Starting your own law practice requires a lot of planning, decision making, and hard work. When you finally make the decision to go for it, you must understand that you are likely to make a few mistakes along the way. The following are some common mistakes attorneys make (some we made, and some we were fortunate enough to avoid), along with tips on how to avoid them and build a successful law practice.
1. Make Financial Plans
One of the biggest mistakes attorneys make when starting their own firms is to assume that money will come in the door immediately. Unfortunately, that is rarely the case. Even if you start the firm with existing clients and ongoing work, there will likely be a period of time between doing the work, preparing and sending out the bill, and actually receiving payment. To be safe, you should be prepared not to pay yourself for at least the first year. Certainly the hope is that it will not take an entire year to be profitable, but planning for a worst-case scenario will increase your odds of survival.
2. Plan Every Detail
Lack of planning is a common mistake among new firm owners. It is important to plan every detail of your firm, from how much space to how many garbage cans you will need. Detailed planning helps you understand your financial needs, along with providing focus to your practice. At a minimum you need a detailed written business plan that incorporates all aspects of your practice. The main areas to be addressed include the following:
- Firm name
- Supplies, office furniture, and office equipment
- Permits, licenses, and so on
- Banking relationship (loans, trust accounts, and so on)
- Partnership agreement, if necessary
- Insurance (malpractice, business, premises, and so on)
- Legal research
- Exit strategy from existing firm, if applicable
- Marketing strategy
3. Have a Marketing Plan
In conjunction with your detailed business plan, it is imperative that you create a written plan to help you organize and budget for the marketing you will need to get clients through the door. The most successful firms have a firm-wide marketing plan and individual marketing plans for the partners. The key elements to a firm-wide plan include the following:
- Competitors analysis
- Client/prospect analysis
- SWOT (strengths, weaknesses, opportunities, threats) analysis
- Business development goals (long- and short-term)
- Action plan
Personal marketing plans should be reviewed monthly to keep partners accountable for building their books of business. Personal marketing plans should identify:
- how partners will nurture client, prospective-client, and referral-source relationships,
- which professional and networking groups will be most lucrative and how the partner will become involved,
- targeted speaking and media opportunities, and
- opportunities for personal growth.
4. Set Goals
It is essential to articulate goals (monthly, quarterly, one-year, three-year, and five-year). Dream big, with the knowledge that coming up short does not necessarily constitute failure. For example, if your “stretch” goal is to double revenue in three years, a 70 percent increase is … a 70 percent increase.
com ddavis dgattorneys Daniel S. Davis, Kansas 1994, is a principal at Davis & Gelshenen LLP.
com mark goldsteinsc Mark Goldstein, U.W. 1994, is president of Goldstein Law Group S.C.
com cpleas pleaswilliams Coral Pleas, Marquette 1993, is a principal at Pleas Williams LLC.
The authors’ offices are in Milwaukee. This article is adapted from a talk the authors gave at the State Bar of Wisconsin PINNACLE 2012 Solo & Small Firm Conference.
Next, test your goals to ensure they are clear and concrete enough. One way to do this is to ensure they are SMART goals. The SMART acronym lends itself to a variety of definitional elements, but it is most frequently referenced as the following:
Specific – Articulate your goal with enough specificity to be both meaningful and measurable.
Measurable – If your goal cannot be measured, you will not know if you have succeeded in reaching it.
Attainable – Be honest with yourself, keeping your confidence and optimism in check.
Results-Oriented – The goal must support a larger strategic objective. If the ultimate objective is to grow business by X percent in the coming fiscal year, how does a precise marketing/financial/administrative goal support that objective?
Time-Based – Set a reasonable deadline for attaining this goal. This is an area where your legal training can work in your favor, as much in our world is still governed by “artificial deadlines” (for example, scheduling orders).
Another key element is to assign primary responsibility for the goal: to yourself, to someone else in your office, or to an outside vendor.
Without these pieces in place, you may find yourself lacking a sense of focus and purpose; or worse, simply reacting to the most recent email, voicemail, or piece of paper that comes to your desk – robbing you of valuable time and energy.
5. Measure Your Progress
No amount of goal-setting and planning can be effective if you do not measure your progress and determine whether that progress is leading you to the objective you initially sought. For example:
- Your goal was to create blocks of uninterrupted time for drafting pleadings, doing legal research, or business planning. How did you do this week? What impediments (for example, phone calls, visitors, emails) did you encounter, and how can you adjust for them next week (for example, instructions to your assistant regarding which calls to let through and which should go directly to voicemail)?
- Your goal was to launch a new marketing program. Has the program yielded leads and, ultimately, new clients?
