Wisconsin Lawyer: Managing Risk Help for Hanging Out Your Own Shingle:

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    Managing Risk
    Help for Hanging Out Your Own Shingle

    If you’re thinking about going solo, there are many things to consider, from locating an office to developing clients to employing technology to operating your business, and more. Challenging? Yes. Rewarding? Yes. Best of all, you’re not really alone.

    Thomas J. Watson

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    Lawyers face all kinds of different challenges these days, including how to successfully open and operate law offices. Many lawyers I’ve run into, whether at local bar association meetings or State Bar events, are currently practicing as a solo or are heading in that direction. It might be you’re a new law school grad entering the profession, or you’re a lawyer who has been in practice for awhile and, either voluntarily or not, you want to give it a go on your own.

    Hanging out your own shingle can have its rewards, no doubt. But it also has risks and challenges. The questions that typically run through the minds of the intrepid lawyer willing to take the plunge include 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 should I do about legal research?
    • How do I attract clients?

    Of course, there are more, but those are certainly enough to give any lawyer starting a practice enough to think about.

    Recently, the State Bar’s Solo and Small Firm-General Practice Section put on its eighth annual one-day seminar in Waukesha, titled “Considerations for Starting a Law Practice.” The Saturday event filled a room, and many of the attendees were not brand new lawyers, but rather established lawyers looking for ways to make a solo practice work.

    New Richmond attorney Terry Dunst, who helps organize the seminar each year, says it started in 2009 when many new law graduates couldn’t find law firm jobs. “Our goal is to offer something practical and useful for someone wanting to start a solo practice. Right from the beginning the seminar attracted a wide range of ages. We had law school students as well as seasoned lawyers who were thinking of leaving firms to go solo.”

    Dunst says organizers try to present practical information that lawyers can take back to their practices and put to good use. “We try to focus on the business side of running a law practice. What do you really need to start a law office? We cover a wide range of topics from costs to technology to marketing to malpractice insurance.”

    Getting Your Practice Off the Ground

    Some of the more intimidating parts of opening your own law office are often the things you didn’t learn about in law school: a business model, a budget, payroll taxes, accounting, and hiring staff (or not). Another challenge is making sure you have enough business and are able to attract new clients to sustain a long-term practice. Brookfield attorney Marty Ditkof, one of the speakers at the seminar, says lawyers, especially ones just getting started in the profession, need to understand that starting a business, and particularly a legal business, is hard work. But he also says that if successful, it is a wonderful way to practice law on your own terms.

    Thomas J. Watsoncom Tom.Watson wilmic Thomas J. Watson, Marquette 2002, is senior vice president and director of communications at Wisconsin Lawyers Mutual Insurance Co., Madison.

    “The world is open to solos much more than in the past 30 or so years. Initially, inexpensive technology which allows you to receive, review, and respond almost immediately makes an amazing difference. There’s no need for the overhead of a receptionist, office, secretary, or paralegal other than as driven by the type of business you choose.”

    Madison attorney Zeshan Usman, another seminar speaker, says the advances in technology give solos a fighting chance to compete. “Clients are very cost conscious these days. Sometimes, they think a solo lawyer can provide good legal service for a reasonable price.”

    Ditkof agrees. “The hourly rates are very important to the smaller clients, which is a solo’s main focus. Contracts and employment law are becoming much more complex with higher damages if you do it wrong; as such, smaller clients need services that they previously would have just relied on in-house nonattorneys to sort out. Not so anymore.”

    Usman says he cautions attorneys when they tell him they’re opening a practice. “Many of them jump into partnerships with other lawyers or they agree to office share with others. There’s nothing wrong with that, and it often works well. But sometimes lawyers enter into those partnerships without much thought. They believe they have no other option or they’re afraid of doing it by themselves.

    One lawyer I know got into a partnership with another lawyer before both of them even talked about how they would share the work that comes in. That’s a conversation they should have had before they formed the partnership.”

    Attracting Clients

    The seminar also included a segment about attracting clients. Speakers suggested that part of successfully attracting good clients is developing habits that give good clients a reason to keep using your services and recommending you to others. They also warned attendees about client selection.

