After several years of working for others, many lawyers seek to start out on their own and build a practice they can be proud to share with their clients. There are many reasons for this, from the desire to get away from demanding bosses or a certain type of work to the ability to have a flexible schedule, financial freedom, and more. Whatever your reason for venturing out into your own private firm, it’s a big undertaking.
The good thing about this is that even if you’re not quite sure when you’ll leave your current position, you can still start building your practice. Take the time now to consult with a business lawyer and accountant. They can help you decide which type of business you’ll form so that you can start researching how to move forward.
Here are six steps to ensure that your legal practice gets started on the right foot.
As mentioned, you’ll want to reach out to a business lawyer to discuss the type of business structure that’s best for your situation. The entity that you choose (LLC, corporation, etc.) will impact taxes, financial responsibility, liabilities, and other aspects of the operation. Law firms are typically established as:
The entity you choose will determine how much personal liability, if any, you have in your new law firm. You cannot move on with building your firm until you’ve completed this step because the subsequent steps will depend on which type of formation you choose.
A lot of guides on starting a private law firm assume that you’ve already taken the time to create a business plan that you can execute as you build your business. However, there are a lot of lawyers who come to this process with little to no real preparation. Therefore, you must make sure that you have a business plan for your law firm.
You can do this before or after you create your business entity, but it’s usually best to know what kind of entity you are creating so that you can include it in your plan. A solid business plan will outline the following:
The elements of a business plan include:
When you have all this in place, you can proceed with building your new firm.
It would be best if you had plans in place for managing the finances of your law firm. This includes a business checking account that can make and receive payments and a financial plan that outlines the projected revenues for your firm, the budget you need to build your business, and other details.
You will also need a client trust account so your clients can pay retainers or provide secure funds and property as a form of payment. Also, lawyers need an IOLTA, or Interest on Lawyers’ Trust Account, which holds interest earned on trust account funds.
Consider a business credit card to help you finance your operations. A rewards card can earn you cash back, points, miles, and other perks for spending money that you’d use on the business anyway. It can also make it easier for you to separate personal and business spending when you have a credit card available.
Professional liability insurance is a must for lawyers and law firms. As a lawyer, you’ve probably already experienced situations where professional liability insurance comes in handy, even if not directly. This insurance is designed to protect lawyers and their law firms in the event that there is a financial loss that occurs as a result of errors or missteps in the handling and provision of legal services.
Some states mandate this coverage and the required amounts, so check with yours before you start shopping. It is also a good idea to shop around and get the rest of the business insurance that you’ll need, or at least get some quotes started.
Now we’re getting to the fun stuff. It’s time to come up with a name for your firm and choose a logo. Many lawyers choose to name their practices after themselves, but you can choose just about anything you want. Just make sure that it’s professional and portrays the services that you provide.
When creating a logo, try to do something unique. It seems like every other law firm out there has a logo that incorporates the checks and balances graphic in some way. If you want to stand out, do something different. Most importantly, make sure that your chosen law firm name isn’t already taken.
As a new lawyer, you’re going to have a lot on your plate. Handling communication isn’t a solo job, just as winning a challenging case usually requires the assistance of at least one other attorney. Instead of going it alone, consider outsourcing to manage your communication with ease.
You can partner with the virtual receptionists at Smith.ai, who can act as your 24/7 answering service to ensure that you never miss a lead. We can also assist with lead intake, appointment scheduling, and live chat so that you can focus on your clients. And if you want to take things to the next level, ask about our AI voice assistant, too.