The Necessities – The Difference Between Wants and Needs 

As you set out to embark on the excitement of opening your own law office, you will no doubt read many books, attend seminars and get sage advice from attorneys on the secrets to a successful startup in the practice of law. However, for every well-intentioned person who wants to share with you a distilled down version of the “secret sauce” to running a successful law office, something that was successful for them, may not necessarily be successful for you. It is important to keep an open mind and an open ear to the advice you receive. Then, sort through the advice to determine what works best for you.

Low Barrier to Entry

Opening a law practice has one significant advantage over many other businesses - once you have your law degree and pass the bar exam there is a very low barrier to entering into the legal field. Think about it, you need a flat surface (whether it be a desk or a kitchen table), a computer, printer and some paper. These are the bare necessities to practice law. Sometimes I laugh when I think about the cost of computers today. Thirty years ago when I started, a computer was more expensive than it is today with less capabilities. Today, starting a law practice can be had with a very small investment of money.

The Wants

After seeing partner offices in large law firms, as well as on tv and in the movies, everybody would like a large corner office with a sofa, a large credenza, a big mahogany desk, a small meeting table, and of course the small but always present, in movies and television, fully stocked liquor bar. In addition, the finest multi monitor computer, document management system, letterhead, phone system which is synced to your computer and cell phone, customized website, and billing and accounting software systems to serve you well into the future. All of that sounds great, and eventually may well fit the attorney you aspire to become. Before that time arrives, you need to separate the wants and needs. Start out in an affordable fashion where your fixed monthly costs and initial investment of office furniture are at an absolute minimum. Remember, it is not necessarily how much you bill and collect, but rather how much you take home. Therefore, by minimizing your monthly fixed costs, you will be able to take home more of your revenue than paying for services and lease payments that you do not really need.

The Necessities

When I refer to “necessities,” I instinctively refer to the “bare necessities” that you will need to keep overhead low, and take home pay high.

With respect to office space, make sure that you do not sign a lease until you visited at least ten larger office suites that have an available private office. Because of the nature of our work, I do not suggest renting a cubicle. Many of your telephone calls are confidential and you should have a private office in which to have those telephone calls. Also consider accounting firms, financial service offices, or banks in the area that have office space available, which are all good places to start (they may be a source of business as well). Also, there are office suites where you can rent an office with other independent financial consultants and sometimes office suites dedicated to lawyers that are primary sole practitioners. These are good locations for conflict work and for mentoring from other senior attorneys. Do not jump at the first location you look at, but make sure you understand your market and the location that you want to work in, and get the best deal possible for you. Finally, resist a long-term lease in order to remain flexible. You never know what future opportunities may present themselves.

With respect to bank accounts, go to your local bank and open an operating account and an “interest on lawyers trust accounts” (IOLTA account). All retainer money and money that you have not earned must first be deposited in the IOLTA account. Then, when earned, you have the legal right to transfer the money from the IOLTA account to your operating account. Take the rules of your jurisdiction very seriously on managing your IOLTA account truthfully and accurately.

Next, buy malpractice insurance. Go to your local bar associations and contact them with respect to the offerings that they have through an independent insurance broker for members for insurance discounts. Ask the insurance professional for his or her opinion on how much insurance you should carry but it probably should be approximately $1M for an aggregate loss and surprisingly, for a recent graduate, it is somewhat affordable.

Most printers are good but Hewlett-Packard seems to make very inexpensive crisp printing laser jet machines. Be careful to buy a printer with a sizeable toner cartridge. The expense in printers are in replacing toner cartridges on a regular basis. In fact, it is the highest supply expense item in a law office. Along with a high quality printer, have designed letterhead that is befitting your practice. Using a thermographic letterhead with raised letters is far less expense than an engraved letterhead. Be reasonable, and watch the bottom line.

Lastly, with respect to office furniture, do not overpay for expensive furniture. Google local gently used office furniture retail locations in your area to find high quality but inexpensive used furniture for your office. Remember, you can simply hire a furniture “touch-up” person to come out to your office to make your used furniture look like brand new.

In reality, your first meeting with a client will probably be in a common area conference room and the client probably will not see your office anyway. Ninety-five percent of the work you do as a lawyer is done over the phone and in court, and not with your client in your office. Nonetheless, because you will be spending approximately fifty hours a week in your office, you want it to be comfortable and nice looking and a place where you enjoy going to work every day.

Of course, you will need a phone system. Hopefully where you are officing, the landlord will have a system where you will only need to pay the incremental extra for having a phone added to the already existing system. Phone systems can be very expensive and I cautiously advise you to operate in a smart fashion. It may almost be cheaper for you to get a dedicated cell phone for your practice (so you do not need to give out your personal cell phone number to clients) to be reachable for clients.

Remember that in this day in age, all potential clients who are coming in for an initial visit will have googled you and know something about you. The number one portal into your practice will be through your website. Simply put, you need a website. Be careful on how much you spend to develop a website that will attract business to you. You can have your website hosted on sites like web.com or wix.com for a monthly fee as low as $5. If you want to use a vendor’s combined web posting site plus templates for your web design you might pay approximately $15 per month. Make sure you own your own domain name so that if these services ever fail, they cannot hold your domain name hostage. Since any potential client will be researching you on the internet, they will no doubt be driven to your website so it needs to look good, convey a sense of confidence and knowledge about the subject matter and, above all else, be professional and meet the expectations of any potential clients.

While billing and accounting software is not necessarily a necessity, very inexpensive products are available to buy off the shelf and to implement for a law office. I suggest making a purchase of one of those software packages in the first year of operation. Since most of your work will probably be done on an hourly basis, sending out timely bills is critically important for you to financially manage your firm. A key to sending out timely bills, is being disciplined enough to input your time into a time and billing software in a timely fashion so that bills are ready to be proof read the last day of the month.

Conclusion

Other items such as online research availability, postage meters are all nice but can be delayed with the growth of your firm. If you are in a large metropolitan area, you are probably a short ride away from a local law school law library. That will need to suffice until you can afford an online research service like Westlaw or LexisNexis. Other luxuries would be an administrative assistant, paralegals or associates. Although important for growth, initially they can wait until your practice has stabilized. Remember, keep ongoing expenses low to increase your take home pay as you grow your law firm.

For any further discussion on the necessities involved with the establishment of your law practice, please reach out to Kerry Lavelle at klavelle@lavellelaw.com to schedule an appointment.

Kerry Lavelle is the author of “The Business Guide to Law: Creating and Operating a Successful Law Firm” published by the American Bar Association. It can be found on the ABA website at: http://bit.ly/1J1p0Aa . He grew his solo practice to a 28-attorney firm, accumulating numerous awards and commendations along the way for his legal work and community service. He is a frequent speaker at bar association seminars and conferences on law office management, and has served as an adjunct professor for business, economics and law school classes, and has served on boards for the Northwest Suburban, Illinois and American Bar Association.