How to Start Your Own Law Firm: Startup Checklist
The prospect of starting your own law firm can be intimidating. You may be a great lawyer but starting your own business means deciding on the area of law you will practice, setting up your office, dealing with staffing demands and much more.
What this article covers:
- Starting Your Own Law Firm Checklist
- How Much Do Lawyers with Their Own Practice Make?
- Should I Start My Own Law Firm?
Starting Your Own Law Firm Checklist
Develop a Business Plan
Chalk out a detailed business plan before starting a law firm. This includes forming your mission statement, knowing the competitive advantages of your firm, planning the financials and the marketing strategy. This will give you a clear vision of what your business will look like and plan for the future.
Create an executive summary of your plan detailing the location, the focus of its practice as well as goals and objectives. You will also need to identify a start-up budget and a monthly budget. Research the potential client markets and capital needed for operating the firm for the first three months.
Choose a Practice Area
Now that you have a business plan in place, you’ll want to identify the areas of law you want to practice. Focus on your strengths and weaknesses as a lawyer to choose the best fit.
It’s rare for lawyers to provide a generic practice nowadays. Choosing a clearly defined practice area, such as bankruptcy or family law, will help you build your credibility faster and network more.
Name Your Firm
You could choose a name for your firm based on your expertise or name the practice after yourself. If you’re opting for a creative name based on your expertise, make sure it’s not misleading.
For example, if you use the words “and Associates”, it violates the Rules of Professional Conduct if there are no associates in your firm. Similarly, use of “Group” violates the rule if the practice comprises a sole proprietor and no other lawyers.
Form Your Own Entity
Depending on how you intend to run and manage the firm, decide on the organizational structure.
For example, solopreneurs can choose sole practitioner, professional corporation and single-member LLC entities while multi-member firms can select professional corporation, partnership, LLC and LLP.
Select a Location
The ideal location has a lot to do with your practice area. Look at various locations and office spaces before settling for the one that fits your needs.
For example, you may want to rent a space, share an office space or even work from home. Sharing an office space will allow you to pool resources, save money and ease the isolation of practicing alone
Get Office Furniture, Equipment and Supplies
With an office, you’ll obviously need office furniture, supplies and equipment such as printers, computers, dedicated business telephone, files, office furniture, furniture for reception areas and staff furniture.
Build a Network
If you do not already have a client base, you need to think of ways to attract new clients. Building a strong referral network is the first step towards this. Work hard to cultivate relationships with lawyers in the area and look for opportunities for more referral work.
Join Local Organizations
One of the ways lawyers can form a network is to join a lawyer association in your area.
These associations have a listserv, which is standard email list management software that comprises email addresses of the members. You can meetup experienced attorneys who can mentor and show you the ropes.
Build a Website
Gone are the days when lawyers could survive without technology. People looking for lawyers no longer search for names on their phone books. They use Google to do the job for them. The business website works as the first point of reference for people looking to check the credibility of the firm.
Plan Your Finances
The financial aspect of running a law firm can be complicated and stressful, especially if you’re handling your own bookkeeping.
- Open a separate bank account for your business to deposit payments from clients and pay your expenses. This could be an operating account, trust account or IOLTA account. If you choose an IOLTA (Interest on Lawyers Trust Account), you can accept and hold funds for advanced costs and fees that belong to someone other than yourself.
- While planning your finances, you also need to set money aside for taxes, business registration fee and other licensing fees. Research the various business tax liabilities in your state and when these liabilities are due. Ensure that you have allocated sufficient funds to meet these obligations.
- Determine the marketing and advertising expenses that you’ll use such as business cards, website, brochures and announcements.
- You must also get insurance such as professional liability, workers compensation, property and casualty insurance.
- You’ll need to establish how you want to bill your clients – fixed or hourly, the rates, the billing cycle and the payment terms. If you’ve hired full-time or part-time staff, you need to account for employee compensation.
How Much Do Lawyers Make with Their Own Practice?
The amount lawyers make depends on what they practice and the size of the firm. For example, intellectual property attorneys earn 50% more than corporate attorneys and nearly double that of personal injury or divorce attorneys.
Should I Start My Own Law Firm?
Working for a large firm comes with its set of perks including a great infrastructure for accounting, marketing and client relations. If you start your own law firm, all these responsibilities fall on you. You will need to learn how to bring in clients, do your accounting and run an office.
However, if you have an entrepreneurial spirit and are willing to take on the risks and rigors of creating your own business, then it is time to take the leap and start your own business.