After the pandemic in 2022, the demand for legal assistance increased by 24% compared to previous years, and this trend is expected to continue. Now is the time to think about starting a law firm of your own.
But it can be a scary leap to make if you’re newer to the legal field or have been working for someone else for a long time. However, success is within your reach, and learning how to start a law firm is much less intimidating once you learn what steps to take first.
You’ll need to keep reading this guide to learn what you need to know about starting a law practice!
Create a Business Plan
One of the very first things you need is a solid business plan. Having this allows you to create a roadmap for how you want your business to be. Business plans also help you to define short and long-term goals and a plan for your marketing and financial strategies.
You’ll need to include all your projected future costs and devise a way to avoid any pitfalls that might come up.
It’s best to do some prep work before you write your business plan. To do this, you’ll need to think about your goals. Ask yourself questions like:
- How do you define a successful law firm?
- What do you want to get out of owning a law firm?
- How much time do you want to invest in it?
- Who do you want to help?
- What are your strengths?
Forming a vision of what you want your law firm to be like will help you if you’re struggling.
Form a Legal Entity
As you’re working on your business plan, you must decide what type of structure your law firm will follow:
- A partnership is with two or more lawyers who share profits
- A corporation is a group of lawyers who form a legal entity
- A sole proprietorship is best if you’re going alone
- A limited liability company has at least two people but is taxed like a partnership
Whichever you choose, be sure you understand the tax implications of the entity you form and are comfortable with your decision.
Calculate Your Budget
As you work on your business plan, you must figure out your budget. It’s best to begin by determining how much revenue you need. First, you’ll need to consider that the average lawyer in the US makes $150,130 a year.
However, if you’re just starting out, you might begin in the lower ranges, around $61,000 a year.
Even if you’ve been practicing longer, this number can vary depending on the type of law you focus on. Either way, you’ll need to make enough revenue so you can both pay yourself and invest in your business. Otherwise, you’ll lose future income by not investing in technology or marketing. You may also burn out by not investing in yourself.
To figure out your rates, you’ll need to consider factors like:
- Your law experience
- Your local competitors’ rates
- Your practice area
- Your location
Remember, it’s essential not to set your rates too low. Even if you’re opening a small law firm, low rates aren’t sustainable long-term. Ultimately you may have more clients, but you’ll end up working more and not making the necessary revenue.
Consider Start-up Costs
Next, you’ll need to consider how much money you’ll need upfront to start your law firm. This begins with your practice location. Will you lease an office, or do you plan to buy your own space?
This cost will depend on your location, so you’ll need to do research to decide the best route to take. Keep in mind that you don’t need a fancy location and the perfect furniture to start a law practice.
It’s perfectly acceptable to begin practicing from home. Nowadays, many attorneys operate virtually, saving a lot of money in the process. You should look into this trend and see if it might be the right choice for you.
If you decide buying or renting an office space is best for you, give yourself enough time to find the best location. Start between 6 and 10 months in advance so you can research and visit potential spaces without feeling rushed.
Other factors that go into your start-up costs include:
Computers and Software
You’ll first need a solid computer with an external hard drive to back up your files. A printer, document scanner, and phone are also necessary.
You should consider investing in technology too. Legal software automates many processes and will save you a lot of time. Be sure to find legal software that offers excellent practice management solutions like:
- Accounting software
- Billing software
- Timekeeping abilities
- Legal research tools
- Law practice management software
Having the right technology in place is crucial to good law firm management and will save you money long-term.
Marketing Plan
Obviously, people need to be able to find your practice, so investing enough in marketing is crucial. At a minimum, you’ll need a law firm website, social media page, logo, and business cards to start.
Marketing also involves designing a brand identity and determining what sets you apart from your competitors. SEO and paid ads will help you rank on Google and get noticed.
This can be tricky to navigate alone, so you may want to consider hiring a digital marketing agency.
Budget for Staffing
Finally, how do you want to staff your new law firm? It’s okay if you want to open your practice alone, but you could easily get overwhelmed.
But the good news is, it’s entirely up to you to decide who you want to hire.
One option to consider is hiring one person to handle administrative duties like answering emails, scheduling appointments, and completing essential paperwork.
On the other hand, you might want to hire an experienced paralegal to help you manage your cases. Because it can be time-consuming and challenging to find the right employee, you should think about using a paralegal staffing agency.
This way, you’ll find an employee that doesn’t just have general experience working at a law firm. Legal staffing agencies work to ensure you get the staff that meets your specific business needs.
Use This Guide for Starting a Law Firm
Using this guide for starting a law firm will help you set a solid foundation. But remember, this guide is just a starting point, and you’ll need to continue your research.
The most important thing is to take everything one step at a time. It’s all too easy to get overwhelmed with the endless list of things you need to do. Remember, you just need to do the basics, and everything else will fall into place.
For more helpful business tips, check out the rest of our blog for more informative articles!
