Management Assistance Program
The Nuts and Bolts of Opening a Law Practice
By Jim Calloway
Opening a new law practice is, at its core, opening a new business. It is an experiment in entrepreneurship. Emotions are definitely involved. This can, and should, be exciting and thrilling.
There can also be trepidation as one contemplates an unknown future, and it can involve mixed emotions for someone like a new law school graduate who really preferred to obtain employment to begin their career, but for whatever reason did not. It can even be tinged with regret for the lawyer who has departed an established law firm that dissolved or who was terminated from employment.
The daunting thing for lawyers, trained to rely on precedent to predict the future, is that these nuts and bolts differ from what they were a few decades or even a few years ago. A successful business model established in 2019 may be considered dated in 2029.
Your attention is first directed to the OBA Management Assistance Program’s Opening Your Law Practice resource page at www.okbar.org/oylp. Among the many resources, there is a document titled “First Steps in Building Your New Law Firm” prepared by myself and a fellow practice management advisor with the District of Columbia Bar for ABA TECHSHOW 2016. This 65-page document includes a sample business plan and other resources.
THE PRACTICE AREAS
The lawyer or group of lawyers leaving an existing firm will probably start with some existing clients and a good idea of the practice area focus. The lawyer leaving a firm where all the clients will be staying with the firm or the new lawyer opening a practice will face establishing a practice area focus. I have talked to many law students who say they want to establish an estate planning or other transactional practice. I sometimes wonder if it is because they really don’t want to go to court. In my view, it would be quite challenging to establish an economically viable practice of only drafting simple estates and trusts because individuals with a high net worth will gravitate toward established lawyers and law firms.
The new lawyer will likely begin with clients hiring a lawyer for the first time, including those who are referred to you by friends and family to handle personal problems. This means matters like family law, guardianship, criminal defense, business or employment disputes and consumer bankruptcy. Determine which matters you will handle on your own and which require co-counsel or a referral. Some estate planning and contract drafting can round out the new law practice but will likely not form the foundation of it. Being a “courthouse lawyer” also increases your visibility in the legal community which can result in more business.
A group of lawyers leaving a firm probably has a good idea of who they need to hire. Receptionists, secretaries, legal assistants, bookkeepers and law office administrators are all potential law firm hires.
Even a solo practitioner who intends not to hire any full-time employees needs to assemble a team. Having someone available to answer the telephone and schedule appointments with potential new clients when you are unavailable is important. Even one who starts their practice with just a cellphone will want to consider using a virtual receptionist service when it is affordable. Hiring someone with no previous law office experience to answer the phone is workable where there are other employees in the firm who can provide some structure and answer the person’s questions. The person answering the phone on your behalf represents your law firm and a virtual receptionist will likely be best. In addition, this avoids payroll tax obligations which can be time consuming. You can also locate virtual legal assistants, if needed.
This does not mean that a real person, particularly one with previous law office experience, is not the best situation if you can afford this. My first year in solo/small firm practice I hired a young lady who had never worked in a law office before. She was soon replaced by an experienced legal assistant who in many ways provided me more training than law school, but today there are many great and affordable virtual assistance services.
THE PHYSICAL TOOLS
You need telephones – a good smartphone and a landline. Some would say you no longer need a landline, but you want to be listed in the local telephone directory and directory assistance so people can find you. You can re-evaluate that later.
A computer is an obvious necessity. For solo and small firm lawyers, I advise them to spend the extra money for a laptop so they can use it for working at home and on the road. Computers are relatively inexpensive now, so it is best not to work from a home computer shared by other family members.
A scanner is a very good investment. Certainly, you can scan a page or two with an app on your smartphone, but the first time you need to scan a 25-page document you will be glad you have a scanner. For many years now, I have recommended the Fujitsu ScanSnap line for a desktop scanner. Just go online and find the best price for the ScanSnap iX1500. I prefer that everyone have a scanner and printer within reach of their desk, so time is not wasted getting up to scan or pick up something off the printer.
You may also need a copier, but a computer with a scanner and printer can make quick copies. Solo and small firms may want to start with an inexpensive copier and see whether they need one with more capacity. Law firms still generate a lot of paper, but there is a wide variation between law firms on how many copies, depending on the practice areas. Know where the closest local copy service is located for big projects.
If you do much mailing, a postage meter and scale will avoid wasting postage because you are not sure of the correct amount. There are alternatives to the USPS today.
SOFTWARE TOOLS AND SERVICES
You will want to subscribe to Office 365 Business Premium at $12.50 per user per month for an annual commitment. This will provide you with Outlook, Word, Excel, PowerPoint installed on your machine plus several other tools that are available when you log in. Assuming you have a good internet connection, you can then use OneDrive for storing your documents and other files.
