Many lawyers in recent years have decided to take on the challenge of opening up their own law office. You might be a new graduate entering the profession but not finding positions at law firms. Or, perhaps you’re a lawyer who has been in practice for awhile and, voluntarily or not, you want to give it a go on your own.
Hanging out your own shingle can have rewards, no doubt. But it also has risks and challenges. The questions that typically run through the minds of the intrepid lawyers willing to take the plunge are the following:
- Where should I locate?
- Should I lease office space?
- What kind of technology do I need?
- Do I need start-up money? What about a business plan and a budget?
- How do I attract clients?
Of course, there are more, but those certainly give any lawyer contemplating starting his or her own practice enough to think about.
At the State Bar Annual Meeting and Conference, held in June in Lake Geneva, I moderated a panel discussion titled Law Firm Boot Camp: A Practical Guide to Hanging Your Own Shingle. The panelists were attorneys Johanna Kirk, who recently went solo in Superior; Jon Groth, who has been running his own law office in Brookfield for several years; Kathleen Brost, who runs her own firm in Neenah; Terry Dunst of the Bakke Norman firm in New Richmond; and Tim Pierce, ethics counsel for the State Bar of Wisconsin.
Getting Your Practice Off the Ground
Often, one of the more intimidating aspects of opening your own law office is learning to deal with the things you didn’t learn about in law school: a business model, a budget, payroll taxes, accounting, and hiring staff (or deciding not to).
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Johanna Kirk gives tips on writing a business plan.
Johanna Kirk says one of the first things to consider is financing. “When I started the process, many articles told me that I needed to have six months’ worth of income saved up before it was financially ‘safe’ to go solo. I didn’t have it. It didn’t stop me. If you aren’t in a position where you have that security net to help fund your venture and your family during the transition, it is OK. You have options.”
Start with a business plan and a budget. Any type of business, including a law practice, should be planned on paper before the doors first open. If you are starting a practice from scratch, your business plan might help you enlist banks, suppliers, or other business partners on whom you hope to rely. (See “You’re Not Too Small for Strategic Planning” at page 47.)
When putting together your business plan, be as specific as possible in your projections about finances and budgeting. Show how you will manage your cash flow. Set goals, whether by month, by quarter, or for the year, so you can measure your business’s progress against those goals. Review the goals regularly to determine whether you are falling behind or meeting or exceeding your benchmark for success. If you fall behind, you can identify the problems and take corrective action before the problems get out of control and drag down your practice.
The options to consider include office space, staffing, and technology needs. Office space can be a traditional bricks-and-mortar building or a virtual law practice. Spending on office space depends on what you need, of course. Do you need conference rooms? What about storage space? Would you consider office sharing with other attorneys?
Kathy Brost says lawyers have a variety of preferences about these issues. She says the bricks-and-mortar space “provides clients and the law firm with all the amenities of a professional, designated space and can enhance credibility and trustworthiness. It also helps preserve client confidentiality and secure client files.” However, a fixed location carries with it fixed expenses, such as rent and utilities. Also, you might discover that the location is not convenient for some potential clients.
I have seen more lawyers opening virtual law practices in recent years. In a nutshell, a virtual law practice means you practice out of your laptop, providing legal services electronically, and attracting and corresponding with clients through a secure website.
Brost says the virtual office offers several benefits. “It’s another way for clients to access your current practice and can therefore expand your client base. It is accessible to both you and your client anywhere you can access the Internet. You and your staff can be located anywhere, increasing your flexibility and giving you greater control over your work/life balance.”
Brost adds that having a virtual office can very effectively reduce your office and staffing costs and help level the playing field for solos and small firms. But she also cautions that a virtual office can reduce the ability to connect directly with clients. “You may still need to meet with them face-to-face.”
Secure a domain name, develop a website, and get at least the basic technology items. Good software programs for document production, billing, and timekeeping can make your life much easier – and keep you organized. Jon Groth says, “Make your website look distinct and make sure the language used can be easily understood by potential clients. And make sure your contact and practice information and can be easily seen.”
Terry Dunst says there are some other basics. “At a bare minimum, to hang out a shingle as a solo in today’s world, you need at least two ‘systems’ – a phone system and a computer system.” These should include:
- A laptop computer;
- A cell (smart) phone;
- A reliable, high-speed, secure Internet connection; and
- Technical competence.
