Particularly in solo and small law practices, income growth typically is irregular and for the most part slow in the first year of practice. Before you decide to go solo or join a new practice, do some financial planning and consider these three tips.
- Have a plan. Every business must have a business plan; a law practice is no different. Thus, it’s important from a financial planning standpoint to plan for a certain number of months in which the practice may have a negative cash flow and to provide means to get through any lean times. Before opening a solo law office, a practitioner should work with someone or have the skill set to establish a reasonable budget, draft a viable business plan, and secure the financial resources—saved or borrowed—to sustain the practice during the start-up period.
- Leave former employer on good terms. New practices sometimes split off from other practices, as when an attorney decides to leave an established practice to strike out alone or with partners. Be careful about trying to take a client base or workload with you; unethical/improper behavior in securing clients has tremendous short- and long-term costs and implications. If the new practice is an offshoot from another firm, take care to make the separation as cordial and transparent as is reasonably possible.
- Think creatively to decrease costs and increase income. With the availability of virtual offices, multi-space networks, online law libraries, and local bar “list-servs,” a practitioner with entrepreneurial skills and the requisite experience has many options available to minimize overhead and maximize potential income. Consider all overhead expenses associated with the start-up and operation of a practice (e.g., office rent) as part of the planning and formation process. Seek out competent and trusted advisors to minimize the risks of a start-up or transition from a firm to a new practice. One strategy is to rent an office in a suite that has other lawyers with complementary practices.
Cautionary note: Often, established lawyers or departments may be lured into setting up a new organization by the potential income stream from a single case, major client, or organization without considering the long-term implications of what may happen if the client is lured back to the old firm. If the client is looking to reduce its costs/fees by encouraging you to breach commonsense rules or propriety, recognize the red flag because such a client will have continuing issues of loyalty or respect for your integrity.
Get practical advice on opening a law practice in CEB’s California Basic Practice Handbook, chap 1. Also check out the advice in CEB’s California Civil Procedure Before Trial chapter 1 on accepting cases and implementing office procedures. Also, CEB’s The Basics Conference (if you’re fresh out of law school and/or want some basic tools), or CEB’s Practice Skills Estate Planning (if you are planning on hanging your estate planning shingle soon) will give you training, tools, and confidence to move forward with your career and reach out to your first clients.
Other CEBblog™ posts you may find useful:
- Going Solo? Don’t Forget Insurance!
- Do You Have What It Takes to Go Solo?
- Starting a Solo Practice – Step 1: Getting Office Space
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