneys get on their feet but also for providing another avenue for generating pro bono legal service.  The only problem is that they cannot help the sheer volume of new attorneys being thrown into the marketplace every year.

Why?

Since law schools are responsible for covering the incubator’s overhead, there is an upper limit on the number of participants an incubator can admit.  Few even attempt to go beyond a dozen participants because expanding further is not only cost-prohibitive but also fraught with risk:  grant funds are never guaranteed, using current students’ tuition to fund office space for non-students raises ethical concerns, and providing below-market office space limits the ability of participants to self-finance the program.

To consider the impact of that participation cap, take my alma mater as an example.  This July the North Carolina Central University School of Law added 68 new attorneys to the market; historically, about two-thirds of them will hang a shingle or join a small firm.  If NCCU Law created its own incubator tomorrow and had it accommodate 30 participants, instantly making it one of the largest incubators in the country, they would still leave at least a dozen folks from July (and more from February) on the outside looking in.

That number only grows every single year, and is a problem faced by every law school contemplating whether to create an incubator program.

 A SCALABLE, OPEN SUPPLEMENT IS NEEDED

A consortium-style approach, open to graduates of all law schools, is necessary to supplement what each law school already does on its own.  That’s what the nonprofit North Carolina Small Practice Incubator and Collaboration Environment is working to create.

Above all, we will be open to every solo and small practitioner who wants to join; if more people are interested than space can accommodate, our solution is to add more space rather than turn people away.  We aim for financial self-sufficiency to enable that flexibility; rather than pay stipends to our participants, we focus on providing the mentorship, law practice management skills, and business development expertise for participants to pay themselves.  Being self-sustaining also enables us to provide service beyond the major metro areas, where rural citizens have trouble finding a competent lawyer due to existing practitioners’ conflicts of interest, cost, age and other factors.  In addition, we will serve our participants until their practices “outgrow” our facilities, giving them time to fully build a thriving practice before turning them back out into the marketplace.

Our goals in creating NC SPICE are threefold:  (i) enabling attorneys to still make a living while charging more-affordable rates and providing more pro bono service, (ii) training new attorneys on the practice of law so we can reduce the number running afoul of the Rules of Professional Conduct or simply providing poor service, and (iii) expanding the pool of competent solo and small practitioners who provide the bulk of legal services used by everyday North Carolinians.  By improving the affordability, accessibility, and quality of legal service provided by these practitioners, North Carolina can lead the nation in remaking how solo and small practice is done.

But we can’t do that without your help.  As our Board of Directors works on the initial SPICE Center, we need the insights and advice of attorneys like you on how we should move forward.  If there’s a service we should offer that we don’t, tell us.  If you’d like to serve as a mentor to new attorneys, tell us.  If you think NC SPICE is a misguided waste of time and energy, tell us that too.  You can reach us through our website at http://www.ncspice.org/ or on Twitter by following @nc_spice.  We want to work with each of you, and appreciate your input.

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T. Greg Doucette is a North Carolina small business attorney who practices in Wake, Durham, and Orange Counties.  T. Greg is the Executive Director of the North Carolina Small Practice Incubator and Collaboration Environment (NC SPICE), a first-of-its-kind nonprofit organization fusing the public interest focus of traditional law firm incubators with the scalability pioneered in the information technology industry.  He can be reached by phone at (919) 606-7158, via email to greg.doucette@ncspice.org, or on Twitter at @greg_doucette.

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[1] Tax Prof Blog, “2010-2020 Math:  200,000 Lawyer Jobs, 450,000 New Lawyers,” 09/06/2012, http://taxprof.typepad.com/taxprof_blog/2012/09/deborah-jones-merritt-.html.

[2] ABA Journal, “Lawyers Urged to Take on More Pro Bono Work to Offset Increase in Demand for Legal Services,” 08/20/2012, http://www.abajournal.com/news/article/lawyers_urged_to_take_on_more_pro_bono_work_to_offset_increase_in_demand/.

[3] National Law Journal, “Underserved middle class could sustain underemployed law graduates,” 08/15/2012, http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202567602357&Underserved_middle_class_could_sustain_underemployed_law_graduates.

[4] Legal Aid of North Carolina, “Need for Private Attorney Involvement (PAI),” http://www.legalaidnc.org/public/give/probono/About_LANC_Cases.aspx.

[5] U.S. News, “Methodology: Law School Rankings,” 2012, http://www.usnews.com/education/best-graduate-schools/top-law-schools/articles/2012/03/12/methodology-law-school-rankings.

[6] National Law Journal, “Incubators Give Birth to Flocks of Solo Practitioners”, 09/07/2011, http://www.law.com/jsp/tx/PubArticleTX.jsp?id=1202513553104.

[7] N.C. State University, “NC State University Technology Incubator,” http://techincubator.ncsu.edu/.

[8] ABA Journal, “Growing Justice,” Oct. 2012, pg. 30.

[9] N.C. Bar Association, “The Charlotte School of Law’s Commitment to Training Law Students to be Practice-Ready Attorneys Drives Our Transactional Course of Study,” 06/28/2011, http://businesslaw.ncbar.org/newsletters/nbijune2011/charlotte.aspx.