A Practice Management Solution
Picking your practice management software solution is a critical decision because you will be using this tool all day every day as you practice law. Others may tell you this is an optional decision or to wait until you have several open files or sufficient cash flow, but they are wrong. Clio, CosmoLex, MyCase, PracticePanther, RocketMatter and ZolaSuite are recognized as OBA member benefits and you can log into MyOKBar and click “Practice Management Software Benefits” to learn more about these tools and to see OBA member discounts. There are other good tools not on this list and we may be expanding it soon.
Your practice management solutions are an important tool in managing your practice allowing you to combine billing, timekeeping, client file organization and many other important features under one dashboard. It is especially important for lawyers beginning a brand new practice to start off right using these tools and to learn how to use them well while you may be less busy with client matters in the initial months of your practice. Think of these tools as the personal assistant that works for a very cheap monthly fee and never takes a day off.
PDF Manipulation Tools
Lawyers on a budget can defer this purchase for a while. Ideally, you should choose between Adobe Acrobat Pro DC at $179.88 per year or Nuance PDF Converter Professional 8 at $179.99 for a license (not an annual subscription).
It is true that Adobe Reader is free and Word, Excel and PowerPoint will print to PDF. The ScanSnap will scan to PDF. There are other free and less expensive PDF manipulation tools. The Adobe and Nuance Standard products are a little less expensive but do not include the advanced tools of the pro versions. Soon you will want to do advanced PDF functions like redaction, Bates stamping and combining multiple PDFs into one. Not only do you want a tool that can do “everything,” but also one with many online tutorials and guides.
Your CPA will probably suggest you use QuickBooks. There are many other alternatives including FreshBooks and Xero. Billing is included in your practice management solution and CosmoLex contains accounting tools. Trust accounting is covered in another feature in this bar journal. Unless you have a lot of accounting entries, you may not prioritize this purchase either. Ultimately, you will probably do what your CPA tells you to do if you wish to work with a CPA.
Your firm may need to subscribe to a commercial legal research service. The OBA does provide you with a free Fastcase subscription, which you can access via MyOKBar. We strongly suggest you go to fastcase.com and watch some of the training videos and sign up for their free webinars.
If a solo doesn’t feel he or she can commit to the overhead for monthly office rental or only intends to work part-time, then a home office may be the right choice. Before you put your home address on a publicly filed court pleading, figure out which post office is closest to you and also investigate the private mailbox services near you. One of the biggest advantages of renting space from another law firm or having paid staff is having a person to sign for certified mail and deliveries. If you cannot have that, it is best to just make a habit of stopping by the post office every day, but no price can be placed on personal security. Whether it is the inconvenience of clients stopping by your house at all hours of the night or something more dangerous, have a law firm address that is not your home address.
You also have to know yourself. If you have a large family or roommates at home, it may be worth the expense to go to work and focus on that in another location every day. Ironically, working from home often works better for the veteran lawyer who has left the big firm and is focusing on a few long-term clients than the new lawyer trying to get established.
Solo practice can be isolating. It is good to have other lawyers to discuss ideas. It is good to have other people to talk to, so explore office suite locations and see if a law firm might rent you an office. Always own your own phone number.
It is hard to do justice to the challenge of picking the perfect office location in just a few short sentences. If you will have many court appearances each week, you probably want to be within walking distance of the courthouse. That’s simple for lawyers in most of the county seats, but in Oklahoma City and Tulsa, having to find and pay for parking may be a barrier for many consumer clients. A lawyer focusing on consumer bankruptcy, for example, may choose a location away from downtown on a well-known street with a parking lot with free parking. There are so many variables associated with this decision, including what’s available, that you may just have to accept you may not find a perfect situation.
Unless you have a very healthy budget, shop around for some decent gently used furniture if you are just getting started, but invest in a new, sturdy and comfortable office chair for yourself.
You will need a traditional website and a business Facebook page. Spend some time searching for domain names with credit card in hand. It is far better to purchase two or three domain names you end up not using than to “think over” purchasing one and then come back to find it is now mysteriously in the control of a reseller.
Version one of your website need not be an award winner. You want it up before you send out that first email proudly using the domain name of your website as your official email address.
THAT’S NOT NEARLY EVERYTHING
There are many other items associated with opening and operating a law firm because you are not only practicing law, but also running a business enterprise. You need to develop and maintain good personal habits. You need to seek out mentors and advisors and develop your referral network. You will definitely want to talk to our friends at Oklahoma Attorney’s Mutual Insurance Co. about professional liability insurance. These are enough of the nuts and bolts to open the doors.
ABOUT THE AUTHOR
Jim Calloway is the director of the OBA Management Assistance Program. He served as chair of the 2005 ABA TECHSHOW board. His Law Practice Tips blog and Digitial Edge podcast cover technology and management issues. He speaks frequently on law office management, legal technology, ethics and business operations.
Originally published in the Oklahoma Bar Journal — December, 2019 — Vol. 90, No. 10