Main Disadvantages of Freelancing

Pitfalls of Freelancing for Legal Professionals

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The benefits of freelancing are many: better work-life balance, the ability to choose your work hours and clients and unlimited income potential. However, launching a freelance or virtual business requires careful planning and preparation. Before you make the transition from full-time employee to freelancer, you should be aware of the pitfalls of self-employment. Below are 20 drawbacks to consider.

  1. Isolation

    Working from home can be isolating. As a freelancer without employees, you have no interaction with management, staff or other employees. Networking, involvement in professional associations and social media can help relieve the isolation. Social media networks such as Twitter, LinkedIn and Facebook are great tools to connect with other legal professionals.​

  2. Lack of Benefits

    As an independent contractor, you do not receive employer-provided benefits such as vacation pay, health insurance, 401K and other common perks. Sick time is non-existent and malpractice or professional liability insurance can be costly.

  3. Variable Workloads

    As a freelancer, you will encounter busy times and lean times. You must learn to manage variable workloads and balance multiple competing priorities and deadlines.

  4. Unique Ethical Considerations

    Freelancing in the legal industry carries unique practical and ethical implications. Common ethical considerations include unauthorized practice of law, client disclosure and consent, confidentiality and data security issues and the need to perform thorough conflict checks.

  1. Variable Income

    Your workload and income may vary from month to month and can be difficult to predict, particularly in the early stages of your business. Large swings in income can make budgeting difficult.

  2. Round the Clock Coverage

    Today's clients expect 24/7 service. You may receive client calls late at night, on weekends and while you are on vacation. As a freelancer, you must ensure that you can provide round-to-clock coverage, especially if you serve clients in other time zones.

  1. Accountability

    As an independent contractor, you are the bottom line and the success or failure of the business rests on your shoulders. You must be highly self-motivated and disciplined to survive without a manager or other employees to keep you on track.

  2. Entertaining Clients

    Entertaining clients from home presents a new set of challenges including liability insurance and potential parking issues.

  3. Long Hours

    As a new business owner, you may initially work more hours than you worked in a traditional office setting. In addition to performing your core legal work, you will need to handle other tasks such as marketing and billing.

  4. Initial Cash Investment

    Most new businesses require an initial cash investment to purchase computer software, office equipment, office supplies, insurance and other business staples. Marketing expenses, web expenses, and other start-up costs can require thousands in upfront cash.

  5. Lack of Job Security

    Statistics show that most new businesses fail within the first two years. Moreover, you will not qualify for unemployment if your business does not succeed. For job security in the early stages of freelancing, you may want to keep your regular job and launch your freelance business part-time on the side until you develop an established client base.

  1. Administrative Responsibilities

    In addition to your legal work, you must also manage the duties of operating a business. Marketing, client development, office administration, billing and other tasks can eat up significant time and finances. You need to become familiar with tax regulations, business licensing requirements, accounting and bookkeeping, contract law and office technology.

  2. Lack of Paid Vacation or Personal Time Off

    If you are self-employed, paid sick time or vacation time is non-existent. You must develop a backup plan for times when you are unavailable to serve your clients or meet deadlines due to sickness, personal emergencies or vacations.

  3. Health Insurance

    Health insurance can be costly for self-employed workers since they cannot benefit from the volume-based discounts offered to large companies. Preexisting medical conditions can make finding coverage difficult.

  1. CLEs

    If you are a lawyer or paralegal, you must keep up with your continuing legal education obligations on your own time and through your own finances. CLE costs and travel expenses can add up.

  2. Client Development

    One of the most significant challenges of launching a new business is gaining clients. You must constantly promote yourself and your business to keep and develop new clients. Marketing your talents can represent another part-time job in addition to your legal work.

  3. Resources

    Law firms and legal employers have libraries and databases of forms, treatises, rule books, flat-fee computer research, and other legal resources. As a virtual worker, you will need to build your own library of resources and forms for your practice area. Some of these resources may require costly purchases or subscriptions. You also will no longer have access to support personnel, such as help desk staffers and network administrators.

  4. Tax Consequences

    As an independent contractor, you are subject to an extra self-employment tax. Since an independent contractor does not have taxes deducted from client checks, you must pay estimated taxes on a quarterly basis if your tax liability for the year will exceed $1,000. You must also keep careful records of all your expenditures.

  5. Lack of Bonuses

    As a freelancer, you do not receive bonuses, awards or employer recognition. Feedback from clients is great but does not usually entail extra financial remuneration.

  6. Distractions

    Working from home can pose many distractions from personal telephone calls to children, family and visitors to the lure of the refrigerator, television, household chores and personal errands. You must be focused, motivated and disciplined.

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