Starting your Own Law firm: COVID-19 Edition
People ask me often about what it takes to open your own law firm so I figured I would give some of my insight here. This year has taught me a lot, along with founding Santos Legal Group, I’m still a new mom trying to make it work during an active pandemic. Let me tell you, it is a lot! I have learned what does and doesn’t work. If you’re someone who is considering going solo or starting a firm with a small group of attorneys, read on for more.
Entrepreneurship is a buzz word that many people toss around without fully understanding what that means or how it works. Due to COVID, many people have been forced to actually open their own business to survive, while others have been realizing they are truly unhappy in their work situation and want to go out on their own. Regardless of the motivation behind becoming an entrepreneur and owning your own law firm, I wanted to highlight some of the important aspects to consider before making the decision. Further, although owning a law firm is much like owning a business, there are many more requirements and liabilities when it comes to practicing law that must be addressed.
So, where do you start?
The first step is what I advise all of my general business clients, create a business plan. A business plan will have you map out your target audience, do a market analysis, see what your competition is, etc., You can get an idea here of additional things to consider in your business plan from LexisNexis. Writing it down will allow you to look and think about the reality of things. We all have different situations that may impact the ease or not of being able to fully go on our own. However, what I will say is, due to COVID and almost everything going virtual (even the courts), it is now easier than ever to own your own law practice. Virtual law offices in particular have been on the rise for years now but this year it just makes more sense than ever.
Now that you have a good idea of what your objectives, target audience and your niche are as evidenced in your business plan, let’s talk about expenses. This in particular will vary widely depending on the area of law you practice. There are many different software available for specific areas of law. For example, if you practice trademarks or estate planning like me, you will definitely have to utilize different software for your business, and it comes at a cost.
Some general expenses that are required in all law firms no matter the area of law include:
Phone and/or fax service
Website
Legal Malpractice Insurance
Marketing expenses
Rent
Email
Client database system
The cost of rent is again heavily dependent on the geographic area you live in but like I mentioned before, if you own a virtual law firm, your rent can be significantly reduced by working out of a virtual office. Keep in mind state’s also have very specific requirements when it comes to what is considered a “law office”. For example, in New Jersey and New York, two neighboring states, the rules are completely different. In one state, a virtual office can be a location where you don’t own a private office whereas in another, they require you to still own a private office within a co-working space. These co-working spaces where you share common areas with other business, is pretty popular for solo and small law firms. As you grow and hire on staff, you may want to change your office space to accommodate them, or you may stay virtual and allow your staff to work remotely.
What if you want to work from home and use your home address as an office? That is an option too but check with your state to make sure that is allowed.
How much money do I need to start up?
You should honestly have 3 months or more of your expenses in the bank because working for yourself has zero certainty as to when you will get paid. Some months are better than others, so you have to save save save the surplus from the good months. Whether you have money saved up or you get a loan to start your business, make sure you can cover both your business and personal expenses for at least 3 months. Ideally it would be six or more months, but I think it is achievable and safe to have at least 3 months of expenses saved up, granted you are working overtime to make things happen and get clients in the door.
Time commitment.
Speaking of overtime… in the beginning you are everything for the firm. You will 100% work twice as many hours than your full-time job right now. Even if you don’t have kids, you may still have a spouse of other family responsibilities that will take some of your working time. Owning your own firm is a true commitment from every angle. A lot of sacrifices are made in the beginning in order to be successful, financially, emotionally, mentally, etc.,
What about marketing?
Nobody knows how great you are at what you do, much less even know what it is that you do unless you tell them. It’s not enough to have a big family or a lot of friends. That may help you in the beginning but depending on what you practice, you will have to have a strong marketing strategy to reach your intended audience.
How do you do start marketing your firm? Start with social media. It is free (when you don’t pay for the ads obviously) and an easy way to reach people. I have had clients literally find out about me through a hashtag. It works! Make sure to follow accounts that your audience is likely to follow as well, maybe you can market yourself to those accounts and they will ask you to host an event for them? There are a lot of possibilities and opportunities that come when you are open to networking and speaking to people (even if virtually).
Bonus considerations:
Choose a bank with the best fees, or lack thereof rather. Choose a location close to you, how often will you need to go to the bank? If you’re in real estate for example you have to deposit client’s checks frequently versus for a trademark client, everything can be done online.
Make sure you have reliable phone and internet service if primarily working from home
Create a schedule and designate specific days for things
Schedule emails! Wow what a time saver. I can be up at 11pm when I finally have the chance to respond to my emails, so I respond and schedule them to go out 8am the next morning.
Consider creating an account with Lawline for additional support and to help you complete your state’s Continuing Legal Education (CLE) requirements. Lawline provides relevant subject matter videos that cover a broad range of practice areas and transforms traditional CLE compliance into practical knowledge. I highly recommend them and use them still for my practice. If you want to save $100 off an Unlimited CLE Subscription use my code: http://share.lawline.com/67SB2j
The LEGAL nitty gritty.
Know your state’s rules on naming the firm (some have stricter regulations than others);
Make sure your malpractice insurance has the minimum limits required in your state;
Make sure your trust account is in compliance because you do not mess with this (the most common way attorneys get in trouble is due to finances so be careful).
That’s it for now! I hope those who are interested in opening their own firm found this short blog post helpful. I will be sharing the specific tools that I use in a video format coming out soon. You will get real reviews and my honest opinion on different software and services. Stay tuned if you’re interested.
With LOVE,
KayaDejure