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When you’ve made the decision to start your own law firm, it’s going to be a life-changing experience - it can also be incredibly rewarding. Out of the many benefits lawyers can enjoy by going out on their own, some of the most impactful can be:
Of course, a lot goes into building a new law firm from the ground up, including many challenges. You will need to define your business strategies clearly, your expectations from the firm, and in what direction you expect and want to grow in. Devising a realistic and detailed plan and taking steps appropriately can determine the success of your firm.
Below you’ll find a carefully curated guide on how to start a law firm. With intent, discipline, and careful coordination, you could be on your way to owning your own successful law practice sooner than you think.
Before you dive headfirst into beginning your law firm, it’s crucial that you have a clear grasp of why you’re embarking on this journey. When you make this decision, it’s going to impact your life and your career going forward profoundly. While starting your firm may sound appealing, it’s a lot of hard work, and it helps if you’re one hundred percent invested in it.
Consider the following:
Determining if you want to take on a partner(s) or go in as a solo practitioner is an important decision. Very often, lawyers who are starting their own firm will do so with one or multiple partners who share the same vision. It can be helpful to partner, as each attorney will add their own knowledge and expertise; However, some lawyers prefer to start their firms on their own, allowing themselves the opportunity to develop their concept and dig their heels in before bringing someone else into the mix.
Choosing the name for your firm is not only fun, but it’s also a pretty important decision. Don’t rush to any conclusions in this area - With any luck, you’ll be practicing law under this name for many years to come. The name of your firm is one that should exude confidence, easily identify the type of firm you are, and be easily remembered by potential clients. Keep in mind that down the road you’ll be beginning a website for your law firm - you’ll want to be sure your firm’s name is internet-friendly as well.
Experts in any industry will tell you one of the most critical steps to starting your own company is consulting with those who’ve already “been there, done that.” Be a sponge. Soak up all the knowledge offered to you and take diligent notes. After you’ve decided to start your own firm, schedule lunches, phone calls, and coffee dates with legal professionals you respect and who are willing to help. Be sure to ask the tough questions, i.e. What to do when (insert problem here) goes wrong? You’ll be glad you did late one night when you run into a new issue and need to make a tough call.
If there is anything the legal field isn’t about, it’s generalizing. When you aim to begin your own legal start-up, you’ll need to have a precise idea of what type of law you plan to practice. It’s essential to weigh the pros and cons of each area of law and make this decision carefully. Remember, while one area of law might be the most appealing, it’s possibly not the most practical of choices.
Below are some thoughts for you to consider while you narrow things down:
Opening any business, particularly a law firm, is going to require money. It won’t necessarily require much financial income to start, but it is going to rely heavily on having a clearly defined budget, strategy, and plan for financial stability and growth. Your financial plan should be one to help your law firm thrive, while also planning for when you may not be bringing in as much money as you need to meet our bottom line. According to Clio’s Legal Trends Report, many lawyers often fall short of having a sound financial plan in place for their firms. They estimate that lawyers spend just 2.3 hours per day on billable tasks - meaning many are working simply to keep going and retain some type of income instead of seeing actual growth.
As previously mentioned, it doesn’t necessarily take as much money as you’d think to start-up your own law firm, but it does require some element of a nest egg. According to Lawyerist, you should realistically plan for $5,000 to $15,000 in savings for starting your own firm. This amount can vary, however, depending on your financial plan, location, type of practice, office space requirements, and other components.
Your law firm is going to require the necessary financial accounts to keep your finances running smoothly. You’ll need to begin with two types of accounts: your operating account and your client’s trust account. The operating account is meant to house all business financials that are required to run your firm, pay yourself, and pay any employees you have. Your client’s trust account should in no way be impacted by operating expenses and should always be maintained separately.
In the legal profession, especially in certain areas, it can all boil down to whom you know. By building an excellent referral network, you’re helping your law firm gain much-needed referrals and reputability. By reaching out to and networking with lawyers in other fields of law, you can gain valuable referral sources for new clients. The goal is to be at the top of everyone’s Rolodex when a client contacts them looking for a lawyer who specializes in your area. Don’t be a pest, but regularly reach out, offer to take a legal acquaintance to lunch, attend get-togethers and conferences - the goal is to establish a name for yourself.
Depending on the type of law you chose to practice, your first clients could be right under your nose in the form of friends, family members, and the referrals they send your way. At this crucial point in time, consider everyone a potential client and “always be selling.” At the start of your practice, when you put the work in to secure your first clients, it often results in ongoing work from referrals and reputation.
For many just starting out, they choose to work out of a home office instead of securing their own space. When money’s tight and your firm is new, holding off on establishing an office can make sense; However, it can also hurt your business depending on how often you meet with clients and what type of clients they are. CEO’s of a large corporation, for instance, aren’t going to be too keen on sitting in your living room and reviewing the legalities of their business. As a compromise, some start-up law firms will find a shared space office location, where they can open up shop while sharing space with other companies to save money. Some law firms even choose to go the virtual route; Learn more about running a virtual law firm here.
The absolute last thing you want to do is get your law firm going and then run into an issue of missing the proper permits, licenses, insurance, or other state requirements. It’s imperative that you dedicate time to researching what you’ll legally need to conduct business and practice law in your area. Then, apply for the appropriate licenses and permits and continue moving forward only once you have what’s necessary.
Aside from referrals and networking, how do you plan to get your law firm's name out there? Devising a marketing strategy for your new firm is imperative. Here are some things to consider:
Of course there are plenty of books as well that address marketing. We have complied a great list here as well for you to check out.
As mentioned before, you’ll absolutely be expected to have a website for your law firm. Moreover, why wouldn’t you want one? A well-crafted website can be an essential and valuable marketing tool for your law firm. If you plan to utilize it for a significant portion of client acquisition, you’ll want to make sure you have some fundamental components down:
It’s almost guaranteed that whichever area of law you chose has a dedicated association or organizations that you can join. This is a crucial step for you as an attorney, and for your law firm, because it connects you with other attorneys that you can seek advice from co-counsel with, and network with. In the legal industry, knowledge truly is power, and when you’re part of an organization that you can seek guidance from it can mean all the difference to your start-up law firm. As a bonus, many of these organizations also have something called a “listserv.” A listserv is an email network that allows you to email every single member of the organization, thus providing an invaluable networking tool.
To have a successful law firm, you need to time-track and bill effectively. To make this a reality, setting up the operating essentials to your law firm’s day-to-day is vital.
Here are some of the critical components you’ll need to strategize and plan for:
When starting your new law firm, it’s crucial that you take steps to technologically keep-up with your clients. All businesses these days are racing towards better and more efficient ways to communicate, maximize their company’s capability and profit, and improve their growth strategies. The same can be said for personal clients - effective communication, task completion, and transparency are essential. Your clients are going to expect your law firm to maintain pace and provide them with practical solutions. Luckily, with the growth of cloud computing software, there are many solutions out there to help your law firm establish itself as a leader in the industry. Take the time to carefully consider which cloud-based software you’d like to incorporate into your law firm.
We've written a great guide for law firms to use when implementing technology and includes everything they must know and plan for to achieve a positive ROI.
When you’ve decided to begin a new law firm, it can be a life-changing event that seals your position in the legal industry and allows you to build a firm in accordance with your vision. When you proceed with a concrete plan, and after calculated thought, you can find the process rewarding. Remember, beginning any new business from scratch will have its individual and unique challenges, but with persistence, it can be advantageous and gratifying.
Let's face it, downtime, hiccups and technical challenges are unavoidable in every business and they can be frustrating and downright costly.