Before we talk about anything else, let me just tell you that starting your own law firm is not an easy task. In fact, it is a quite difficult process and I don’t suggest you go on with it if you give up quickly or cannot adapt to a difficult situation. Now, that we’ve gotten that out of the way, we can focus on more important things – the process of starting a new law firm.
It is a difficult thing to do, but it can be done if you put your mind and body to it. A law firm is a business just like any other, however it has its unique sides that must be considered and approached accordingly. I am going to help you do this by covering some essentials that you must understand as a person who wants to run a law firm. This is a list of steps you must take if you want to succeed in opening a law firm of your own.
Work on your business plan
The first thing you must take care off when starting your law firm is, like with most other business, creating a business plan. A business plan should cover your starting period that could last from 3 to 5 years, depending on your growth. It is a roadmap of your business and it should guide your business to finding the means to strive and become profitable.
Business plans that are usually most effective consist of four essential parts. The first part should be the executive summary, as it is the most relevant part of the whole business plan. In this section, you should summarize the whole plan you came up with and describe your whole business, the law it practices, the goal of your law firm and the methods you will use to grow your business.
The second part of your business plan should revolve around your marketing efforts. In this section your focus should be on the market situation, your competitors, their strengths and weaknesses, client demographics, and the marketing methods you will make use of to beat your competitors.
The third part should be your management plan. Outline who is in charge of the law firm while explaining the whole structure of ranks and the chain of command. In case there are several partners, each lawyer should have a brief bio within this section. These bios should include lawyer’s past work, skills accomplishments and their education backgrounds.
The last part of your business plan should cover you finances. This part should explain how your law firm will be able to survive. There are three important financial aspects that must be covered in this part:
- Income statement
- Balance sheet
- Cashflow estimate
Focus on one area of the law
This is one of the most critical things you need to remember. You should never try and create a law firm that takes absolutely any job that comes along. The days of these kinds of law firms are done; there are no practices that do business this way today, and for a reason.
You should focus on one or maximum two areas of the law. If you try to be an all-around law firm you won’t accomplish anything good and you won’t be able to establish yourself as an expert in any of the fields. What is even worse is the fact that you will literally compete with everyone and this will make it really hard to create referral networks for your law firm.
It is simply impossible to take such wide areas and be competitive, as opposed to firms that specialize and can offer better legal advice to clients.
Build your referral network
You should inform anyone you meet with about your plans for starting a law firm of your own and let them know which area of the law you will specialize in. When meeting up its lawyers which are in your field you should take them to lunch and establish a professional relationship.
You might even ask established lawyers to send you some work that they don’t need, because they might refuse some simpler, cheaper cases and throw them your way. These small cases mean nothing to them, but can mean a lot to your law firm.
It is also important that you network with those lawyers that don’t practice in your field. Why? Simply because this is how you will get the most referrals. A lot of lawyers in a certain field get people who need lawyers in other fields.
When you establish plenty of good relationships with people outside of your area of law, you will have clients pouring in. Of course, you will have to do the same for those lawyers who send people your way.
Choose the right area to specialize in
There are certain areas of the law which are harder to break into than others. For example, it is impossible to simply start a law firm and instantly get a huge corporate client, it doesn’t work that way. If you want to get these big clients, your law firm needs to have a long history of success, great relationships with other attorneys and courts, and a lot of experience.
On the other hand, in other fields such as criminal defense, personal injuries, family law, bankruptcy, employment law and others, there are clients who have usually never worked with any lawyers. Because of this reason they are not that rigorous when picking a lawyer and this is your chance to prove yourself as a law firm. These clients are looking for competent, caring lawyers who believe in their cause and this is exactly what you must be for them.
The point of this story I am trying to tell you is that you will have to understand your weaknesses and strengths alike, and find out if the clients who are in need of the services you offer can see them as well and feel like they could make use of them. If your clients come to a conclusion that you have something valuable, naturally they will be more open to hiring your services.
Licenses and entity setup
Once you have finished with writing your business plan you can go to the next step and set up the entity for your law firm. When it comes to law firms, there a couple of business entities that can be used including general partnership, sole partnership, limited liability partnership, professional limited liability company and professional association.
For each and every one of these types of entities there are different requirements and they depend on your location. This is why you should check up on them with your local government. Your law firm will also have to get a federal employer ID number and get licenses and permits, which are also different from country to country and might be even called differently in some cases.
Even though your country may not require it by law it is still highly recommended that you have a malpractice law. A lot of private attorney have issues with legal malpractice charges during each and every year. In most cases litigation costs are far greater than a legal malpractice insurance costs and this is why a lot of lawyers look to get this kind of protection. There are a lot of other insurance types that you can acquire as well, for example life insurance, health insurance or property insurance.
Do proper management
When you have done everything that was needed to open up your law firm you will have to perform proper management so that you can function efficiently. The decision you will have to make is whether to go paperless or keep them with you.
If you are looking to find a cost-effective solution to keep track of your bills, while at the same time managing your documents and calendar, than you should go through some legal case management tools and find the best cloud-based solution to do so. The fact that this software is so convenient, cheap and easy to use gives brand new law firms the ability to operate closely to the level of larger firms.
So, there you go, these are the most important things you should keep in mind when starting a law firm of your own. Of course, this is not all of it and there are many other things that you will have to face during this process. Still, it is good to learn something on your own and genuinely get interested in your line of work, so that you can run your law firm better.
Every lawyer has different experiences when starting a firm of their own and you should always remember that, but still, the things that we covered above should help you get on track whenever you feel lost.