Daily Dispatch

Seed Money

How Much Does It Cost to Start a New Solo Law Firm?

By | Jul.17.12 | Daily Dispatch, Legal Careers, Money, New Lawyers

In case you hadn’t noticed, a lot of those new lawyers who can’t find jobs are hanging out a solo shingle. Add to that those lawyers with experience who have left a firm by choice—their own or someone else’s—to launch a practice. That’s a lot of lawyers starting from scratch! You may be one of them (or dreaming of becoming one). So, what kind of seed money does it take to start a solo practice these days?

We asked a handful of people who know the territory, and here are some of their answers. There’ll be more here next week!

Stephanie Kimbro

“The answer depends on what method of legal service delivery the new lawyer wants to provide: traditional delivery, online delivery or a hybrid of the two. The cost to launch a traditional, bricks-and-mortar law practice is going to be greater than if the lawyer uses cloud computing to conduct the majority of his or her work with clients. The most cost-effective scenario for a lawyer to launch a solo practice would be to select a hybrid practice where he or she leases a shared office with conference space and a shared or virtual receptionist. The lawyer may use a web-based practice management system with a secure client portal to provide unbundled legal services to online clients across his or her jurisdiction, as well as do some of the work for full-service clients online and at the leased office space. Additional start-up expenses and the cost to market and develop a client base in that first critical year are then added to that basic foundation.”
Stephanie Kimbro, Burton Law LLC
Author, Virtual Law Practice: How to Deliver Legal Services Online
Blogger, Virtual Law Practice

Ruth Carter

“Here’s my two cents. You can start a law firm pretty cheaply. The minimum things you need to have are an LLC, liability insurance, QuickBooks, business cards and a website. Depending on your situation, you may also need to invest in a mail service (so you don’t have to use your home address for your firm), a printer and scanner, a laptop, Internet service and a backup hard drive or cloud storage. You’re also going to be responsible for your bar dues and CLEs.”
Ruth Carter, The Carter Law Firm
Blogger, UndeniableRuth.com

Greg Siskind

“Pick a niche specialty where you don’t have a lot of competition and your short-term and long-term costs will be a lot cheaper. That’s because you won’t have to spend as much to market to your smaller audience and will get referrals from a much wider base of lawyers who aren’t competing with you. And you can minimize your expenses by operating as ‘virtually’ as possible, which could mean renting the use of a conference room and a mailing address from a local firm and working mainly from home, marketing online, using Internet-based research services, etc. Your big-ticket item in your initial time as a brand-new solo will likely be your time and writing like crazy to build your expertise and reputation in your field. That worked for me when I was a 26-year-old solo.”
Greg Siskind, Siskind Susser, PC
Author,
The Lawyer’s Guide to Marketing on the Internet 
Blogger, Greg Siskin on Immigration Law & Policy

Debbie Foster

“Cloud options make starting a law firm less expensive than ever. Presuming you establish your new practice from home, start-up costs can be as little as $3,500 inclusive of purchasing a laptop, printer and scanner. Cloud-based practice management and billing solutions run about $50 per user per month. Microsoft, via its Office 365 product, provides Microsoft Office 2010 for as little as $22 per month. Further, if you already own reasonably current computer equipment, start-up costs may be even less. Also, online resources like TechnoLawyer, the ABA’s Law Practice TodayGPSOLO and social media provide ongoing and current techno-guidance.”
Debbie Foster, Affinity Consulting Group
Past Chair, ABA TECHSHOW

Carolyn Elefant

“The better question is how much you need to earn to survive the first year. These days, most first-year law students already have the basic equipment to run a firm—a laptop and smartphone (which you can even use for scanning) and (presumably) a place to live. Online file storage, email, calendaring, voicemail, word processing, legal research and a blog and website are free, courtesy of Google, and you can establish a robust online presence and market through social media and free email newsletter services like MailChimp. Arguably, you could even get by without Internet expense if you work out of a law library or Starbucks. Your only real costs are malpractice insurance (which can be as low as $500 per year for a newbie), business cards (maybe $10 online) and a domain name ($10 per year). The bigger hurdle is how much you need to earn each month to cover costs like health insurance (if you’re young and healthy, you could find something for a few hundred) and student loan debt (which for many grads starts at $1,000 per month, though there is a deferral period). I’m not saying that starting on the cheap is recommended—it’s not. But if push comes to shove, it can be done.”