Dunst adds that backup technology is essential. “If you are a one-person operation, there are relatively simple and inexpensive options such as an external hard drive. If you have a network with multiple people, you will need a more sophisticated system on the network or in the cloud. Whatever option you go with, you need an offsite option in case of fire, flood, or other disaster striking your office.”
While technology has positively affected the way lawyers practice law, Dunst cautions it also presents new ways to run afoul of the rules of professional conduct. “Lawyers have a duty to safeguard their clients’ data, both in terms of keeping it confidential and in terms of protecting it from damage or loss.”
“Your business plan might help you enlist banks, suppliers, or other business partners on whom you hope to rely.”
Wireless technology has opened the door to ease of use and mobility. Dunst says, however, that lawyers must be careful. “Unsecured wireless Internet access opens the door to hackers and nosy snooping. Resist using other unsecured wifi networks with your confidential information. Enable encryption. Change all your default settings and limit the number of connections to the number of computers you want to allow.”
Tim Pierce says that when using technology, lawyers must be careful to preserve the attorney-client privilege and client confidentiality and maintain ethical marketing. “Confidential communication with your client is protected by the attorney-client privilege. Disclosure of that communication may waive the privilege, and technology certainly makes disclosure easy.”
Pierce says clients might forward an email to friends or family or post information on social media. He says it’s important to educate clients about the attorney-client privilege and consider whether email is the most appropriate method of communication.
The duty of confidentiality, meanwhile, extends to all information relating to representation of the client. And, Pierce says, the duty of confidentiality lasts forever, even after the lawyer-client relationship ends.
Lawyers also must take steps to protect information on mobile devices. The duty of competence requires lawyers who use mobile devices to take reasonable measures to protect against disclosing information related to the representation of a client. Pierce recommends several ways to protect information on your mobile devices.
Use a strong password to protect laptops, tablets, and smart phones from unauthorized access.
Use a privacy screen to prevent other people from reading what is on your screen.
Install a program that will allow you to remotely wipe or lock your device if it is lost or stolen.
Before discarding devices such as computers, smart phones, and copiers with scanners, purge data from them.
Use a firewall to prevent unauthorized access.
Use virus and spyware programs to guard against malware.
Update to operating systems with the strongest security protections.
Configure software and network settings to minimize security risks.
Encrypt sensitive information.
Avoid public wifi when transmitting information relating to the representation of a client.
Meanwhile, technology has fostered several methods of Internet marketing.
The Wisconsin Rules of Professional Conduct permit lawyers to advertise services through written, recorded, or electronic communication. However, the rules also prohibit a lawyer from giving anything of value to a person recommending the lawyer’s services. Under the rules, Pierce says, “a lawyer may pay for the cost of advertising, but may not give anything of value for someone to provide a recommendation of the lawyer’s services. With the rise of Internet advertising, there has been confusion about the difference between online, for-profit companies that provide permissible advertising and those that deliver impermissible lawyer recommendations.”
Getting (and Keeping) Clients
Successfully attracting good clients includes developing habits that give good clients a reason to keep using your services and recommending you to others. So how do you attract more clients? Volunteering and developing contacts is a start. You might consider signing up with a volunteer-lawyer program in your town, attending CLE programs at which you can network with other lawyers, joining local and specialty bar groups, and volunteering for activities relevant to your desired practice areas.
Selecting good clients is also part of the process. Taking every potential client who walks through your door might lead to frustration, discontent, and an increased risk of disciplinary action. It can sometimes lead to practicing in areas in which you have little or no expertise.
But many lawyers starting a practice cannot afford to turn away too many clients. That’s where mentoring comes in. Find a mentor, or two or three seasoned attorneys, by networking. Use the State Bar’s Lawyer-to-Lawyer Directory. Keep talking to your law school classmates and listen to other ideas.
We could not cover every aspect of opening a law office in the time we had in our session in Lake Geneva nor can it be done in a short article such as this. But, at the very least, when contemplating starting your own firm, consider the following:
- A business plan, with financial goals and objectives
- Technology needs for your office (and out of the office)
- Client selection, fees, and billing procedures
- Attracting clients (marketing your practice and networking)
- Backup plans in the event you are temporarily disabled or cannot work
And don’t forget to consider your insurance needs, including malpractice insurance, a business-owners policy, and health and life insurance. With attention to detail and a little help from the right sources, launching and operating a successful law practice can be done.
On Aug. 13 and Sept. 16, the State Bar will offer the first Business School for Lawyers, offering practical information to help lawyers thrive in their practice. Visit http://bsl.wisbar.org for information.