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Guide to Starting a Law Firm

This complete guide to starting a law firm will teach you to strategize, organize, finance, brand, launch, market, and run a new firm.

Starting a law firm may be the best decision you’ll ever make. In fact, it was for many of us! Based off of our experiences investing our time and resources to help lawyers like you start and manage their own small or solo law firms, we’ve put together this guide.

Getting started as a new entrepreneur often brings challenges, of course. Fear of failure can lead to stagnation or a string of false starts. A sea of peer anecdotes, confusing messages, and a mixed bag of experiences can add to hesitation. Even if you’re a seasoned attorney, hanging your own shingle requires a completely separate skill set than what you’re used to when practicing for someone else.

Law practice is a business and a profession. To start your own law firm successfully, you must agree to see it as both. Assuming you do, it’s time to learn how to organize, brand, and launch your new law firm.

Why You Can and Should Start Your Own Law Firm

If you’re a new lawyer with your ducks in a row (such as your J.D.), has an entrepreneurial spirit and clear goals, and who knows that you want to be a lawyer without a doubt, you can and should start your own law firm.

There are many benefits to being the proud owner of your own firm, including:

  • The ability to do more than practice law. Sure, your legal services will be your bread and butter, but you’ll also be able to build your own business on your own terms.
  • Control when choosing your clients. Most attorneys have a specific type of law they wish to practice. With your own firm, you have a choice in the clients you choose to accept and the cases you choose to move forward with.
  • The chance to develop a business model that works for you (and your clients and team). As someone else’s employee, you may have little control over the business model of the firm. As the owner of your own firm, you make the decisions, including those tied to your business model. You can build your firm around your personal and career goals, the solutions you want to offer your clients, and your own workplace culture for your future team built around your values.

Starting a law firm doesn’t necessarily require a lot of money. What it does require is a clear set of goals, a clear business strategy, and a disciplined budget and financial model. If you have all of those things, you’re ready to start your own firm.

It’s Time to Go All In

Starting a law firm can feel overwhelming at times—and that’s if you do it right. As a new business owner and entrepreneur, you have to go all in. Being successful when starting a new law firm business takes time, clarity, focus, and discipline. Everything you accomplish each day is investing in the future health and well-being of your firm. With hard work (and the addition of the right technology and the Lawyerist tribe) you’ll set yourself up for success.

How to Start a Law Firm: A Good Plan vs. A Bad Plan

We believe that for your new law practice to thrive, it should offer client-focused services, leverage future-oriented technology, use profit-oriented business models, and (hopefully) help our profession move the needle on access to justice and inclusion. The best way to reach these goals is to start your law firm with intention. Unfortunately, many attorneys start law firms without a plan in place to move forward successfully.

According to law practice management software company Clio’s Legal Trends Report:

  • Lawyers spend 2.3 hours per day (that’s 29% of an 8-hour workday) on billable tasks.
  • Only 40% of firms that track time have hourly billing targets.
  • Only 50% of legal professionals can bill a case based on a set budget.
  • Lawyers spend 48% of their time on administrative tasks.
  • 91% of firms can’t calculate a return on advertising investments.
  • 94% of law firms don’t know how much it costs them to acquire a new client.

With statistics like these, it’s easy to see the results of improper planning.

A bad plan equates to solely working to make sure you have some money in the bank. A good plan includes the proper steps you must take to build a sustainable business. Such a plan includes:

  1. Career Goals
  2. Strategy
  3. Technology
  4. Marketing & Client Acquisition
  5. Office Management
  6. Client Service
  7. Finances
  8. Hiring & Staffing
  9. Lifestyle
  10. Lawyering Skills

As with anything worth doing, planning will empower you and dramatically improve your likelihood of long-term success.

If you want to know how your firm will measure up, check out our Small Firm Scorecard.

How Much Does it Cost to Start a Law Firm?

As you get started, prepare to invest both time and money to help you outfit your new business. It’s important to understand what you need and then plan how to pay for it. The hard truth is this: if you can’t get what you need, it’s not time to start your practice.

Let’s discuss what you’ll need at a minimum to get started.

The Practical Minimum to Start a Law Firm

Money in the Bank

When you start a practice, you will need to spend some money at the outset—it isn’t optional. According to our experience and data over the years, $3,000 is an okay starting point, but $5,000 to $15,000 is more realistic when opening your first law firm. The cost depends on a wide range of variables such as location, practice area, advertising, and more.

Office & Supplies

You’ll need a dedicated space for meeting with clients, some furniture, and the necessary office supplies to keep operations running smoothly. You can get started working from home, but unless you have a solid plan for running a virtual law office, plan to start paying for rent six to 12 months after you launch.

When choosing furniture, reach out to a professional that understands how to style spaces correctly. It will make you look more professional to your new clients. As you purchase office supplies, only buy what you need; don’t forget the exhibit labels, if you litigate!

