A successful law practice requires a solid business plan, a modern infrastructure and a polished marketing strategy. Sharp focus has to be given to efficiency, flexibility, customer service, risk management, and marketing. While beginning law practice, a person has to decide if s/he needs to be an employee or an entrepreneur. A lawyer needs to determine whether he or she wants to spend the time and energy necessary to run a business and practice law or whether he or she likes to remain in an employee position. Before taking the final decision on practice, a lawyer should make time to talk to other practicing attorneys. S/he has to understand the responsibilities behind starting practice including finding an office space, purchasing equipment and furniture, hiring a capable assistant, setting up a legal business entity and developing tactics and strategies for gaining new business.
The biggest challenge that a beginner of law practice would face is the choice of practice area. One must consider his or her talent, passion and consumer demand before selecting the field. Certain clients that a beginner in law practice intends to represent may be used to being serviced by a large, full-service law firm and they may not be prepared to be serviced by a solo practitioner. Some other clients may need lawyers specialized in process oriented practice where several people, including non-lawyers, participate in servicing. In this case, a lawyer has to find the resources to hire the necessary staff. The scope of potential client base has to be well considered. If a lawyer is passionate about a particular type of work that could be impacted by cyclical market conditions, a down cycle period in work can be expected. A lawyer who wishes to start practice has to understand what s/he likes to do, what s/he is good and efficient at doing, and where the demand exists.
A lawyer wishing to start practice has to opt to the best name for the firm. It is generally seen that most of the firms opt to name the firm after the surname of the partner or partners. The business name has to be a calling card for the type of practice that a lawyer intends to have. The law firm needs to have a website, and try to derive a fairly brief URL for the firm’s website and e-mails. If there are plans to use internet based marketing, the name of the firm has to suit the purpose. One must be sure to choose a name that is not same as or identical to the name of another law firm.
Proper business planning is essential for the growth of law practice. When starting a new practice an early consideration has to be given about where to position the services in the market space. At the high end of the market fewer clients are needed to generate equivalent revenue as compared to the middle or low end of the market. A high level of service has to be provided to people paying better money. A larger potential base of clients in a given region can be expected at the lower end. However, one can expect unpaid fees, haggling over fee rates and collections expenses at the low end. A billable hour practice has everything to do with the percentage of billed time that ends up as paid time. One’s productivity may be influenced by factors such as non-billed time, slow-pay clients, re-negotiation of fees and forgetting to bill for something or billing less than the time actually worked. It is always better to create a model based on 75% productivity and then achieve more. Factors such as current client roster, the specific area one plan to serve and the dollars one is able to put into marketing and the look and feel of the law office, website and many other things have to be considered.
It is always sensible for a lawyer starting practice to invest in office space. The lowest cost option is to work through one of many corporate office centers around the country that provide meeting space, phone service and mail collection. Such office services may benefit to some types of lawyers. Another option is to share office space with an existing firm or group of solo practitioners. In such a case, s/he would have to share costs for all common functions, including staff. The third option is to lease one’s own space, hire employees and set up firm-wide systems. A beginner in law practice has to determine which of the three options would suit better.
Incorporation of business is the next step in beginning practice. Specific rules are in place for states about various legal forms that a law firm can take. Checking with the state bar association would provide light on available business structures. In certain places, businesses must pay local taxes or fees annually to maintain a business license where even a sole practitioner operating a sole proprietorship might have to pay these fees. Some states allow rapid filing of incorporation documents for an extra fee.
According to a census, most lawyers practicing for at least ten years will face a malpractice claim. This emphasizes on the need for a good malpractice policy when starting one’s own practice. One successful claim can even wipe out an uninsured small firm. The time and resources necessary to fight the claim can be more than what a small firm can bear without insurance. Apart from malpractice insurance, a law firm needs to have a general business casualty and liability policy. This would protect the law firm in the event of any injury on its premises, loss of property from flood, fire or other damage and even theft.
Managing money is another key factor in law practice. Money is the life blood of law practice, and it may decide the success and failure of a firm. In the absence of accounting professionals, the best way to manage accounts is to use automated time, billing and accounting softwares. Such softwares will assist in setting up a chart of accounts, billing mechanisms, time-keeping automation and finally, integration of systems from tracking time to sending out invoices. Accounting softwares would also assist a practicing lawyer in tracking client productivity.
Banking with good financial institutions would be helpful for a lawyer intending to practice. They can provide start-up loans or lines of credit. Banks can also be a source of new clients. It is always better to have three accounts, a trust account, an expense account and a general deposits account. Rules regarding opening and maintenance of these accounts may vary from state to state. Ensuring that the bank has merchant services would be better since most clients pay the bills using credit cards.
The confusion about setting fees has to be cleared by checking with peers and known lawyers. Lawyers set fees according to circumstances of the case and the time required to represent a case. It may also account other considerations. It is hard for a lawyer to advise the exact amount of fees in advance. However, the lawyer may provide with a fee estimate. A lot of attorneys set up fixed hourly charge for their services. The fee is calculated by multiplying the number of hours an attorney has spent working on the case with the fixed hourly charge. Court filing costs, long distance telephone charges, transportation costs, photocopy charges and all other charges are added to the fee. Hourly rate of attorneys will vary depending upon his or her experience and the particular service. Fixed or Flat Fees may be charged for frequently performed services. Such services will include drafting wills or assisting with real estate transactions. Contingent fee arrangement is usually fixed as a percentage of the recovery.
A law firm needs to have well defined office policies and procedures. This enables a lawyer to run the firm productively, hire competent people, and pay them. Policies should also be in place regarding email, Internet usage, time worked and billed for billing employees and conditions of employment. Office procedures make it easier to handle more clients and legal issues. It allows proper usage of time and man power. Clear client service agreements would avoid confusions.
State bar associations may have dedicated resources, counseling and special education for new firms. State bar organization or the American Bar Association provides opportunities to network with peers and potential clients. Many special bar associations focus on specific practice areas such as international law or intellectual property law, and they may have information that could be useful for developing a practice within the area of focus.
Generally, online research is necessary for any practice that involves litigation. Research time can be saved by hard cover books and updates at times. Many practices will need subscriptions to online or hard cover practice specific resources.