The legal sector is a fascinating field to work in. You get to share your expertise, develop trusted relationships with clients, work with professional colleagues and charge well for your time. If you’re a qualified attorney, there are several options for a successful career. You could join a larger firm or go work at an established company as legal counsel. Alternatively, you could also start a law firm of your very own.
It’s an enticing idea — you get to put your name over the door, decide which legal areas you want to specialize in, create something of your own and provide exceptional services to deserving clients. Of course, starting a business of any kind has its challenges. Worry not; today we’ll talk you through the key areas you’ll want to consider before taking the legal plunge.
Do You Want to Go It Alone as a Lawyer or Partner With Others?
One of the first things to consider is whether you want to be a single-person law firm or go into business with other attorneys. In many cases, partnering with other lawyers could be a great choice.
You get to offer a wider range of legal expertise, share costs like office space and utilities and have staff provide services for all of you. It may also give you access to a wider potential network of legal clients and you might share the workload if you get really busy.
What Is the Right Business Structure for Your Law Firm?
From the start, you will want to choose the right type of legal entity for your law firm. A sole proprietorship or traditional partnership may not be the best idea since it leaves you and your partners fully accountable for any business liabilities or costs with no asset protection.
Even a Limited Liability Partnership (LLP) isn’t always the best choice since one partner will always bear responsibility for the law firm as a whole. In most cases, a good business entity structure for your law firm will be a Limited Liability Company (LLC). These are simple and inexpensive to create and maintain with minimal administrative overhead. Most importantly, an LLC provides protection for your personal finances and assets.
Here at Incfile, we’re experts in creating LLCs across every state in the U.S.
How Will You Decide Each Lawyer’s Responsibilities?
If you do decide to work with others, make sure you have a rock-solid Operating Agreement in place. This agreement will define how the law firm is structured, who makes decisions, how ownership is divided, who can take money out of the business and more.
If you’re interested in having your Operating Agreement created for you, Incfile can draft a general Operating Agreement as part of our online business formation packages. It can also be selected as an add-on option in our Silver package. This Operating Agreement will be a basic template that you can make changes to anytime you see fit.
Do You Have the Right Approach and Skills to Run Your Own Law Firm?
You may be an awesome attorney, but an excellent understanding of the law isn’t the only thing you need to run a successful legal business. You’ll need to develop the following skills or hire experts to assist you.
Client Outreach and Marketing
A law firm thrives or fails depending on its client base and reputation. You will need an excellent understanding of what legal services you can provide, what your clients are looking for, where to find those clients and the right marketing channels to use for outreach.
That means developing a comprehensive marketing strategy, making the most of your personal and professional network and enhancing your law firm’s visibility in your local marketplace.
Your Legal Niche
Explore your likely client base in your home area to see what types of legal service will be most in demand. You could specialize in real estate transactions, civil cases, wills and probate, personal injury claims, contract law, mergers and acquisitions, criminal litigation or many others.
Be sure to also use market research to understand who your local competitors are likely to be. One strategy is to identify gaps in legal services in your area and develop a business plan to fill them in.
Financial Business Management
Next to getting clients, one of the most important keys to a thriving legal business is good financial management. To ensure you're prepared, find an expert accountant and partner with them to create an effective finance and tax plan for your new business.
You can even set up your LLC with S Corporation status for some extra tax advantages. The Incfile Tax Calculator is a great tool that will show you how much you can save.
Administration and Overhead
Never underestimate how much time administration and overhead can eat up during your days. As a professional attorney, your financial success comes from maximizing your billable hours, but admin work can take a big chunk out of this time. It might be worth hiring a law firm manager or assistant who can take care of all the non-billable tasks that you'll need to complete.
What Is the Best Way to Setup and Maintain Your Law Firm?
There are several areas you’ll need to cover in detail when you’re starting out with your legal business.
Choosing the Right Location for Your Law Firm
Most attorneys will need their own offices. It’s possible you could work from home, but that won’t always be ideal when it comes to meeting with clients. As a lawyer, It’s important to make the right first impression. Investing in smart, modern, beautiful offices will go a long way toward winning over potential clients.
Getting the Necessary Licenses and Permits in Place
You will definitely need local licenses and permits from your state, region, and city before opening your firm. You may also need special federal permits to practice law as well. If you need help navigating this, Incfile offers a Business License Research Package that will let you know exactly what you need to register for.
Planning for Your Taxes
In addition to good financial management, you will need to understand your tax liabilities. These are likely to include self-employment tax, payroll tax if you employ anyone, federal income tax, and state income tax.
Equipment and Resources for Your Law Firm
In addition to standard office equipment and furniture, each employee will need a computer and software so they can do their work and access legal resources. Make sure you plan for any ongoing costs and subscriptions, including legal software, utilities, building overhead and asset purchases.
Marketing Materials and Budget
To put your legal marketing plan into effect, you will need to create a marketing budget. Prioritize the main areas you want to focus on depending on your goals for client acquisition: a website, social media marketing, local print or radio ads, local search engine marketing, etc.
Hiring and Managing Law Firm Employees
Establish whether you are going to need to hire employees for your law firm. Some tasks can be completed by freelancers and contractors, but a permanent employee may be better for ongoing services like reception and admin support.
If you decide you need employees, make sure to budget time and money for managing them, paying salaries, providing benefits, setting up insurance, paying taxes and managing employee overheads.
LinkedIn Groups for Lawyers, Attorneys, and Legal Support Staff
LinkedIn is one of the best online resources for legal communities, discussion groups, and advice forums. Here are some groups to get started:
If you're ready to start your own law firm, the time to begin is now. You have an amazing chance to create something uniquely valuable, share your legal skills with the world, build great client relationships and get paid to do something you love. Let Incfile know how we can help you!