Professional Expenses

Plan for professional expenses such as licensing, continuing legal education, conferences and events, malpractice insurance, and memberships. Both licensing and legal education aren’t optional. We also recommend not going without malpractice insurance.

Hardware

In your office space, you’ll need a computer, backup drive, document scanner, printer, and a phone. If you’re not sure what basic hardware is best for your solo or small firm, check out our Legal Technology Buyers Guide.

Legal Software & Services

Legal software and online services will be the tools you use the most on a daily basis in your practice. You’ll need a wide range for optimum productivity, including:

Legal Marketing

It’s critical to budget for marketing, including networking, the designing of a law firm website, and necessary advertising. Your budget likely should include dining with leads and potential clients, enough room to hire someone to build your website for you, and a plan for experimenting with other paid marketing options.

Growth Is Constant When Starting a Law Firm If You Make It So

For many lawyers, starting a law firm is the dream of a lifetime. You’re finally in line to receive the flexibility, control, and financial freedom you’ve been craving. Although this could be your future, your present should be full of hard work and dedication.

The key to building your firm is to keep moving forward, step by step. At Lawyerist, we’ve compiled a list of ten steps you must take to build your firm and reach durable success.

Step #1: Career Goals

If you’ve made it this far, chances are you’ve considered what being a business owner means for your life. It has the potential to consume your work and your personal life, create huge levels of accountability, and will depend on your ability to run a business. Make sure you’ve considered how starting a law firm fits with your career goals.

Step #2: Strategy

Before you take on your first client, it’s time to take a deep look into your law firm strategy. Ideally, you’ll be able to check the box next to some of these concepts.

  • Your mission and values are clear and documented.
  • You have a documented business model built around solving client problems in line with their expectations at an appropriate price.
  • You understand trends that affect your firm and clients and you incorporate what you know into your strategy.
  • You’re working on projects and short-term goals connected to your long-term goals for your firm.
  • You use a set of key performance indicators (KPIs) to monitor your firm’s health and help you predict your future success. You review and update your KPIs regularly.
  • You occasionally conduct a competitive analysis and adjust your strategy to win in your market.
  • You’ve surrounded yourself with a supportive peer community or expert coach.

It’s necessary to understand how to develop your strategy, refine it, and incorporate it into your daily life. To learn more about your strategy, take a look at our resources.

Step #3: Technology

Successful law firms understand their workflows and systems and leverage technology to improve their quality, efficiency, and client experience. Take advantage of technology to help you fulfill operational needs, streamline systems, meet goals, and improve client service. As a new firm, create goals based on your firm’s technological infrastructure.

  • Work hard to be technologically competent in general.
  • Conduct training often in your technology systems and tools to remain up-to-date with changes.
  • Run a paperless law firm to scan and digitally file all paperwork.
  • Run a mobile law firm to work productively and securely from outside of your office.
  • Conduct data security threat assessments to have an up-to-date threat model, develop a written security policy, and follow good data security practices.
  • Possess technology systems that reflect your firm’s security needs and those of your clients.

You don’t have to meet all of these goals in a day. Instead, make them a critical part of your overall strategy.

Step #4: Marketing & Client Acquisition

Many lawyers seem to think that referrals from other lawyers and clients are the only marketing sources they need. This is only the tip of the iceberg. We encourage attorneys to take a broader view.

Solo and small firm lawyers, particularly those just starting a law firm, should guide their actions based on an understanding of their ideal clients’ needs, where they currently look for solutions, and what kinds of messages resonate with them. Consider the following as you get started:

  • Your firm’s reputation in your community reflects the brand image you’re trying to convey and the unique value you provide to your clients.
  • You have a written marketing plan and you use objective data to determine the success of your marketing activities.
  • You track your marketing efforts to potential clients, existing clients, former clients, and referral sources.
  • Your firm has a modern, mobile-responsive website that’s focused on communicating your brand message.
  • You use a variety of online and offline marketing activities to communicate your value in a way that resonates with your target client market, converting them into leads.
  • You have a system for converting potential clients into paying clients.

Branding and developing your marketing strategy take time but are critical for the growth of your new law firm. Ensure you investigate all potential marketing avenues for your firm and then commit to implementing those that work best based on your firm’s overarching goals.

Step #5: Office Management

Forward-thinking lawyers get ahead of their office management needs by focusing on a few important principles:

  • You firm follows clear, documented systems and procedures that reflect your core business model.
  • Your documented procedures include both administrative and client service workflows and you have a system for regularly reviewing these workflows to find opportunities for automation and improvement.
  • You follow personal productivity and time management practices.
  • You have a paperless law office.

Office management involves managing projects in a timely manner and remaining productive to help serve your clients better. Dive deeper into key areas to streamline your office management and set your firm up for success.

