Creating Your Law Firm Business Plan
Just like those little (and sometimes not so little) business plans we had to write out in grammar and high school, your business plan will serve as a roadmap for your law firm success – but you won’t have to turn it into your instructors. In fact, you don’t even need to "turn" this in to anyone but yourself if you don’t want to. If you’re planning to finance your law practice with your own funds or with loans from friends and family – you can keep your business plan and use it as a learning tool rather than a submission for an academic grade. Keep it on file and refer back to it if you ever doubt your reasons for starting a law firm.
Is a business plan really that important?
A business plan will serve as a way for you to define your law firm success in a realistic way. You will be setting attainable and measurable goals. You’ll be more likely to achieve those goals that setting long-term goals with no actionable steps to accomplish them.
In addition to being a roadmap for your law firm , it will also be a good resource for budgeting and financial planning.
Ok, so how do I write a business plan?
You’ll want to break your law firm business plan down into these sections:
You can expand on these sections as much as you want, but these items will provide a strong foundation for your business plan.
You now have the road map for starting your law office and you are ready to get started on your legal marketing plan.
Selecting Your Law Firm Practice Area
Picking the type of law you intend to practice is an important step in starting your own law firm. It determines the type of clients you will attract. Some legal niches are more lucrative as they are more demanding. Likewise, selecting the area of specialty depends on your existing skill set and local demand for your services. In your research to find out what legal services are in high demand you can also benefit from a market analysis tool that unveils the countries, states or cities that have the most demand for legal services. This tool also allows you to determine the prevalence and growth for a specific practice area. You can get granular by looking at the demand in specific zip codes to target markets with the-highest demand for specific legal services. Usually niche down to a specific practice area. Alternatively, you can define your niche audience demographically or geographically, which is particularly useful for solo practitioners. Once you identify your niche legal practices and the audience that is looking for those services you can then turn to develop a marketing strategy that will establish you as the expert in the field. If on the other hand you plan on growing a firm by building a team of lawyers, you can have multiple practice areas. The most important factor for building a strong case load for a new solo practitioner is choosing a specialized area where you can become the expert and referral go-to in the community.
Legal Structure and Licensing Requirements
Starting a law practice isn’t as simple as hanging out a shingle and waiting for clients to come pouring through the door. There are legal requirements and licenses your firm must have to operate within the law. Failure to comply with licensing and regulatory requirements can not only lead to service disruptions, but may also expose you to expensive fines and penalties. A significant aspect of compliance is with regard to your attorneys. Every attorney in your firm must be properly licensed and in good standing to practice in your state. They also must be admitted to each federal court in which they will be representing clients. As a result, it’s a good idea to make sure your firm is set up at the beginning to cover multi-state, federal and interstate representation. In addition to your attorneys, your firm requires some basic licenses to practice law, including, but not limited to: Depending on your business structure and organization, you may have other licenses and permits to comply with as well. For example, if you will be supplying credit or if you will be collecting debts, you will need to make sure you comply with the specific requirements in your state. Many states require additional licenses and/or certifications to operate as a law firm, and it’s important that you contact your local state bar association to get the full picture. In addition, there may be federal regulations that apply to a particular type of law your firm practices. For example, bankruptcy, immigration or intellectual property may have special requirements or regulations your firm should be aware of. Failure to obtain and maintain the licenses, certifications, permits and registrations your firm requires may subject you to criminal and civil penalties, including disbarment or the dissolution of your firm. It’s therefore important for you to do your research and make sure you comply with all basic regulatory requirements before launching your firm. In addition to basic licenses and certifications, you should also make sure you comply with other state-specific regulations that apply to your firm. For example, many states have clear-cut rules regarding topics such as attorney-client privilege, confidentiality, client conflict of interest and malpractice liability. Practicing law without knowledge of these basic rules can open your firm up to civil litigation or disciplinary actions from the state bar association.
Establishing Your Law Firm Office
Setting up your law office should include a checklist of what is needed in the physical and electronic space. The physical location of your office should be such that it runs efficiently. Your office should be conducive for your specific area of practice, your employees, if you have any and the clients you serve.
Finding a location for your law office may take several months to figure out where to locate. For instance, if you focus primarily on commercial real estate, being located in a downtown business district may better suit you than in the suburbs. Likewise, if you focus on family law, people may want to be near the courthouse.
When considering an office location, it should be noted that larger firms may want to be nearer to the city center, but if they are in a city like Houston, where the city is more unfurling than centrally located, that may not be necessary. Be sure to research what firms are in your practice area and how far away they are from the courthouse in your jurisdiction. Such may help you determine a good location for your practice. If there is a full-service law firm in your area that caters to your legal practice, consider being located nearby as that may give you an edge. Consider office location and surroundings (i.e., does your office face south, east, etc.), proximity to restaurants, and other amenities. Your office space, be it in a business center or elsewhere should be welcoming to your client. If you provide services to a low net worth client, consider the decor of your selected space. If you provide estate planning services to high net worth individuals, consider office location decor of providing a different element that suits their needs.
Office Space
When laying out your office in a physical space – layout the offices. Figure out who needs an office and who can work in a cubicle. Have common areas (i.e., copy rooms and break rooms). Have conference rooms. Layout the space in a way so that there is no area wasted. In a small space, this is especially important.
Equipment
Equipment can include a wide array of things and many of these are things lawyers do not naturally think about. Basic office space includes a copier, printer/fax/scanner device, phones, fax lines, and possibly e-fax. Consider getting more than one line if you frequently get faxes. Having two lines means you will need a second fax machine or e-fax. Clients do sometimes use fax, these days. You may want a high speed fax machine, scanner, copier. Consider getting a small copier for your office and one for the common area. If you have a fax machine, consider wiring it to other offices so staff can receive faxes directly to their location.
