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When I graduated from law school in 2010, legal jobs were hard to find. After a brief stint as a staff attorney, I wasn’t optimistic about finding a job that would fulfill the dreams that led me to law school in the first place.
So, I started my own law firm with a law school friend, called Mays & Kerr, LLC. Neither of us had experience as lawyers or business professionals, but we were entrepreneurs at heart and passionate about the legal profession. Despite our inexperience — and some early mistakes — our practice took off and the firm has been very successful.
Based on building my own practice and helping several friends and colleagues also start their own, here are five things I learned about starting your own successful small practice and keeping the big picture in mind.
1. Keep it lean. The best thing about starting a law business is how cost-effective it can be. Lawyers don’t need to buy any specialized equipment or tools. Give us a computer, a phone and a suit, and we can start making money representing clients. If you can forgo renting office space, buying an upscale desk and other “nice-to-haves,” then you’ll take more money home.
Staying lean also helps immensely when you start to invest more in your practice. For every dollar spent, you’ll ask: “How does this expenditure increase my ability to generate revenue?” Getting to the next level often requires a willingness to increase operating costs, but you’ll invest wisely because you’ll know you can function without frills.
2. Specialize. When first starting my practice, I thought it would be fun to be a general practitioner. I quickly realized it wasn’t — it was my personal hell. Like most people, I enjoy being competent and knowledgeable in my work. But when I was taking family law, personal injury, employment, probate and civil rights cases, I never felt fully knowledgeable. I didn’t know answers to most of the questions that came up. And, while I could find the answers eventually, this was no way to practice.
Soon I made a 180-degree pivot to specializing with a laser focus on a single species of employment law: claims arising under the Fair Labor Standards Act. Despite my lack of a pre-existing interest in wage and hour law, it seemed interesting enough. So I learned everything I could about it. After six months, I knew more about this tiny neighborhood of the law than many of the more seasoned lawyers I litigated against — not because I was smarter than them, but because I only did FLSA cases, whereas they handled many varieties of cases. Also, I found I had more clients than when I was trying to be a general practitioner. Nailing a niche turned out to be the key to enjoying my job and making a living doing it.
3. Be smart about leaving your current job. Most lawyers start their first firm after leaving another law practice. It’s extremely important to wrap up with your past firm and transition clients in a way that won’t create legal or ethical problems. Refer to the ABA’s Model Rules of Professional Conduct and guidelines from your state bar for information about ethics requirements. Regarding legal duties, note that you may have fiduciary duties to your current employer. It’s never a bad idea to consult with a business lawyer at this stage.
“The Lawyer’s Career Change Handbook” author Hindi Greenberg provides great advice on how to make a smooth transition in her post “How to Successfully Leave a Law Job.” She stresses that remaining on good terms with your former employer should be a priority: “You never know when you may need to work with your former employer again in some capacity, ask for a reference or have some contact in an unrelated business situation.”
4. Prepare for a ramp-up period. While starting your own law firm can be inexpensive, that doesn’t mean you can jump in without financial backup. Building a base of clients and cases takes time.
Make sure you have enough in savings to cover your living expenses while revenues are growing. Think about your personal living costs. Look at your budget (and bank account) to see where you are spending money each month. What unnecessary extras can you live without, at least temporarily? What necessities can’t be ignored? Think about mortgage, utilities, health insurance, meals. Estimate how much you need in savings to cover expenses for five to six months (assuming you don’t have a penny of profit come in during your ramp-up period). Be sure to add in a buffer for those unexpected situations that always arise at the worst possible moment.
5. Don’t skimp on essential tools. As with any other business, you will need to spend money to make money. Carefully consider how to spend your seed money, but don’t skimp on the essentials your firm needs to operate. We all know time is money. So keep in mind that cutting corners often turns out to be more time-consuming and more costly in the end. For instance, you may save money up-front by using a cheap scanner and PDF editor, but these will cost you time that could be spent more efficiently.
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It sucks when clients take advantage of us and don't pay their bills.January 15, 2019 0 0 0