So you’re ready to start your own law firm? Congratulations! This is the beginning of many a success story in the United States. Yours might be next. So you’re ready to start your own law firm? Congratulations! This is the beginning of many a success story in the United States. Yours might be next.
Mind you, not all law firms soar at first — or even ever. If they did, every attorney would have their own practice.
Starting your own law firm takes a lot of work and in this world of ethics rules and legal forms and bank accounts and insurance premiums and regulations… well, you get the idea. It isn’t easy. Or cheap. And there are no guarantees.
But the biggest stumbling block for shingle hangers is often simply the uncrossed “t” or the un-dotted “i.”
The things you forget about, overlook, or never even anticipate are the things most likely to cause you problems early on.
To that end, we’ve developed an everything-you-need-to-do list for lawyers opening their own practices.
We call it The Ultimate Starting Your Own Law Firm Checklist, and whether you’re a recent graduate or a seasoned vet venturing out of Big Law for the first time, it’s an excellent resource.
Below, we’ll walk you through the 13 most important areas of preparation. You’ll find a to-do list within each category. That’s a good thing because, as any Type-A personality can tell you (and if you’re hanging your own shingle, there’s a good chance you are one), crossing off a to-do list feels good.
“Planning” might seem like a pretty obvious item, but we aren’t talking about the abstract here. We mean a business plan… the same type of formal packet entrepreneurs must take to investors or the bank for a loan.
Even if you aren’t looking for that kind of capital just yet, it’s healthy to have a formal business plan in place for your firm. Too often, legal practices falter because the attorney only saw the firm as a vocation, not as a business.
As the head of your own practice, you’ll need to start wearing both hats from square one.
- Assess yourself: Why are you starting a law firm? What are your goals?
- Ask yourself: Are you ready to run a business and practice law?
- Know yourself: Are you experienced enough to practice law on your own? (Or do you have someone joining you who is?)
- Project how many hours you will work each week.
- Set your fees. (How much will you charge clients?)
- Write up fee agreements and client intake forms.
- Write a formal Business Plan.
You need to have an idea of what your finances will look like, even if you expect them to be meager in the beginning. Know how much money you have to work with, where that money’s going, and when/where/how you’ll see it return.
You’ll probably need to adjust your Business Plan as you work through this step.
- Project your gross receipts.
- Project your overhead expenses.
- Project your net receipts, salary, and profits.
- Project your cash flow.
3. Which Form of Business?
Attorneys usually have several options when forming a law firm as a business organization:
- Solo practice
- Partnership with a non-lawyer (where allowed)
- In some cases, a corporation
The right choice will depend on:
- The size of your practice
- Your state bar’s rules
- The business organizations available in your state
- Tax considerations
- Liability considerations
- Long-term succession plans
- What kind of agreements you want to draw up between you and your potential partners
While it’s usually possible to change your form of business later, doing so is never not a pain, so think carefully now.
FORM OF BUSINESS CHECKLIST
- Determine how many people will be a part of your business and what roles they’ll play.
- Consult with an accountant.
- Make sure you understand the liability and taxation implications of each form of business.
- Make sure you understand the paperwork and reporting requirements for each form of business.
- Check for any attorney ethics rules pertaining to your chosen form of business in your state. Make sure you comply.
- Create partnership agreements (if necessary).
- Draft and file your Articles of Incorporation (or the relevant documents required by the State Department).
4. How Are You Going to Market Yourself?
Do you have a ready-made client base? If you’ve been practicing for a long time at another law firm, the answer might be yes.
But many lawyers don’t have a bankable book of business to carry out the front door. In that case, you need to give real thought to how you’ll attract clients.
Remember: this is more difficult in law than in other professions. Strict rules apply when attorneys try to advertise themselves. Make sure you follow them.
Incidentally, this is one item on the law firm startup checklist that we can help with. Black Fin is a top-ranked provider of web marketing for law firms, and we’re experts at using the internet to make law firms grow.
- Identify your potential client base.
- Refresh yourself on the ethics rules for attorney advertising.
- List at least three practical, demonstrable ways you’ll attract clients. Include these in your Business Plan.
- Contact your state and county bar associations to see if they have helpful resources for startup law firms.
- Decide how you’ll advertise (print, web, television, radio, etc.).
- Hire an attorney web marketing team to design your website and get your new law firm ranked on Google.
5. Where Will Your Office Be?
Obviously, it’s better to be in a busy part of town… but those spaces will cost you. If there’s a more affordable option outside of downtown, it might be worth considering.
Then again, some types of legal practices – like defense attorneys specializing in traffic tickets and low-level arrests — benefit tremendously from being near a courthouse. Medical malpractice attorneys might value proximity to hospitals.
These days, the virtual office is a popular option, as is the home office, but most lawyers find it easier to recruit clients when their shingle is both real and nonresidential. Here again, though, it’s all a question of cost.
The bottom line: real estate is a research-intensive inquiry, so plan on this part of the checklist taking some extra time.
- Research some law practices of different sizes and types in your area. Where are their offices?
- Look for available office space. Consider consulting with a realtor.
- Ask yourself: how much space do you want vs. how much do you need?
- Define a maximum budget for leasing or buying office space.
- Keep the client experience in mind. What kind of impression will your office make? Now weigh that against the cost.
- Is office sharing an option? Working from home?
- Before signing anything, look into the parking situation and ask about renovation needs, janitorial services, utility and service providers, amenities, expansion opportunities, regulations concerning marketing or signage, applicable zoning ordinances, and ADA compliance.
6. Keeping the State Bar Happy
If you’re starting a law firm, the state bar is going to want to know about it… and not just with an informal “by the way.” There are forms to fill out, rules to abide by, and (of course) fees to pay.