You will need a computer with a working and up-to-date operating system, working email and a backup system. Legal software can get pricey but there are many types of legal software programs that will help you save money and effort in the long run.
Technology
When starting a law firm, you should check into what technology is necessary in order to get your business underway. There are laws in place governing cloud computing. While you may want to keep your office in the cloud, it can be a major benefit to consult with a technology attorney to determine whether or not you are exposing yourself to malpractice. If you are in the cloud but are not compliant with HIPAA, for example, you could find yourself liable. A technology attorney can help you ensure that you are compliant with all state and federal laws in the cloud, encryption and otherwise.
There are a number of legal apps providing free meeting, cloud and storage capabilities, case management, e-discovery and more. Take a look at some of the sites and determine which ones (that are tech compliant) are best for your practice.
Branding and Marketing Your Practice
Building a strong brand and creating an effective marketing strategy are essential elements in attracting new clients and building a successful law practice. For the new attorney, this may seem like an overwhelming task, but with the right approach, you can build a recognizable law brand in no time.
Begin by developing a firm name that reflects the services you provide. This can be your name, the location you practice in, or a catchy name that stands out. You should also create a memorable logo that is consistent across all of your marketing materials.
Once you have a name and logo for your firm, it’s time to start developing a marketing strategy. There are many ways to market your law firm, both online and offline. Traditional marketing techniques can include business cards, fliers, brochures, print ads, television and radio spots and billboards.
Online strategies include an informative blog, search engine optimization (SEO) for your website to rank highly in Google, Bing or Yahoo! search results, client testimonials and reviews, an active presence on social media platforms like Facebook , Twitter and LinkedIn, and joining legal directories to increase your online rankings.
When developing a social media strategy for your firm, it’s important to choose the platforms that your potential clients use so that you can reach them where they spend their time online. For example, if you are a divorce lawyer, you might want to focus on Facebook, Instagram and Pinterest. If estate law is your area of practice, then a professional yet friendly tone on LinkedIn would work best for your brand.
Be sure to engage with your followers by responding to comments and answering questions, and remember that people trust people more than they do corporations. You should also have a separate page on your website for client testimonials so that your clients can leave their thoughts.
Building a brand is important, but so is having a marketing strategy for your firm. That being said, any traditional marketing methods for generating business are great, but usually more costly. Online marketing is cost-effective, and when you’re first starting out, it’s a good idea to build your client base in a cost-effective way.
Financing and Accounting
Managing the finances and accounting of a law practice is a key component of successfully starting and operating a law firm. Law firms must understand the basics of billing, invoicing, expense tracking, and accounting software in order to manage their business effectively. Streamlined processes for tracking receivables and expenses are essential to managing a successful law firm.
Most law firm owners track their receivables and payables via a spreadsheet program, such as Microsoft Excel. However, there are many online and desktop programs specifically designed for legal professionals that offer many advantages over a simple spreadsheet. Law firm accounting software can help lawyers manage billing and invoicing. Many applications allow lawyers to enter time and expenses within the program, create invoices, and provide a payment portal for clients to make payments online. Although it can be tempting to track expenses on a simple spreadsheet, this method is not recommended. Most law firm accounting software allows lawyers to track all of the expenses for the firm. This means you have to enter your information only once. Managing your law firm requires you to track everything: receivables, payables, payroll, and benefits. Law firm accounting software can help make this process easier.
Networking and Client Development
Beyond the initial brand awareness that targeted advertising can bring, at the heart of every successful boutique law firm is a strong network of loyal clients. Keeping clients is an ongoing process that begins with your very first engagement. Through your website and other touch points, you will have to set the right expectations for the new client relationship and clearly demonstrate the value your law firm brings. Regular check-ins with clients, even after a matter has been complete, can deepen your connections and lead to critical referrals as your former clients form deep and lasting impressions of your responsiveness and willingness to go the extra mile. Informal networking is important because people want to do business with people they know. Especially in a world of hybrid legal services that are increasingly tech-enabled, every touch point matters. A meeting in person or a phone call is always better than an email or text message. Not because an email or text message is a bad form of communication, but because the more depth of understanding you have about your client, the more likely you can solve their immediate problems. Sometimes problems that seem like urgent need on the surface, can wait. Meanwhile, the client can benefit from some preventive legal advice.
Professional Growth and Development
Continuing education and professional development are essential for lawyers who want to stay at the forefront of their practice areas and offer the best possible service to their clients. In an ever-evolving legal landscape, it is crucial for legal professionals to keep up with changes in the law, as well as advancements in technology, ethics, and industry best practices.
Lawyers can fulfill their continued legal education (CLE) requirements by attending a range of events, including seminars, conferences, workshops, webinars, and other training opportunities that cover legal updates, practical skills, and professional responsibility. Many bar associations provide a list of accredited CLE programs, as well as online resources for on-demand learning.
Professional development, on the other hand, extends beyond staying current on the law. It encompasses a lawyer’s growth in various areas, from business development to personal finance and mental wellness . Many bar associations, training organizations, and professional networking groups offer courses, certifications, and resources that support these pursuits, helping legal professionals navigate their careers from law school to retirement.
In addition to traditional continuing education, lawyers can explore alternative options such as community college courses, online learning platforms, and on-demand educational resources through websites like CLE Central and Lawline. These websites offer a variety of CLE-approved programs covering a wide range of topics.
In summary, continued legal education and professional development are essential for lawyers to maintain and enhance their expertise. By taking advantage of available resources, courses, and certifications, legal professionals can continue to grow throughout all stages of their careers.