Audrey Rubin is president of Rubin Solutions Ltd., advising law firms and law departments on business solutions. Rubin often serves as Interim Chief Operating Officer for start-up law firms. She consults on alternative fees, collections, and profit enhancement. For more information visit http://www.rubinsolutions.com/.
There has been a trend over the past year of lawyers leaving large firms and opening their own smaller firms. There are various reasons for this, including client resistance to high rates and law firm reductions. Large firms have a place in the legal industry, but with more flexibility, and the ability of partners to have more direct control over their practices and profits, boutiques are a highly attractive model and the wave of the future.
Opening up your own firm — with or without other lawyers — can be fun and rewarding. Depending on your business model, you might even make more money than you did at a larger firm. However, planning and execution of solid plans are key to making your transition a success.
If you’re thinking that all you really need to get started as a small firm owner is a desk, a computer, and a phone, THINK AGAIN! If you want to avoid wasting a lot of time and money so that your new firm gets off to a profitable start, you need a plan for success. If you’re breaking from a large firm, you’re probably accustomed to infrastructure being provided for you and managed by others. You didn’t have to figure out what accounting system to select or how to set it up. You didn’t have to apply for malpractice insurance and negotiate with underwriters. You didn’t have to develop a marketing strategy.
The list of items that have to be tackled and decisions that have to be made is long. Our “To Do” list for clients launching their own firm includes:
– Time and billing, and accounting systems. (Time and billing systems are not the same thing as accounting systems.)
– Budgets and business plans. You may have realized you need some kind of budget so you could know what to expect in the way of income and expenses. But what you probably didn’t know was that without solid budgets and projections, you won’t be able to get a line of credit. And you probably won’t get a lease without a bank line of credit and a solid business plan. Landlords are so skittish about renting space to today’s businesses, that they require business plans, client lists, personal credit reports, a line of credit from a solid bank, and interviews with you and your future partners about your client base and business projections.
– Office space. How much do you really need? Some buildings have more usable space than others, but you’re charged for the footage anyway. Some space is not easily convertible to law firm usage.
– Other attorneys. Are you taking other lawyers and staff out of your firm to join your new firm? If so, there are numerous ethical and practical mine fields you must avoid.
– Staff. If your new firm will have any employees at all, you will need to establish payroll, hours of operation, and work rules. The last thing you want is a tax penalty or labor regulation violation, simply because you were unaware of the rules, or ran out of time to deal with them.
– Marketing. You need to spend time understanding and promoting your brand. There should be analysis of your pricing, target clients, web site and printed materials. Even your office style and location speaks to your brand.
– Technology. If you are coming from a larger firm, you probably did not have had to select technology platforms and apparatus before. Someone else chose the computers, type of systems, document management systems, calendaring systems, remote access systems, security, and all of those other necessary aspects of technology without which you can’t operate.
– Office equipment. Here’s an area that most lawyers hate thinking about, if they’ve thought about it at all. How in the world will you know which copiers to select? The pricing of them varies wildly. How will you know the quantity of copiers to obtain? How many printers will you need? What type will they be and where will you put them? These questions alone can take several days of a lawyer’s analysis, when in fact there are experts who can walk you through it much more quickly.
The list goes on and on. There are so many decisions that at times you think the world has gone crazy with choices.
And sole practitioners: Don’t be fooled. You need most of the laundry list of items when opening your own firm as well. Technology, leases, payroll taxes and budgets are not just for “the other guy.” But with the right support team of experts, and a solid business plan, you can start your own firm, feel more empowered, satisfy your clients at a more efficient cost, and make a very nice living – often more than you made before.
There are valid business reasons for the recent trend of lawyers to open their own boutique firms. If you have that entrepreneurial spirit – here’s to your new venture. And your new adventure.