SMALL FIRM ROUNDTABLE: STARTING YOUR OWN SMALL FIRM
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1 SMALL FIRM ROUNDTABLE: STARTING YOUR OWN SMALL FIRM By: Jim Quadra Factors to Consider When Deciding to Open Your Own Law Firm 1 Is being your own boss worth the pressure to you? 2 Are you confident in your ability to succeed? 3 Do you enjoy client contact? 4 Be ready to work harder (at least at first) than if you were working for somebody else. 5 Your legal experience and specialization? 6 What is your potential client base? What are your ties to the legal and broader communities? 7 Do you want to be a solo? Do you want partners? Do you want to associate with a group of attorneys even if not partners? 8 What are sources of initial financing? 9 Why do you want to start your own law firm? 10 Make an informed choice. Research. Talk to other attorneys who have done it. Look at State Bar resources about running your own practice.
2 Create a Business Plan 1 Remember -the practice of law is a business. You need a business plan. Estimate the costs of running your practice and how much initial financing you will need. 2 Look for resource guides. State Bars and financial institutions have materials and resources to help you come up with a business plan. Look on the Web. 3 Estimate the cost of renting space for your office. Sources of information: commercial real estate brokers, legal advertisements and professional suites rental rates. 4 Contact vendors to get cost estimates. Typical vendors include: office supply stores; office furniture sale/rental stores; messenger service providers; computer hardware/software suppliers; telephone/voic service providers; internet/it service providers; malpractice insurance carriers; medical insurance carriers; liability insurance carriers; workers' compensation insurance carriers; printing service providers (announcement, business cards, stationery); banks; online legal libraries (Westlaw, Lexis); legal resource publishers; and bookkeeping/accounting service providers. 5 Find out initial and ongoing costs of registering with and obtaining/renewing your business license from state and local governments. 6 Estimate support staff needs/costs. Sources of information for estimating costs: legal advertisements for staff positions, placement offices, temporary staff offices and executive suite packages that include support. 7 Using the above data, create an annual budget. Set up Financing 2
3 1. Give yourself a chance to succeed. Try to line up financing so that you have enough time for your practice to get off the ground. 2. Sources of capital include: private lenders; government loans; sick leave/vacation pay from your last job. (See Attachment regarding commercial banking). 3. Find a good and trustworthy accountant and accounting software. Decide What Kind of a Legal Entity Your Firm Will Be 1. LLP 2. Professional Corporation 3. Partnerships Find Out and Comply With All State Bar Registration Requirements Setting up Your Office 1. Even if you are going solo, get help in setting up your practice. 2. Choose the location of your office. Are you accessible to your client base? What image do you want to convey? What is your vision for the firm? Sublet, lease, share space or executive suites? 3. Using your business plan and the vendor information you have gathered -start spending money to set up your office. Keep control of your budget -and try not to get nauseous. If you do this right, business will come. 4. Set up an efficient filing system. Protect Yourself 3
4 1. Comply with all rules regarding fee agreements. 2. Get malpractice, medical and disability insurance. 3. Set up a retirement account. Business Management 1. Remember you are a business. 2. Create annual budgets. Control your expenses and work within your means. 3. Keep on eye on overhead and keep your books up to date. 4. Set up an efficient billing and collection system. Business Development 1. Advertising -what is your target? 2. For example, are you trying to service the Latino/Hispanic community? If so, do you need Spanish advertising? 3. Developing a referral network 4. Joining and being active in professional organizations 5. Joining and being active in community organizations 6. Become active in Bar and Court activities 7. Get involved in local politics 8. Give presentations in an areas of expertise 9. Writing articles 4
5 10. Teaching 11. Letting your family, friends and anybody who will listen know what you are doing Issues Relating to a Sole Practitioner 1. Keep Overhead low 2. Have an excellent secretary and preferably bilingual if you are providing services to a community that requires special language skills 3. Network with other attorneys who handle different areas of law and create a referral system. Create a virtualla w firm. 4. If possible, buy your office space rather than lease. Issues Relating to a Partnership 1. Picking your partners. 2. Partnership Agreement 3. Dividing responsibility and agreeing on decision making process. 4. Agreeing on how you will divide income. 5. How will you deal with conflict? Becoming an Employer 1. Hiring staff -receptionist, secretary, office manager, paralegal, clerical support. 2. Hiring other attorneys. 5
6 3. Develop employee guidelines and policies RECORDER SMALL FIRM ROUNTABLE 4. Complying with labor regulations 5. Payroll-doing it yourself or hiring a service to do it for you Enjoy your practice. 1. Celebrate the opening of your firm and every year you practice. 2. Take vacations. You need to refuel. 6
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