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Home > Advice & Tips > Start Your Own Law Firm
If you have arrived at a point in your career where you are seriously considering starting your own law practice, the following information is presented to assist you in planning and launching your new venture. Success, of course, is up to you and the energy and creativity you put into developing your business. But following the blueprint that others have followed in establishing their own business can help you clearly define your objectives, assess your needs, and avoid many pitfalls along the way.
Disclaimer: The following narrative is provided simply to point out some of the issues and concerns attached to any of the Life Events, and it is not intended to be dispositive of all of the issues or concerns possibly confronting individuals dealing with such Life Events. Any individuals wanting or needing additional information should contact the appropriate professional, whether an attorney, a financial planner, a retirement planner, etc., to receive such information and guidance. Self-Assessment Do you have what it takes? Before you announce to the world that you are now self-employed, it is wise to ask yourself some very serious questions.
Being your own boss sounds like the American dream. But the reality is hard work, low pay and many, many hours building a business from scratch. The time commitment alone will change many of your familiar routines and the cash flow of a start up venture will strain your budget and change spending patterns for you and your family for many months or even years. But once you've weathered the start up phase and your business is established, the rewards can be significant. There are several ways to put yourself in business. Consider:
Developing a Business Plan Step number one in launching a new business is to develop a written business plan. The business plan is an outline of all aspects of your anticipated practice. It captures all your thoughts in a logical, detailed presentation that not only acts as your guide but also tells others what your business is all about. A solid business plan is critical if and when you seek funding for your venture. Your business plan should:
Financial Considerations Before opening your practice, it is critical to review your personal financial situation, your income needs and your cash flow projections. Even if you have a paying customer lined up from day one of opening your practice, consider the fact that it may be several months before you actually receive payment for your services. Do you have the cash on hand to pay your ongoing household expenses plus the start up and operating expenses of a new business? If you are leaving an employed position, what impact will the loss of a paycheck have on your financial obligations and your family's lifestyle? Aside from savings and equity you hold, what other sources of income can you rely on? Can your spouse provide adequate income to handle the day to day household bills? Do you have a severance package from your employer to help get you started? Can you rely on family and friends for financial assistance? Do you need to borrow money from a bank or commercial lender? Do you have a solid credit history? Are you heavily in debt? Will you qualify for a business loan? Consider:
Start Up and Operating Costs The cost of starting a law practice depends on many variable factors. Your geographic location will determine the cost of renting office space. You might consider starting with a home office and then growing into larger quarters. You may already have some equipment or computers that you can use to get started, or you may need to purchase or lease complete furnishings and equipment. Here are the basic elements you'll need: Office Space The Home Office Many start up businesses begin as home offices. Although the home office offers many cost savings, it may or may not be right for you. Do you have adequate space to devote solely to your business? Is it quiet and away from family noise and traffic? Do you feel comfortable bringing clients into your office? If you anticipate employees, is your family comfortable with this? Do local zoning requirements allow for a business in your home and what restrictions are there on employees, client visits, parking, deliveries, signage? The Commercial Office Renting space in a commercial office building may better fit your business requirements. Rent and lease conditions vary considerably, so it is best to shop around before settling on a location. Before signing a lease agreement, be aware of the long term commitment and cash requirements. If your business grows rapidly, is there space to expand? Conversely, if your business does not take off, are you locked into a commitment of many years? Does the office meet realistic financial considerations, does it convey a positive image to clients, and does it offer flexibility based on your actual performance? The Shared Office Many businesses today are using the shared space concept. Within a commercial building, you rent private office space but also use a shared reception area and staff, shared conference facilities, copy machines and phone systems, as well as rest rooms and coffee or lunch areas. This arrangement offers the image and amenities of a large office at shared costs with others. Equipment Once your office space is procured, you'll need to furnish and equip yourself for business. Basics include:
