When considering starting a boutique law firm, there are many issues that need to be addressed prior to the first day of business. For instance, if a lawyer is leaving another firm, it is critical that the lawyer read any documentation or current firm policies regarding clients and transferring data. The lawyer should make sure that the departure is as transparent and non-adversarial as possible. In some instances (especially with equity partners), it would make sense to engage a business attorney.
The very first thing the lawyer should do is to notify his/her top clients of the move in order. The lawyer needs to ensure that they will remain his/her clients despite the transition. An engagement letter must be prepared that specifically addresses the transport of their current files and matters to the new firm, so that there are no issues when moving not only the paper files, but the electronic files as well. An electronic document should be kept of all contacts (clients, colleagues, and business partners). Using whatever software is most familiar, initially, is fine. Eventually, this information will need to be exported into a document management system.
Assemble a Team
One of the primary tasks that a lawyer should complete is assembling a team of professionals that will work with them to make sure all the necessary issues, including expense management, are addressed prior to that first day in the office. Cash receipts generated from the new business will not be available until approximately 90 days from opening day, so a solo practitioner has to be affiliated with like-minded cost-conscious professionals. While the entrepreneurial lawyer can do much of what is needed, in many cases, it is good business practice to utilize more competent professionals for each specific task. One of the most effective ways to assemble this team is for the lawyer to participate in various networking groups and ask for recommendations from colleagues who have opened their own practices.
Because of recent events, almost all networking groups continue to be virtual, so access is relatively easy. There are many groups out there, so the lawyer should take the time to find those that include other attorneys and professionals who support lawyers. Networking with local chamber of commerce groups and bar associations are often a good investment of both time and money.
Some project management tools will be necessary to maintain a checklist for coordinating persons assigned to each task, prioritizing each task and monitoring the status of each task.
Plan Your Opening
Anticipating a 90-day ramp-up to positive cash flow, the lawyer must ensure there is enough money to live on and to start a new practice. This may differ between individuals, so careful consideration is important when calculating a budget. It is best to expect a 90-day non-cash receipt period and budget appropriately.
It is important to set a start date, making sure that date is far enough into the future so there is time to address unexpected events. Once an opening date is close, a press release should be prepared and posted on all social media. It should also be sent to trade publications and networking groups.
Set Up Shop (and the appropriate accounts)
Acquiring a suite or office space is important. This can be a shared office or a sublet space. The new firm will need an address which is accessible. After acquiring space, the lawyer should immediately reach out to a local bank and open a checking account and an IOLTA (escrow) account.
The next step is to apply for professional liability insurance. A bank account and location will probably be required to obtain this insurance. Because law firms are being hacked at unprecedented rates, it is critical to obtain cyber liability insurance as well—professional liability insurance will not cover a cyberattack.
The firm will need to be registered with the state where the firm will be located. An EIN number must be obtained, so an accountant should be consulted as to the formation of the firm. The lawyer will need to decide if the firms should be an S-Corp, an LLC, an LLP, or another formation. For this reason, it is important for the lawyer to hire an accountant who understands the legal industry.
Select the Right Tools
The new firm will need a document management/time and billing system to properly manage the business. It is important to choose a system provider who specializes in the legal industry and who is accessible and helpful. The system must make it easy to enter time from anywhere and maintain the data in the cloud.
In today’s environment, clients and potential clients are Googling lawyers and accessing their websites—they have become their virtual reception areas. As such, it is necessary to obtain a URL and domain name for a firm website. Since someone will need to develop the initial content to get it up and running, hiring a professional website developer with experience in the legal industry isa good idea. When considering the website, it is important to remember that a website is a fluid asset and will need to be updated frequently. Firms should maintain an accurate LinkedIn profile as well. In some cases, a Facebook account may also be valuable
Business cards are still necessary as well as electronic letterhead. Hardcopy letterhead may not be needed, but envelopes and other hardcopy documents with a brand/logo may make sense.
In summary, it is best to assemble, plan and work with a team of like-minded cost-conscious professionals, not only during the initial days of a new practice, but during the life of the practice. As everyone has experienced recently, events that are out of our control occur. Being a new and small firm offers an opportunity for competitive advantage: to be flexible, prepared for change, and able to pivot as needed.
Published by Zola Media