Don’t overlook any of those, or you’ll find yourself starting with your worst foot forward.
In fact, we recommend calling your state bar’s advisory board and asking them to walk you through the requirements. Make a note of the day, the time, the person you spoke with, and what they said.
STATE BAR & ETHICS COMPLIANCE CHECKLIST
- Reread all the rules about opening, owning, and operating a legal practice.
- Give the state bar adequate notice of your new practice.
- Fill out all the necessary forms and pay all applicable fees.
- Call the ethics board to make sure you’re doing things the right way.
7. Opening Bank Accounts and a Line of Credit
As with everything else in law, managing your funds (and even more importantly, your clients’ funds) is something to take very seriously. You’ll need to have the right kinds of accounts and report on them regularly. You might also consider a line of credit.
As a general rule, your total capital account balance + your total line of available credit should be enough to cover all your startup costs and at least six months of overhead. (You’ll also need to have enough personal money to cover your bills and living expenses for the first six months to a year.)
BANK ACCOUNT & CREDIT CHECKLIST
- Open a business operating account (for expenses, payroll, etc.).
- Open a separate IOLTA account (where applicable/required).
- Consider a business savings account and safety deposit box.
- Talk to banks and credit unions. Research your options for a law firm credit card and/or business line of credit.
- Consider additional sources of funding: investors, private lenders, personal loans, home equity or refinancing, secured loans, family loans, your own personal savings. (Note: some states may impose restrictions or regulations on some sources of funding.)
- Order business checks, bookkeeping binders, deposit slips, and endorsement stamps.
- Get set up for accepting and processing credit cards from your clients.
- Consider retirement accounts. You might also add a retirement plan to your Business Plan.
- Provide the requisite notice of all your bank accounts to your state bar. Update your Business Plan too.
Make sure you have access to an accountant you can trust. Just as importantly, make sure you’ll be able to communicate with that person regularly, smoothly, and securely.
- Talk to a CPA about becoming the accountant for your firm. Ask about their fees.
- Ask your accountant for help in identifying all your reporting requirements at the city, county, state, and federal level.
- Set up all your accounting procedures (bookkeeping, profit/loss statements, balance sheets and ledgers, tax returns, etc.)
- Purchase and install a reliable accounting program for law firms. Read reviews from other attorneys in your state before choosing software. Make sure your software is compatible with your accountant’s.
9. Getting Insurance
You and your firm will need all kinds of insurance protection. Consider each of the following.
LAW FIRM INSURANCE CHECKLIST
- Liability insurance
- Malpractice insurance
- Health insurance
- Worker’s compensation
- Property insurance
- Auto insurance that covers business use
- Life insurance
- Disability insurance
- Flood insurance
- Business interruption insurance
10. Researching the Law
One of the best ways to avoid a malpractice suit is to do your due diligence before advising a client! But where will you do your research? And how?
- Get quotes from LexisNexis and Westlaw. Make sure you understand what you will (and won’t) have access to under your plan.
- Locate the nearest legal library and/or law school. How far is it? What are its hours? Is membership available to non-students? If so, how much are the fees (and what are the restrictions)?
- Find out if nearby courts have a legal library available for your use.
- Consider purchasing / subscribing to a library of hardcopy legal books.
11. Getting Connected
LexisNexis and Westlaw aren’t the only subscriptions you might need. In addition to those and the accounting program we mentioned earlier, you might also want to consider:
SOFTWARE & SUBSCRIPTIONS CHECKLIST
- Case management software
- Voice recognition/dictation software
- Conflicts checking software
- Word processing (and all the standard office management applications)
- Billing software (if your case management program doesn’t include it)
- Virus protection
- Any other programs relevant to your specific area of law
- Magazine subscriptions for your waiting room
- Cable television and/or a streaming music service for the office
- High-speed internet service
- Cell phone plan
For more guidance, be sure to consult our guide to the Top 10 Case Management software programs for lawyers.
12. Buying or Renting Equipment
Every office needs equipment, and a law firm is no exception. We’ve already written a guide to the best laptops for lawyers. But the computer’s only the first piece of the puzzle.
OFFICE ITEMS CHECKLIST
- Printer / fax / copier / scanner
- Telephone System (including voicemail, answering service, long distance, conference calling, multiple lines, etc.)
- Office furniture
- Office décor
- Office supplies
- Filing cabinets
- Business cards
- Brochures for your clients (You can sometimes order these from the local bar association, or you can hire a copywriting and design agency to create firm-specific pamphlets for you.)
13. Being an Employer
Don’t forget that just like any other business owner, you’ll be a boss too. As you know, there’s a lot of liability for employers, so think things through.
THE LAW FIRM EMPLOYER’S CHECKLIST
- Decide how many paralegals, office assistants, etc. you’ll need.
- Create ads for hiring employees.
- Draft an employment application.
- Create your employee policies & procedures. Cover things like vacation time, lunch hours, breaks, benefits, sick leave, overtime, etc.
- Establish training procedures.
- Draw up confidentiality agreements.
- Print Forms W-4, I-9, etc.
Starting Your Own Law Firm? Checklist Your Way to Success!
As Walt Disney once said, “The way to get started is to quit talking and begin doing.” We hope this list helps you get that “doing” ball rolling. But don’t let it overwhelm you!
Remember: there is no one-size-fits-all approach to law firm management. Every startup is different, and there might be some boxes above that you simply don’t need to check. That’s okay.
Keep this in mind too: you don’t have to go it alone. If you want an experienced agency to help get your firm off the ground with an effective web marketing and SEO strategy, we can help. Contact Black Fin and learn more about how we can help launch your new firm into success.