- Your goal was to increase your billable time to a set number per week or month. Did you reach that number and, if so, did those billable hours result in more receivables and monies actually collected?
Create a “dashboard” of key performance indicators. This will provide you a weekly or monthly snapshot of how you are doing on your various goals.
6. Purchase and Use All the Technology You Can Afford
Most attorneys starting a new firm believe they can afford only the most basic technology. Generally speaking, the right technology will make you more efficient and, therefore, more profitable. If possible, invest in an effective practice management program and the technology to operate a paperless office. These two technologies alone will save you countless hours not having to search for files and specific documents, and will save you money on office space and paper, along with other related supplies like files, folders, and file cabinets.
On the flip side, be cautious about buying flashy products that won’t help you save time or improve your business processes. Do your homework. Talk to other lawyers and professionals, such as the State Bar’s Practice411™ advisor, about technology programs to find out which are truly worth the investment.
7. Don’t Spend Money on Ineffective Marketing
As a new law firm, you will be bombarded by vendors trying to sell you everything from yellow-page ads to website listings to search-engine optimization. In our experience, the most cost-effective marketing is personal networking and referral development. You will be surprised how many times a simple lunch will turn into a client referral. Certainly more expensive advertising can work; just make sure you are convinced that the value of the advertising will be greater than the cost.
8. Measure the Value of the Marketing and Advertising You Use
Ask new clients (and even inquiries) how they heard of you and track it in some type of contact-management system. Run monthly reports to consistently evaluate the performance of your marketing investments. However, make sure you give your investment the time and commitment it needs to make a return. Most marketing programs take 12 to 18 months to show results.
9. Be Careful about Taking Cases Outside Your Area of Expertise
One of the most foundational decisions you will make in your new law practice is what types of cases you are going to handle. When deciding which areas of law you will accept cases in, keep in mind SCR 20:1.1 – the ethics rule that deals with your responsibility to handle legal matters competently. You want to be sure that you are well prepared to competently represent your client and that both you and your staff have the resources and training necessary to identify the pertinent legal issues and to devise a plan to properly address those issues. To have an efficient practice, you must handle matters effectively. You will want to practice in areas in which you have sufficient knowledge so as to decrease your chance of committing errors. This will, in turn, decrease your stress.
10. Don’t Just Take Anything that Walks Through the Door
State Bar of Wisconsin Practice Resources
Are you thinking about starting your own law firm? As a State Bar member, you can tap into a wealth of practice advice and materials through Practice411™, ethics guidance from the ethics hotline advisor, elists for sharing interest areas and feedback, sections devoted to specific practice areas, and more. Visit WisBar.org and click on forMembers for an array of resources that can help you in your practice.
And don’t forget the Lawyer-to-Lawyer Directory included each year in the Wisconsin Lawyer Directory. The Lawyer-to-Lawyer Directory lists lawyers willing to share their knowledge through brief telephone consultations with their colleagues.
When you first open your practice, the temptation will be to accept any case that comes to you because you are just happy that the phone rang. Don’t do it! If a case looks bad to you on liability, or other lawyers have already turned it down, don’t try to be the hero. It is far easier to turn a case down at intake than it is to have a jury turn down your case after you have made the investment of money and time to bring a bad liability case to trial.
11. Be Careful about Taking Pro Bono Cases as Favors to Friends and Family
Be careful about taking pro bono cases from friends, family, and others. Most of us have the instinct to want to help others and that is why we became lawyers in the first place. Taking pro bono cases is generally a good thing to do as long as you balance that with fee-generating work so that your business can survive and thrive. The trouble is that some people think they can be that one special favor, not realizing that many others are asking for free services as well. You have to use discretion and know when to say no. The success of your business depends on it.
12. Provide Adequate Training for Inexperienced Paralegals and Legal Assistants
Hiring experienced workers can be tough for a new business due to the cost. Your challenge is to get bright, talented people on board who will share your vision for where your practice is headed. You may be able to find smart, goal-oriented individuals at the local law school, universities, or technical colleges who are looking for part-time or full-time work. However, if you hire a student or a new graduate, you must be willing and able to take the time to invest in mentoring and training that person. As all of us who have been in the trenches for a few years can attest, true legal expertise does not come from reading textbooks and passing exams. It comes from working in the field with experienced practitioners who invest daily in your learning. You want every person who is a representative of your brand to have the skills and knowledge to perform their job. Ultimately, your employees are a reflection of you.