Step #6: Client Service

Although client acquisition and marketing help you grow your client base, your client service will make all the difference. You must be relentless in refining your client’s experience by adopting a client-focused law firm mindset that emphasizes these values:

  • You understand your ideal client’s buyer’s journey based on actual interviews with real and potential clients.
  • You design your prices, rates, and fees based on the goals and needs of your clients and they’re benchmarked with your competitors.
  • You have systems in place to make sure you keep client diversity, access, and inclusion in mind.
  • You communicate with clients using methods they prefer while following your data security needs.
  • You draft client communications and legal documents in a reader-centric way, with emphasis on plain language and readability.
  • You have a seamless intake, onboarding, and delivery experience for your clients that reflects the kind of client experience they want.
  • You have a process for capturing client feedback to understand their level of satisfaction and you actively work to improve.

Client expectations are evolving fast; small and solo law firm owners should reimagine and laser-focus on client service in order to deliver.

Step #7: Finances

To have the best chance at success, your new firm should bring in more revenue than it sends out in expenses. You should understand your financial goals and how to best reach them using these top practices:

  • You have a documented long-term financial strategy and profitability model that aligns your short-term budgets and reports with your firm’s long-term goals.
  • You have access to sufficient capital and cash flow to fund your firm for the foreseeable future.
  • You follow written budgets and regularly monitor consistent financial reports and financial KPIs.
  • Your invoicing, payment, and collection systems focus on your clients’ payment preferences so they will pay their bills on time.
  • You pay yourself a consistent market-rate salary, separate from bonuses or distributions, and you’re investing an appropriate amount of your pay towards savings and retirement.

Your firm’s finances will determine your survival and enjoyment in the coming years. Developing financial skills now will power your new law firm with financial health and stability.

Step #8: Hiring & Staffing

Although staffing might be the furthest thing from your mind, the second you start thinking about adding to your firm (independent contractors, part-time employees, bookkeeper, office manager), you need to consider your values and how you’ll treat those who join you. This means:

  • You have a written organizational chart that includes everyone in the firm and their reporting structure.
  • Your organizational chart and job duties allow employees to delegate work to those who do it more efficiently, focusing on what they do best.
  • You hire people based on how they fit with your firm’s mission, values, and the roles in your organizational chart.
  • Your compensation and benefits structure is fair, rational, and encourages the right long-term incentives that reflect your values.
  • You have systems in place to ensure you staff your firm with diversity, access, and inclusion in mind.
  • Managers can manage others skillfully and you train them in people management often.
  • Your firm’s culture reflects your values.
  • You have firm-wide team meetings frequently and communication is always open and honest.

Step #9: Lifestyle

Your chosen profession may reward you with opportunity. It may also threaten your mental health and work-life balance. Ensure you understand how owning your law firm may impact your lifestyle. Successful lawyers:

  • Focus on what they can do best and delegate other work to technology or contractors who can be it more efficiently
  • Keep the number of hours worked in balance, working no more than 40 hours a week unless an emergency occurs
  • Use a reasonable amount of vacation or paid time off each year
  • Have systems in place to support themselves—and everyone else—with self-care, wellness, addiction support, and mental health needs

You are at liberty to live the lawyer lifestyle. Just do so responsibly to protect you and your firm.

Step #10: Lawyering Skills

You can’t have a business without providing top-notch lawyering skills. What makes a great lawyer is for you to decide as you build your firm and reach your career goals. The key is to always keep learning and growing to build your skills through research, advocacy, and creative negotiation.

How to Manage Everything On Your Own

It’s true that starting a law firm is not for hesitant hearts. Although you must be an excellent lawyer, you must also develop a vast array of business-first strategies and tactics that guarantee your future success. When it comes down to managing everything on your own, understand these critical takeaways:

  • Go all in.
  • Always trust your instincts.
  • Ask for advice, build relationships, and do your research.
  • Understand what you’ll do when you don’t make any money.
  • Ensure you know where to go when you don’t know how to handle something.
  • Check yourself to ensure you have the dedication to see your firm through.
  • Get paid up front.
  • Spend smart money on your team, training, tools, and technology to unlock your superpowers.
  • Don’t be wasteful or frivolous.
  • Avoid burnout.
  • Always be honest with your clients.

You now have all the tools necessary to create a sound strategy and launch your new firm with confidence. Congratulations on becoming a legal entrepreneur!

Don’t Go It Alone: Become a Lawyerist Insider Today

As you grow and progress towards success, know that you’re not alone. Together, we can help you through the process. Become a Lawyerist Insider and be a part of the best community of solo and small firm lawyers building successful, future-oriented, client-centered law firms. As part of our tribe, you’ll receive access to practice tools, information, and great people focused on helping your firm grow.