Lawyers exit law school with plenty of case law knowledge and analytical abilities, but what are the basic business skills and know-how that will serve lawyers well?
Table of contents
A Business Plan
Starting your practice with a business plan is essential. At the outset, it’s often hard to know exactly what services you will sell to exactly what clients, but the better job you can do in pinpointing these decisions, the better positioned your practice will be.
Your business plan will serve as your North Star for building your firm. Be specific about your purpose, your goals and the clients you want to serve.
Creating the business plan will also remind you to work “on” your business and not just “in” the business providing legal services. Working “on” your business includes marketing, business development, strategic planning and goal setting.
Once the plan is complete, don’t put it on a shelf out of sight. Rather, build a planning day into your schedule every quarter where you review your goals and the tasks that will get you there. Measure the data by looking at your client list and reviewing your revenue and expenses to see if you are on target. Many lawyers create a dashboard to see daily results, which can be scary but will give you detailed data and insight into your firm that many long-time practitioners have never had about their own firms.
Keep in mind that your business plan should be evergreen, a living plan that is constantly updated and flexible if you need to pivot your practice.
Choosing a Location: Brick-and-Mortar or Virtual?
In many ways, starting a law firm has never been cheaper. With a laptop and a mobile phone, a DIY website, bank accounts and a few subscription services, you can be accepting clients the day your law license arrives.
However, take the time to think through your options of whether to go virtual or brick-and-mortar. Practicing as a solo can be lonely and isolating. If there is an available shared office space or co-working office space that may include other professionals or businesses, you may want to take advantage of brick-and-mortar for the company, the mentorship and the networking. On the other hand, having a virtual office is a great way to keep expenses in check, especially at the beginning, and your clients may never expect to see the inside of your office.
As a result of the pandemic, there are plenty of opportunities for leasing, and as the real estate market ebbs and flows, buying your own space may be a great investment for you and your firm that will pay off down the road.
Fees, Billing and Collections
Determining how to set fees is tough. You want to make sure your fees are competitive.
One tactic to determine fees is the most common research tool today — a Google search. My search “how much does a divorce lawyer cost?” provided a variety of information. I did the search specifically for my state and the first result was from a survey that provided an average hourly rate for divorce lawyers. This search revealed other frequently asked questions (and answers), such as the average retainer fee and the average cost of a divorce. The search resulted in ads for law firms that provided insight into how other family lawyers promote their firms and services.
The Clio Legal Trends Report is an excellent resource that shows fees across the U.S. reported by state or region of the country. Recruiting firms often publish online salary guides that sometimes include regional billing rates. You can also find billing rates on salary websites such as Glassdoor or Salary.com.
Getting direct feedback is valuable. You can talk with trusted clients and referral sources about what they feel are reasonable fees. Mystery shopper programs are where law firms call other firms to inquire about rates. Most firms don’t quote prices over the phone, but you can find out whether other firms provide free or paid consults if nothing else. And finally, look at fee affidavits that have been filed in your jurisdiction.
The most important note about billing is to make it a priority. Firms often bill at the end of the month for all the work done that month. While that may work in larger firms, timely billing results in greater collection rates. When the bill arrives while the results are fresh in your clients’ minds, the value of work seems higher. Put processes in place to ensure you adequately capture your time and document your billing process to improve your billing workflow.
From the moment you open your law firm doors, you should offer online payment options and accept credit cards.
A recent Total System Services (TSYS) study showed that as many as 75% of customers today prefer to pay with a credit or debit card. In addition to the convenience, customers enjoy credit card rewards, cash back and other perks of using their cards.
Studies show that 85% of electronic invoices are paid the same week they are sent, and 57% are paid the same day the client receives the invoice.
Taking credit cards means you get paid faster and the money is deposited in your account sooner. Also, integration between your credit card processor and your time and billing system reduces payment and client information duplication.
While many online payment platforms are available, LawPay is often an affinity partner of many bar associations. LawPay was designed specifically for attorneys and is designed to prevent the commingling of earned and unearned funds, protects your trust account from third-party debiting, and ensures IOLTA compliance for credit card, debit card and eCheck transactions.
Other legal-specific credit card payment processors include ClientPay, Headnote, LexCharge and MyCase Payments.
There are many resources to guide you through the process of choosing your technology and your bar associations are a great first stop. You may be able to save money by taking advantage of the affinity partnerships your bar associations have with various technology providers such as Clio and Fastcase.
Most bar associations have practice management advisors or practice management centers, which typically offer free technology consults.
Regarding what kind of tech you need, you should focus on tech that makes you more efficient and provides a good client experience. Tools that are often listed as “must have” for your tech toolkit include:
- Scheduling automation (I use Calendly).
- Virtual meetings (I use Microsoft Teams and Zoom).
- Project lists and to-do task lists (I use Trello).
- Marketing automation (I use Canva to create and MeetEdgar to schedule and automate).
- Website (I use WordPress).
- Document automation (this will vary by practice area).
- Accounting/Trust accounting (Trustbooks is designed for solo and small firms and is compatible with state bar trust accounting rules).
If you have a bar-related insurance carrier in your state, they should be your first choice. While malpractice is not required in most states, you should view it as a necessity. Insurance payments are painful when you can’t see the product, but you are buying peace of mind. Also, bar-related insurance companies will offer free CLEs, free risk management advice, forms and templates, and newsletters and alerts about changes in the law and scams, all of which provide added value.
Talk with your malpractice insurance carrier to see if they have an agency that provides other types of insurance products you will need, such as health, disability, key person, business owners coverage, and cyber protection.
Being Solo Does Not Mean You Are Alone
Starting a solo practice comes with a mixture of fear and excitement. You will need a healthy dose of resilience, flexibility and resourcefulness. Keep in mind that being solo does not mean you are alone. Seek out other solos to network with. Find a mentor in your community. Join bar associations and virtual communities to continue your legal education and professional development.
Enjoy the journey. You are building what will likely be your most valuable asset, as well as your pride and joy.
You might also like: “Book Review: Considering Hanging Out Your Shingle? Solo by Choice by Carolyn Elefant,” reviewed by Susan Cohodes.
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