    Sally Anderson, vice president of claims at Wisconsin Lawyers Mutual Insurance Co., and another seminar speaker, says, “Taking every potential client that walks through your door will only lead to frustration, discontent, and possible disciplinary action. And it may also lead to practicing in areas of law in which you may have little or no expertise.”

    Office Technology

    Secure a domain name, develop a website, and at least get the basics. Good software programs for document production, billing, and timekeeping can make your life much easier – and keep you organized. Usman says there are some online tools that lawyers need to get started. These include the following:

    • Business name
    • Business checking account and IOLTA account
    • Malpractice insurance
    • Marketing plan
    • Domain name linked to a website
    • Case management system or software
    • Mentors

    Ditkof adds, “Develop networks and networking skills with both lawyers and nonlawyers. And then focus on a niche specialty that the clients value and for which you can charge a fair price.”

    Ditkof has been in solo practice for 15 years. He says it wasn’t easy, but he’s glad he did it. “Although I have changed my focus and niche three times in the 15 years to totally redefine my business as my clients redefined their legal needs, I wouldn’t change this for the world. My success is based on being able to gain the trust of my business clients in a way that allows me to charge mostly on a monthly set-fee basis rather than hourly. Being freed from hourly billing provides a flexibility that really is enabling. Also, my ability to develop business partnerships with other lawyers and nonlawyers has been very helpful.”

    Dunst works in a multi-lawyer firm. But he says there are two things he would tell a lawyer thinking of starting his or her own practice. “The first is can you do this financially? Can you start a law firm and also put food on the table? Each person’s circumstances will be unique as to the money question. Some people may have a working spouse with health insurance, and that will help. The second is ‘know thyself.’ Do you want to run a small business? Are you willing to lick the stamps and send out the bills? Unless you’re independently financially secure, are you ready for some lean times?”

    Conclusion

    Covering every aspect of opening a law office cannot be done in a short article such as this. An entire edition of Wisconsin Lawyer could be devoted to this topic. But, at the very least, when embarking on such an endeavor, 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.

    You won’t learn everything from an article or even a one-day seminar like the one recently held in Waukesha. But considering these issues at the start can be a good foundation that can lead to future success and help avoid sleepless nights.

    State Bar Resources for Starting a Solo Practice

    If you’re thinking about going solo, check out the variety of free or discounted benefits and services the State Bar of Wisconsin provides its members to help set up or maintain a solo – or any – practice. Here’s a sample:

    • Practice411 – From integrating your technology to assisting with trust accounting, and from getting and keeping clients to operations management, Practice411 – the State Bar’s Law Office Management Assistance Program – can help improve your office’s effectiveness and your quality of life. For links to practice and legal forms, the lending library, online resources, free practice consultations, the Practice411 e-list, and more, visit www.wisbar.org/forMembers/PracticeManagement.

    • Legal Research – With our legal research tools, the information you need is at your fingertips. State Bar members in good standing have free access to FastCase. From the same search page, you can also search Books Unbound, our website, Wisconsin Lawyer magazine, Wisconsin case law, and more. For links to Fastcase, Wisconsin case law search, CaseLaw Express, WICourts.gov Search Resources, circuit court rules, research and reports, and more, visit www.wisbar.org/forMembers/legalresearch.

    • Ethics Guidance – Practicing law is hard enough. Doing so in compliance with the Wisconsin Rules of Professional Conduct for Attorneys can sometimes be confusing. When you need responsive, practical advice, and detailed guidance in navigating the Rules, contact the ethics hotline. For information about the Ethics Program and links to advice and information, opinions, LLC firm registration, rules, and trust and fiduciary accounts, visit www.wisbar.org/forMembers/ethics.

    • Lawyers Assistance ProgramWisLAP provides confidential, 24/7 assistance to help lawyers, judges, law students, and their families cope with life’s problems. You are not alone! For links to information on physical and mental health, addictions, retirement, volunteers, articles, and publications, visit www.wisbar.org/forMembers/wisLAP.

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