Many lawyers, at some point in their career, find themselves considering opening their own law practice. This may be due to necessity upon graduation from law school; they found themselves downsized from a larger firm; or perhaps they just aren’t happy in a large firm environment. The problem: lawyers aren’t taught business classes in law school so this can be an intimidating venture. We have identified 5 categories: the business plan, office space and location considerations, technology, office procedures and insurance.
The Business Plan
The business plan should be your first step when you consider opening your own practice. It will lay the groundwork for all other areas of starting your practice, and in some cases, is required. It is a written, organized summary of how your firm is going to get started, establish itself and then continue to grow. The plan should be your guide to directing the first three to five years of growth of your firm. Likely, any bank you approach for a start-up loan, as well as some suppliers and vendors, will require the plan to feel confident in working with you.
All of the goals established in the plan, and especially the financial goals, should be realistic and attainable. Establishing goals in the plan that at are impossible to meet will not help move your business forward, nor will setting goals that won’t challenge you. Visit the plan on a regular basis to gauge your progress. If you meet a goal before its established deadline, make the next goal harder. If a goal is not timely met, ask yourself why using an objective analysis, then take the necessary actions to put yourself back on track. Don’t ignore failing to achieve reasonable progress toward a goal, but don’t panic over it either.
Generally, business plans consist of four main areas: a business description, a financial plan, a management plan, and a marketing plan. For more details on this topic, click here.
Your Office Space and Location Considerations
It is difficult to generalize about any one specific attorney’s office requirements. Clearly, budgeting and income considerations will play a major role in such considerations. However, if a lawyer chooses an office sharing arrangement, he or she must be aware of the ethical and malpractice risks of such an arrangement. Issues in an office sharing arrangement can include vicarious malpractice liability of other office sharing lawyers, loss of attorney-client privilege, and disqualifications arising from unrecognized conflicts of interest. To read more detail on this subject, click here.
In issues relating to development of a technology plan for your new firm, a self-assessment is helpful. Be realistic about your level of technical savvy and acumen, and your desire to acquire more of it. The ABA Model Rules of Professional Conduct, and the Rules of many states, require an attorney to keep up-to-date on “the benefits and risk associated with relevant technology” to be considered competent to practice. If technology isn’t in your expertise, find a consultant or company that is willing to work and grow with you. Most importantly, remember that the hardware and software system you start with will likely need to be upgraded or replaced within a few years. Plan for that, and budget accordingly. For more details on this topic, click here.
Standardized office procedures are not just a good Risk Management tool, they aid and assist law firms in providing more effective and efficient legal representations to their clients. Establishing standard processes for client intake, client communications, calendaring, billing, and other essential law firm functions is essential to running a successful legal business. For additional details on this topic, click here.
When starting your own practice, you need to consider many types of business insurance that you may not previously be familiar. The types of insurance you may want to consider are:
- Lawyer’s Professional Liability
- Cyber Liability
- Workers’ Compensation
- Health Insurance
- Life and Accidental Death & Dismemberment
- Business Owner’s Policy
- Property (wind, fire, earthquake, etc.)
- Business Interruption
When making the decision on the amount of policy limits for legal malpractice insurance, there are many factors to consider, including the:
- potential exposure based upon the types of cases
- cost of defense of a legal malpractice claim
- jurisdiction in which a claim could be brought
- nature and extent of both business and personal assets as they could potentially be subject to collection under a judgment if the attorney is underinsured.
Use The Bar Plan As a Resource
We are here to help. Lawyers will always have questions about their professional duties or malpractice risk throughout their careers. The Bar Plan’s Risk Management team is here to help lawyers answer those questions, or any questions you may have about starting your own practice. Our Risk Management Hotline is free and confidential. You do not need to be an insured of The Bar Plan to use this service. Call 1-800-843-2277 x171 or email firstname.lastname@example.org.
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