13. Budget Time for Administrative and Marketing Activities
With all that you must do as a business owner and lawyer, you must budget your time. Before you open your own business, you can focus on being an excellent lawyer. Once you open your own business, you not only must continue being an excellent lawyer, you must also become knowledgeable in accounting functions, payroll, management, networking, marketing, and so on. You wear many more hats when you have your own firm. If you are a person who thrives on the challenge of it, then you will likely do well. But, there still are only 24 hours in each day, and so you must allocate your time appropriately.
14. Budget Time for Personal Networking and Public Speaking
As with administrative and marketing activities, be sure to budget time for public speaking and networking. These are perhaps the most valuable ways to build recognition, but can also be extraordinarily time consuming. A one-hour presentation may take 10 to 20 hours of preparation. A networking lunch or coffee may take you out of the office for three hours. Still, these endeavors can be worthwhile and quite enjoyable. Keep track of who you meet at each event so that, over time, you can look back and see which interactions bore fruit. With respect to public speaking, prepare “modules” so that you are not reinventing the wheel each time you make a presentation.
15. Manage Your In-Office Legal Work Time Effectively
Quality legal work takes concentration. However, you must also be accessible to clients. Striking a balance between client accessibility and uninterrupted quiet time is absolutely critical to your success. One way to handle this balance is to block off a couple of hours a day that are designated for uninterrupted work time, except for client or family emergencies. But, make certain to return the same day any client phone calls missed during that quiet time.
16. Be Careful about Volunteering Too Much
To run a successful law practice, you must be a good steward of your time. People will call you with requests to volunteer on boards or for mentoring programs. Volunteering on a board or as a mentor is a good way to give something back to others and also a good way to meet people to help promote your business. But, too much of a good thing can be bad if it interrupts the flow of your business. Balancing volunteer activities with your other duties is the key.
17. Do Not Handle Cases without Being Clear about Scope of Representation and Fees
We learned early on that we needed to be absolutely clear about our scope of representation and our fees. It’s exciting when you open a new firm, and friends and relatives are anxious to use your services. Beware! Many will call for a “quick answer” about a particular problem or request. Of course you will want to do your best work, and that quick answer will undoubtedly take many hours to research and provide.
People who aren’t familiar with the practice of law think all lawyers do all things. Although it’s difficult to say no to a friend or family member in need, everyone is better served if you refer out the work outside of your practice area. Use these requests as an opportunity to build your referral relationships. If you’re fortunate, receiving lawyers will return the favor when their friends ask for a “quick answer.”
Tell Us! What advice would you offer to someone wanting to open their own law practice? Email org wislawyer wisbar wisbar wislawyer org.
If you take on work for a friend or family member – or anyone for that matter – within your practice area, be clear up front about what services you will provide and what you will charge (or at what point you will begin to charge). Don’t be afraid to charge what you are worth. Setting expectations for fees and services immediately will help you avoid disappointment on both sides in the long run.
18. Systemize Basic Office Functions from Day One
Most lawyers starting a new firm focus most of their attention on practicing law. It is important to also spend time thinking about – and systemizing – office functions. Outline right away who is responsible for which areas. Draft job descriptions, even if there are only one or two employees. Document steps for everything: How to answer the phone. How to send a FedEx package. How to open a file. How to close a file. How to handle new client intake. How to pay bills. Write down how all tasks are done so that employees can cover each other’s duties. In the process of putting it in writing, you may even notice a glaring inefficiency that can be improved or corrected.
19. Fully Understand the Scope of Your Administrative Duties
Running a law firm encompasses much more than simply practicing law. Most attorneys starting their own firms come from established firms where most of the administrative tasks are done for them by someone else. When you start your own firm, you are the “someone else.” It is imperative that you know and understand subjects such as the trust account rules, payroll, accounting, billing, and so on. There are contractors and computer programs out there to help you with some of these issues, but the bottom line is that, as a law firm owner, you are now also an office manager.
20. Think Big from Day One
We have previously discussed how important planning and goal setting are to opening a successful law firm. Planning and goal setting should not be limited to the short term but should incorporate where you want to go in the long term. If your goal is a firm with multiple offices and 20 associates, you should plan for that outcome from the outset. It may be difficult to envision that you can build something more than a solo firm, but if that is your goal, your initial planning should incorporate that vision, and the decisions you make initially (that is, office space, lease length, technology, and so on) should be made with your ultimate goal in mind.
Starting your own law firm is one of the most exciting and frightening things you can do in your legal career. No matter how much you prepare, mistakes will be made. We hope some of these tips from the trenches will give you a leg up as you launch your firm. Mistakes and mishaps will inevitably occur along the way, but becoming a business owner is an incredibly rewarding experience that will be well worth your efforts in the long run.