Carolyn Elefant, Law Offices of Carolyn Elefant
Author, Solo by Choice: How to Be the Lawyer You Always Wanted to Be
Blogger, MyShingle.com 

Donna Seyle

“As lawyers like to say, it depends. And there are many factors to consider, but there is really just one question that must be answered at the outset: What kind of practice do you want to have? You can get started for under $500 per month, with no up-front costs, for a virtual home office practice. The sky’s the limit after that. Envision your dream practice. Make this the core of your business model. Then create a checklist of the things you will need and price them. If you can’t afford your dream office right now, start paring away the non-essentials. But don’t destroy the list! Do this with the intention that you will grow your practice into your core business model.”
Donna Seyle, Law Practice Strategy
Author,
Law Practice Strategy: Creating a New Business Model for Solos and Small Firms

What Other Costs? Tell Us What You Think

Next week, John Snyder shares his budget for start-ups, based on his experience opening a Manhattan-based litigation boutique. We’d love to hear from lawyers in other parts of the country, too. What unexpected costs did you encounter when starting your practice? What advice would you give to new lawyers? Tell us in the comments below or email the editors.

Attorney at Work’s Merrilyn Astin Tarlton has been helping lawyers and law firms think differently about the business of practicing law since 1984. She was a founding member of the Legal Marketing Association, past President of the College of Law Practice Management and an LMA Hall of Fame inductee. She blogs about innovation at www.astintarlton.com.

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13 Responses to “How Much Does It Cost to Start a New Solo Law Firm?”

  1. Bob Denney
    17 July 2012 at 8:40 am #

    This is absolutely invaluable. Kudos to AaW for thinking of it.

  2. Pat Yevics
    17 July 2012 at 9:42 am #

    Carolyn Elefant is absolutely correct that the more important question is what do you need to earn. I often tell new solos that they need to determine how long they can live without a steady income regardless of the type of practice they start. Obviously some practice areas will require you to be able to live longer without an income but this is really the critical question.

  3. Theda Page
    17 July 2012 at 1:54 pm #

    You have to be forward thinking, when you are starting out so that as you grow, you do not create additional problems. Therefore, I would recommend a PO Box. Even if you have a virtual address, in most instances you cannot forward your mail should you ever decide to lease space on your own. The same is true if you share office space and everyone does not move to the next place. It is not like moving a residence.

    Be very selective in the software that you pick because you could end up needing to replace it and that could be costly not just in the purchase itself but transferring data and making the adjustment.

    Théda W. Page
    Attorney at Law

  4. K.C. Victor
    18 July 2012 at 10:44 pm #

    For people with some extra cash and a desire not to be their own administrative staff, an excellent way to find someone to run your office – and free you to pursue clients and practice law – is to contact a nearby business school and offer to pay a newly minted MBA a moderate salary. The lawyer agrees to teach the MBA about how to run a law firm in exchange for the MBA’s agreement to stay for at least two years. It is not worth it to train someone who will stay for only several months. That method worked pre-recession and certainly works today.

  5. Kymeshia Morris
    19 July 2012 at 10:06 am #

    I definitely agree that a person needs to analyze their expenses (rent, food, utility bills) and monthly operation cost for running a practice before taking the leap. If a person struggles with the concept of not having a steady paycheck the first six months of being solo, get a part time job to cover some of the expenses. Best of luck to all solo’s out there!!


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