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Management Assistance Program

The Agony and the Ecstasy
Tips on Starting Your Own Law Practice

by Tracey Garrison

For several years, I have had my own law practice. My route was not traditional, which turned out to be fortuitous. After working in communications for awhile, I returned to school to become a paralegal and was immediately drawn to the law — a powerful tool to keep society civilized and orderly.

While working as a paralegal for Norma Eagleton, she encouraged me to apply to law school. She said I was a “spring chicken” compared to her age when she started. So, back to school to become a lawyer.

Although I know several successful lawyers who opened their firms directly from law school, I decided to work for established sole practitioners to gain experience. I had the advantage of working as a paralegal for many years, but even so, when thrown into court for the first time, having a boss and mentor was very helpful.

ASK YOURSELF SOME QUESTIONS

Before opening your own practice, examine your personality. Can you tolerate not receiving a steady paycheck? Not knowing what your income will be from month to month? Will you be able to ask clients to pay their bill? Are you disciplined enough to do the work and meet deadlines without a boss to report to and oversee what you are doing? Do you want to be your own boss? Can you make yourself turn down clients and limit your hours to lower your stress levels and have a personal life? Being a sole practitioner requires you to be disciplined and organized.

In addition to your personality, examine your lifestyle. Do you need flexibility? Being a sole practitioner allows that, but on the other hand, you will want to have lawyers who can back you up in an emergency. I know several sole practitioners who would be willing to do that for me if needed, and I would do the same for them. It is also important to have backup so you can have peace of mind going on vacation and knowing if an emergency arose, you could call on a fellow attorney for help.

One of the first decisions you need to make is the form of your law practice. I talked to sole practitioners who formed a professional limited liability company (PLLC) and others who formed a professional corporation. I also took a class while at the TU College of Law, which examined the different types of entities. I decided to be a PLLC because it is simple and I can decide to have a separate entity for tax purposes or be a pass through, which allows me to place my law firm income and expenses on my personal tax form. A single-member PLLC must be careful to follow all formalities so that potential creditors cannot “pierce the corporate veil” and go after personal assets. For example, I have separate bank accounts and credit cards and file the proper paperwork with the Oklahoma Secretary of State. I also keep careful records in a financial journal of income and expenses.

WHERE TO HANG YOUR SHINGLE?

Another early decision is where to locate your office. I was working for a sole practitioner in Broken Arrow when he retired and encouraged me to take over his practice. Most of his clients were from Broken Arrow, Bixby, Coweta and south Tulsa, so I decided on a south Tulsa location. However, I also considered a virtual office and looked at a very nice, affordable virtual office setup in downtown Tulsa. I know several attorneys who use a virtual office and I still might choose it down the road. With a virtual office, you pay a set fee to have access to an office. You also get a mailing address and other services.

My situation is similar to a virtual office, but my office space is permanent. I sublease from a professional management company. I pay more per square footage than I would if I rented a typical office space, but for me it is worth it. There is a reception area where clients are welcomed by the staff and offered beverages. They charge per service and will answer the phone and provide administrative services, as well as access to a copier, fax, scanner and printer. I can leave items at the front desk for my clients and they can drop off items for me without my being there. When a client arrives for an appointment, the staff calls me.

My office has built-in furniture so I did not have to buy any. I already had my laptop computer which was given to me during law school. They offer leases for as short a time as three months. When I first leased, I took a three-month lease because I was not sure my venture would last three months. When it came time to renew, I decided to be braver and take a six-month lease. After that, I began renewing for a year. I have now been there almost four years.

Another expense to be aware of is the business property tax. You have to pay a tax to the county assessor’s office on business property, even if you owned the property before you formed your law office. For example, I have to pay a tax every year on my laptop computer, even though it was given to me while I was still in law school. After awhile, the cumulative amount of tax I will have paid on my computer will be more than the computer is worth! Other expenses to consider are health and malpractice insurance.

MAKING THE BUSINESS WORK

Getting paid for their work is important for all lawyers, but as a sole practitioner, collecting the payment is more personal. When the client needs more time to pay or wants a discount, you are the one who has to tell the client yes or no. You cannot say, “The partners insist that I receive a retainer for the full amount.” I do not have time to accept every client who contacts me and cannot afford to devote time on a case if I am not getting paid. Therefore, I try to accept clients who understand the value of my services and understand they need to pay for them. I allow clients to make payments as the case moves along and I do pro bono work, but I remember reading once that it is the attorney who needs to decide which clients are pro bono, not the clients. I have clients who struggle to pay me our agreed amount from each paycheck but they do it anyway. If a client does not pay, it is not only unfair to me, it is unfair to the clients who do pay. One of my friends who has been a sole practitioner for many years advices that you should obtain a retainer at the beginning of the representation and not sell yourself short on your value. I got a kick out of a client who came by my office to make his regular payment and said to show me how much my representation meant to him; it was hunting season and instead of buying ammunition, he was paying my fee!

If you are a new attorney who needs to build a client base, you may want to consider advertising. Although most of my business is from referrals, I still advertise in phonebooks. Be careful with the expense of phonebook ads. You have to be prepared to stick to your budget, as the representatives will try to sell you a bigger ad and other features which may cost you more than you can afford.

Before starting my own law practice, I attended the OBA seminar, “Hitting the Ground Running.” It was very helpful, as it discussed various aspects of operating a law practice. Joining lawyer associations is an enjoyable way to meet other attorneys and remain current in your practice areas, so I belong to the OBA Bankruptcy Section and various sections of the Tulsa County Bar Association, including at one time or another bankruptcy, probate and guardianship, family, solo and small firm. I also belong to the Tulsa Title and Probate Lawyers.

PLANNING FOR THE INEVITABLE  

Although you may not want to think about the end of your law practice while you are dealing with the beginning, it is very important. Last year I encountered a couple of situations where I had to step in after an attorney became sick and eventually passed away. A couple of times I did not know the previous attorneys, but received calls from their clients who did not know what to do because they had retained an attorney but the attorney was in the hospital. They were looking for an attorney to step in and found their way to me. One attorney I did know asked me to help him after he became ill. It was a struggle to step into an active practice and sort things out. After these incidents, I created a list divided by area of law. Under each area I listed at least one attorney to call if something happens to me, and made sure several people know about this list, as well as where to locate other office records.

Speaking of office records, be sure you keep good Interest-bearing Oklahoma Lawyer Trust Account (IOLTA) records. We have all read in the OBA journals about disciplinary action taken against attorneys who use client funds before they have earned them. Do not let this happen to you.

I am glad that I decided to form my own law office. The control I have over how I spend my time and which clients I will represent more than compensates for the financial uncertainties and responsibilities of being the sole decision-maker. If anyone reading this article decides to be a sole practitioner, I wish you much success.

About The Author  

Tracey Garrison is a sole practitioner at Garrison Law Office PLLC, focusing primarily in the areas of bankruptcy, probate, guardianship and family-member adoptions. She graduated with honors from the TU College of Law in 2006 after working as a paralegal for 17 years.

Originally published in the Oklahoma Bar Journal, October 6, 2012 - Volume 83, No. 26