Turning on the Lights
3 things to do before you open the doors of your new law firm
The business of law has experienced some major changes over the past few years, motivating many lawyers to start new firms. Maybe you’re where I was four years ago, looking to take more control of your future. Or maybe you just like the idea of calling your own shots. Either way, I applaud your decision, but I also want to offer some words of caution based on lessons learned by other lawyer entrepreneurs like you.
Failure to plan is planning to fail
I receive too many calls from lawyers who have not adequately planned, and then find themselves in the position of having to defend against a client complaint or action by a former law partner or employer. Taking the time to plan for a new law business will help you avoid issues like these.
Here are three critical things to do before you launch your new law business:
- Prepare a Business Plan. A documented business plan allows you to think through the details of your new business, estimate potential revenue vs. expenses, and move forward with a more realistic, predictable view of the future. You will be less likely to overlook a critical component (like secure data storage) that could land you in hot water, and be more confident about your ability to succeed. There are free templates available online, and other start-up resources available through the GA Bar.
- Buy Insurance. Per my good friend Aubrey Smith of ProAssurance, around 25% of Georgia lawyers do not carry professional liability insurance. Some of those lawyers feel that, since they would never do anything wrong, it’s not worth buying insurance. Instead, they “self-insure” for claims and complaints. None of us ever plan to make a mistake, but sometimes a mistake is made, or our clients perceive that we’ve made a mistake. 3,277 of our clients complained to the GA Bar in 2013. Make sure you’re covered for malpractice claims and disciplinary complaints.
- Establish the right business relationships. Ok, this is a trick answer because I’m mentioning five relationships. Actually, you’ll need a sixth if you’re forming a partnership – a lawyer to draft a proper partnership agreement.
- Banking – Per GA Bar Rule 1.15, every law firm that receives money or property on behalf of a client must have a trust account separate from personal and operating accounts. If you’ll be doing contingency work, a line of credit may also be helpful to fund new cases. Get to know your banker.
- Accounting – A good CPA will not only help with your bookkeeping and taxes, but can also provide valuable insight as you set up your new firm to minimize tax impact.
- Real Estate – A commercial real estate broker can help save valuable time finding office space. Note the recent Bar Rule 7.2 updates on physical location disclosure. An executive suite location is fine, but as one of the Bar’s Assistant Counsel confirmed, your office address needs to be where the majority of your work is done.
- Marketing – Many lawyers believe they do not need marketing help. However, competition is tight, and unless you have someone spinning a big sign on the street corner in front of your office, you’ll need a strong marketing partner to get your message out and generate business.
- Advisors – It is smart to have at least one or two trusted advisors. For lawyers starting a new law business, I recommend having one non-lawyer advisor and one lawyer advisor. Their different perspectives will add value to your decision-making process.
Lawyers aren’t always the best business managers
Law school and business school have different goals and course work. Most of us learn how to practice law, not practice business. Build a solid plan, follow the plan, and keep close track of your results against the plan. I can personally attest to the rewards and flexibility associated with being an entrepreneurial lawyer. Taking the time to plan in advance is the best investment you will make in your future law practice success. Good luck!
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