Note: The Florida Bar Member Benefits offers members substantial discounts on selected equipment and services. See link at end of this article. Staffing Determining staffing is one of the most critical elements in starting your business. Can you handle all aspects of the business yourself? Is it the best use of your time to be answering phones, scheduling appointments, sending correspondence and handling general office duties, as well as professional services? If you do hire, be sure to identify specific job duties before you bring someone on board. In planning for staff costs, consider that you must offer a competitive salary and benefits package to attract and retain quality staff. You may want to consider part-time or temporary office staff until your practice is established and you can comfortably meet expenses. Once your cash flow reaches the stage where you can meet your operating costs and your personal income requirements, consider the expense of salary and benefits to full-time employees. Cash Management Develop a monthly budget. Include rent, utility costs (if not included in rent payment), telephone, email or online service, cleaning and trash services, parking (if not provided), supplies, and postage. Establish a business checking account with your bank. Do not use your personal checking account for business expenses. Consider whether you have sufficient personal capital available for your start up period or if you need to borrow money. Borrowing Money If you do not have sufficient capital of your own to cover start up costs and at least the first six months of operating costs, you may need to borrow the money to get started. There are several options to consider. You may start with your own personal credit availability. A loan against your home equity may be sufficient to get started. Family or friends may be willing to loan you money to get off the ground. Or consider establishing a business line of credit with your bank. This can provide the money you need, as you need it, without borrowing a fixed lump sum. If these sources do not provide all capital you need, apply for a business loan through your bank. Keep in mind that before you'll qualify for a loan, you must be able to put up a percentage of your own capital against the loan amount. Your home and other assets may be needed as loan collateral. Before you approach a commercial lender make sure you:
Legal Considerations Before you open for business, be sure to check local, county, and state business requirements and certification. You may want to engage an attorney to assure your compliance with all local requirements and to handle the formal establishment of your business as a legal entity. Insurance & Employee Benefits Before you begin your first engagement or open your doors to the public, it is important to address your total insurance requirements. If you are leaving an employed position, you will most likely lose all insurance coverage provided by your employer. You will need to address personal health insurance coverage for you and your family. As a professional today, Professional Liability insurance is critical. Lawsuits are a fact of life in the business and professional world. You must protect your practice and your personal assets against legal liability resulting from errors or omissions in providing professional services. If and when your practice has employees, Employment Practice Liability insurance protects you against charges of discrimination in hiring, wrongful termination, and other workplace liabilities. As a benefit to employees, you may want to offer Life Insurance, Health Insurance, Dental, Disability Insurance, and/or a 401(k) Retirement Plan. The Florida Bar Member Benefits Insurance & Retirement Programs are available to consult with law firms and offers members a wide range of affordable coverage, including:
Marketing There are two aspects to marketing your services that need to be considered at the outset of your business planning:
Your marketing plan needs to define the kind of legal services you will provide. Do you have sufficient experience to provide many areas of service or are you more narrowly focused? Can your local area support your business or is it already crowded with other firms? Is there a niche that you can fill that your competitors are not serving? Knowing the needs of your prospective marketplace is critical to success. Once you've determined your services, you need to communicate with your prospects. Get business cards printed as soon as you determine your office location and phone number. Get listed in the yellow pages of your local phone directory. Since phone books may only be printed annually, it is important to know when the next book is printed and get your information out on time. You may want to consider an announcement ad in your local newspaper, or a mailing to a compiled prospect list. Networking also plays a critical role in marketing, particularly professional services. Pass the word to family, friends, and business associates about your firm and ask that they tell others. Note, that as a member of The Florida Bar, any marketing and advertising must be in compliance with The Florida Bar regulations. Consider joining your local Chamber of Commerce or other business assocaitions. This provides networking opportunities and many times marketing support as well. Finally, once you have identified your services and market, you need to establish a pricing schedule. This is often the most difficult aspect of running a business. Your price must be competitive with other attorneys, low enough to attract new clients yet not so low as to undercut your revenue requirements. Additional Information The Florida Bar Member Benefits Programs offer a wide range of business products with discounts and concessions. If you would like to speak with a Florida Bar Member Benefits Insurance & Retirement consultant regarding an Insurance & Employee Benefits package for your new firm, contact us at 1-800-282-8626.
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