How to Start A Law Firm: The Big Picture

Starting a law firm is an exciting and challenging goal. Whether opening your own firm or building a small firm, the process requires careful consideration. This guide walks you through the starting point: the big picture. Future weeks will delve further into specific areas, so stay tuned.

Why Start Your Own Law Firm?

Starting a law firm offers some great benefits, including:

• Independence: Control your practice, clients, and work environment.
• Higher Earning Potential: Unlike working for a firm, you keep a larger share of the revenue.
• Flexibility: You set your schedule and choose the legal areas you want to focus on.
• Awareness: You establish a reputation under your own name rather than someone else’s firm.

However, starting, and running, your own law firm is demanding, too. Before you start out, it’s critical to look at the big picture and put your plan together.

Practice Area and Competitive Landscape

Choosing a focused practice area is key. Obviously, your experience and knowledge of the practice area is key. But it goes beyond that. Understanding what the competitive landscape is in your jurisdiction is critical. Consider the broader practice areas and how your firm can differentiate itself within that practice type.

Popular practice areas include:

• Personal Injury Law
• Family Law
• Immigration Law
• Estate Planning
• Business and Corporate Law
• Intellectual Property Law
• Employment Law

Specializing in a specific practice area not only helps potential clients find your firm, but it also helps clients find your firm, too. Individuals tend to do an online search to start the process of finding a law firm. And when they search, they generally identify the practice area. Speaking of search, make sure to spend some time looking for existing law firms with the same or similar practice area you are considering. Understanding how competitive the local market is, if there are already more than enough firms offering family law, for example, you are better served to consider a different practice area. Consider both your interests or area of experience and the competitive market.

Develop a Law Firm Business Plan

Sure, it can feel a little like business school but that’s what you are creating. A solid business plan not only identifies who your firm is, but also who it isn’t. It also outlines your firm’s strategy and financial projections which are obviously critical. Key elements include:

• Mission Statement: Define your firm’s goals and vision. This doesn’t need to lead your firm to world domination. The mission can be simple: Create a solo law firm that supports clients with their legal issues and provides a sufficient income, or something like that. And, of course, if that course leads your firm to world domination, you can decide that later.
• Target Market: Identify your ideal clients. Consider looking at public information sources to estimate the size of your potential market.
• Revenue Model: Establish fee structures (hourly, contingency, flat fees), at least to start. You can always adjust as you go.
• Marketing Strategy: Detail how you will attract and retain clients. Some of those things are obvious, of course, like a website and business cards. But think about where you will start and at what point you will expand. We will cover this in more detail in coming weeks.
• Expense Forecast: Estimate costs for office space, software, marketing, and more. We will cover this in more detail in the coming weeks.

Identify the worst-case scenario, too. If you plan for six months of minimal revenue and clients and it turns into eight months, do you have a plan? Stay tuned for a deep dive on developing a financial forecast for your new firm.

Consider the Business Structure

Your law firm’s legal structure impacts liability, taxation, and operations. As if we need to tell attorneys any of this, but it’s still important. Common structures include:

• Sole Proprietorship: Simple setup, but you’re personally liable for business debts.
• Limited Liability Company (LLC): Provides liability protection and tax flexibility.
• Professional Corporation (PC): Offers liability protection but comes with additional regulations.
• Partnership: Good for multiple attorneys but requires a clear agreement.

Consult with an accountant or fellow attorney with business expertise to decide which the best structure may be for your firm. Consider related items when it comes to setting up the legal entity of your firm, including:

• Law Firm Name: Check for trademarks and domain name availability.
• Register Your Business: Review the necessary paperwork with your state’s Secretary of State office.
• Apply for an EIN: Request an Employer Identification Number (EIN) from the IRS for tax purposes.
• Business Bank Account: Keep personal and business finances separate.
• Comply with Bar Rules: Ensure your firm adheres to ethical guidelines set by your state bar association.

Your local bar association can be very helpful with these processes, too. We are big fans of bar associations. They are, in our opinion, one of the most under sung resources attorneys can leverage.

Consider and Plan for Your Law Firm’s Office and Technology

Think about where you will work. A home office or even home space is fine, of course, to start. Keeping costs streamlined as you start out is critical, obviously. Be sure you consider the environment where you work best. Consider a shared office space that you can access to meet clients.

Obviously, technology is key. Firms must have a website. There are some great out-of-the-box options that anyone can use to create their website. Check out Wix, Squarespace, or Yola. Need to create your own logo? Canva has some great options. Do these things before you open the firm.

Many law firms start out manually tracking administrative items, like time tracking, billing, tasks and more. Nothing wrong with that to start out. But be cognizant about how much time it’s taking you to get all that stuff done. While the law firm is growing and you may have some time on your hands, it won’t take long until that process starts consuming very valuable time. At that point, consider case management software.

Outline a Client Acquisition Strategy

How will your new firm attract potential clients? This is another topic where spending some time searching for law firms in your practice area and jurisdiction is helpful. This is also critical for that initial budgeting process.

• Google Ads: Are existing firms running ads? If so, consider their positioning. Does the ad speak to professionalism, care for the client, efficiency, etc. This helps you understand how to position and differentiate your firm.
• Content Marketing: Put yourself in the shoes of your target client. What tips do you want to know? Being seen as a resource helps differentiate your firm. Consider holding in-person events, too.
• Networking: Join local bar associations and professional groups.
• Social Media Marketing: Engage with potential clients on social media. This should be a separate channel from your personal profiles.
• Referral Partnerships: Build relationships with other attorneys for referrals. This can go a long way in getting those first few clients.

Using a combination of online and offline strategies will help generate leads for your law firm.

What's Next

Starting a law firm requires careful planning, but with the right strategy, you can build a thriving legal practice. Creating an informed and comprehensive plan is the first step. It all starts with the big picture. Stay tuned for more information about building your brand, financial management, and how to attract and retain clients. Have other topics you want us to cover? Let us know.