If you’re thinking about starting your own law firm…congratulations! Hanging your own shingle is pretty exciting. A well-known Chinese proverb revealed that a journey of a thousand miles begins with a single step. Starting your own law firm is no different. You have to start somewhere but you have to start out on the right foot if you want to be successful.
A recent Bloomberg survey showed that 3 out of 4 attorneys are dissatisfied with their careers. Many cite burnout, long hours and inflexible work schedules as leading factors. What would those same attorneys say if they were able to still do the legal work that they enjoy while removing the undesirable elements that cause dissatisfaction?
It’s possible to do by starting your own law firm. In this day and age it has never been easier to start and grow your own law practice. You call the shots and set your schedule. However, before you can branch out on your own you’ll need a plan.
Preparing to Run Your Own Law Firm
Before leaving your job you will want to prepare to be make the leap. Unless you have a book of business right out the gate it is likely that you will have to grow your practice and that takes time. Therefore, you should get ready for the likely reduction in income. Start downsizing while you’re at your current job. Reduce the number of times you go out to eat. Buy a less expensive vehicle. Whatever it is that you need to do to cut your costs do it because in your early years your practice may not generate enough revenue to replace your current salary.
Many new law firm owners overestimate their future income and underestimate their expenses. Make a list of what you will need to run your firm. It is highly advisable that you keep your overhead low in the beginning. Instead of locking into a long-term office lease consider renting space on a month-to-month basis. Many of these month-to-month co-working spaces have access to private offices, printers and a receptionist. Add up the costs you will need and then double it that way you give yourself some extra cushion for the unexpected.
Think about your law practice like the growth of a baby. It is unrealistic to expect a baby to start running straight out of their mother’s womb. It must first crawl then find the strength to stand on its own two feet and then it can start to run. The bottom line is that it is a process and you must have the expectation going in that growth of your firm will take time.
Create a Website
It is not uncommon for new law firm owners to have thousands of business cards printed up only to have many of those business cards collect dust on their desk. The business card that should be first and foremost on your list is a website, your digital business card. When potential clients discover your firm they will go online and look up your web presence.
In many instances your website will be the initial contact your clients have with you so it should be professionally done. It should have your law firm’s logo and a video or photo of you and your staff. Your email address should include your domain name. Having a (insert your law firm name)@gmail or yahoo email gives the appearance that you are working on a casual basis. These are factors that will give a lasting impression to your future clients.
“Where is the best place to hide a dead body?” Page 2 of Google.
That’s the joke among many online marketers. Most people do a search and never look beyond the first ten results. Ideally you will want to have some content ready on your website before it launches but it’s unlikely it will be found in online search results. We came across an interesting study showing how long it typically takes to rank on Google.
Getting your content discovered will require that you spend time writing content that appeals to your client while also using specific keywords that they search for. The more common a search phrase is the longer it will take for you to rank for that term if at all.
To be found by anyone searching locally setting up your Google Business Profile is a must. Here is a video that can help you through that process.
If you have more money than time then you can speed up the process of being found by paying to push your website content higher up in the search results. This type of pay-per-click advertising means that you have to pay when someone clicks on your ad. If not targeted properly these clicks can add up quickly.
Develop a Marketing Plan
Pick a niche. The practice of law is so vast that it is difficult to be become well-versed in one area when you are a jack or jill of all trades. Once you narrow down the specific areas that you want to practice develop a marketing plan. How will you reach your clients? Will you market your firm through social media channels? Will your firm offer services virtually, in person or a combination of both?
One option is to create a YouTube channel allowing potential clients to learn of your law firm. Years ago the only way for your potential client to see you on screen would be an expensive television commercial. Now most cameras can produce quality video content at a fraction of the cost.
Software for Your Law Firm
You will need some type of practice management software for your firm. It is important that you are able to maintain a calendar of events, track billable time and manage matters. There are several legal software options out there each with their strengths and weaknesses. It is best to decide what is most important for your firm and then evaluate the practice management software to see if it fits your needs. Will you have flat fee billing or bill on retainer? Is it important for you to maintain regular contact with your client and staff remotely? Does the software allow you to safely receive credit card payments from your clients?
Insurance and Taxes
You will want to secure malpractice insurance before you start practicing. On average attorneys to pay several thousand dollars a year in premiums. Amounts differ by a variety of factors including but not limited to areas of practice, location and claims history.
If you decide to hire staff you will need to factor in costs in addition to the employee’s salary. Employers must purchase workers compensation for their employees. Failure to do so can lead to aggressive penalties in some states. Employers also pay half of their staff’s Social Security and Medicare tax which typically amounts to 7.65% of the employee’s salary.
While we are on the subject of taxes it is important to note that as a self-employed person you will pay taxes a little differently than an employee. An employee has their taxes withheld with every paycheck. Someone who is self-employed will have to pay estimated taxes every few months, in advance, throughout the year.
It is critical that you run your law firm like a business. The reason many small businesses fail is because of lack of capital. Your spending should be based on your billing. Otherwise you could find yourself in a situation where your expenses exceed your income and that’s not a pretty place. Create a budget so you have a blueprint of where you are and where you need to be.
We hear from new solo attorneys that a major adjustment is not having the resources available like when they were on staff at someone else’s firm. You likely will have to take on duties that would be handled by someone in another department. If money is tight when you first start out you may have to wear many hats but eventually you will need to start delegating tasks to others. You may be able to answer incoming calls, do your own bookkeeping and build your own website but by outsourcing these responsibilities to others you leverage the skills of people who are more experienced and you free up time to focus on getting new clients.
Get Help Tax provides full-service accounting to law firms in all 50 states. The firm is certified in legal practice management software such as Clio and LeanLaw.