For some, law is more a lifestyle than a career, which is why many practitioners want to start their legal firm.
But no matter how dazzling your legal talents are, starting your firm means becoming an entrepreneur — the owner of a brand new business that may grow or die, depending on how well you manage it.
The new business carries big responsibilities and requires an enormous commitment from you.
You may spend more time running your business and have far less time and energy to dedicate to the legal community.
Here’s a guide to some critical aspects of starting your legal firm that you must meet head-on before you commit to such a life-changing experience.
Your First Legal Case: Risk Control
Your first ‘legal case’ is to choose the right business structure (LLC, partnership).
You can control the risks of business ownership by, e.g., forming a limited liability company.
But once you get all the registrations and licensing done, there is more work ahead.
Building a successful practice takes a lot more than just being brilliant at law.
The next step is to start thinking like an entrepreneur.
Write a Proper Business Plan
Successful entrepreneurs learn to define what they want to achieve, how they will go about it, what they’ll need, and the steps they’ll take to get there.
What is your ‘special sauce’?
How will you stand out in a notoriously competitive industry?
Are you a specialist in a niche field? What are your strengths and weaknesses?
Envision a typical day, week, and month at your law firm.
How will you manage the practice day-to-day?
How many staff do you need, and what skills should they have?
Who will train and monitor them, and how can you ensure everyone is productive?
The solution is to write a comprehensive business plan to deal with the seven business issues of particular importance in small new law firms.
Setting up the Office Environment
You will have to do both administrative tasks and attend to your law practice, so you’ll be spending more time at the office than ever before. Make it comfortable and inviting.
Since the pandemic, home practices have become more popular.
That may be a good start as long as the space suits your firm’s image and brand.
Other options are standalone or shared office space.
The office should have good lighting, temperature control, and excellent security.
Your clients’ futures may depend on how well you secure their sensitive documents and information.
You’ll need desks, chairs, and other furniture for you and your staff.
Will you be receiving clients and having conferences?
You’ll need a suitably furnished and decorated reception area, waiting room, and conference room.
Can you serve your clients refreshments in style, heat a quick desk lunch, or conveniently grab a late-night snack when you’re burning the midnight oil?
Where will your files and office stationery live?
You’ll need secure file cabinets, drawers, and bookshelves.
Technology, Communication and Networking
Like office furniture, you can lease computers, a printer, scanner, and even office phone systems and smartphones rather than buying them to save upfront costs.
Who will handle tech support?
Instead of fiddling for hours to set up a new printer or scanner, consider hiring an IT support agency to set up your hardware and software.
Use a systematic approach, plugging in components that work together as needed.
Legal industry software can integrate with commercial collaboration platforms and cloud storage solutions.
Make provisions for monthly internet costs, software licenses, and subscription fees.
You’ll need legal practice management software, bookkeeping and payroll software, source library fees, and cybersecurity and encryption software.
Cybersecurity and Client Data Protection
A 2023 survey of Canadian organizations showed that 40 percent experienced an employee and/or customer data breach last year.
A third of them lost revenue, and one quarter suffered damage to their reputation due to a cyber attack.
Cybercriminals are zeroing in on SOHO (small office/home office) setups.
Smaller law firms are particularly attractive targets for phishing and malware attacks, DDoS attacks, ransomware, and insider or third-party attacks.
Plan to prevent data breaches:
- Encrypt all files before sharing or storing them in the cloud. Encryption changes data into unreadable hashes. Attackers can’t get to your financials, client data, or personal and proprietary data.
- Always use encrypted internet connections, especially on mobile devices like smartphones and laptops. If you’re working in different locations or while traveling, installing the best VPN in Canada helps protect your data by masking your IP address and securing your connection. A VPN creates a secure tunnel for the data you send and receive, making it much harder for hackers to intercept or modify your files.
- Finally, secure your router to protect your office network. A VPN on your router can also safeguard smart devices like security cameras and digital locks, giving you peace of mind at home or in the office.
- Provide all staff with cyber safety training. It’s no longer a luxury — cybercrime statistics show that it is a necessary cost of doing business.
- Write a cybersecurity policy and ensure that all staff stick to it. Data security measures are a prerequisite for various insurance policies and codes of conduct.
Human Resources Duties
The first rule of hiring and staffing is to make sure everyone else gets paid before you pay yourself.
The second rule is to make sure you’re ready to train and onboard staff so they can hit the ground running.
Whether you hire temporary staff from agencies or on a contract basis or appoint a permanent paralegal or legal assistant, you must be able to delegate work to them without having to spend days training them first.
Writing company policies and procedures and establishing workflows that any newcomer can follow is an enormous task.
However, it sets your standards and ensures staff know what you expect of them.
It increases everyone’s productivity and lessens training requirements.
But most of all, written standards can reduce liability if your staff makes mistakes.
Financial and Bookkeeping Duties
You’ll need a bookkeeper to manage your payroll, pay suppliers and service providers, and keep an eye on the petty cash.
You’ll need an accountant to manage overheads and profits, manage your taxes, and give you financial advice.
Marketing and Client Acquisition
A marketing plan aims to build your client base via the art of networking.
It’s an integral part of your business plan.
Consider hiring a professional designer to create branding with a logo and color scheme that represents your firm’s values and ethos.
Branding should carry over into your printed and digital stationery.
Even your office space should reflect your firm’s image.
A professionally designed website forms the basis of networking and marketing activities.
Next, consider hiring an expert to manage your digital profile.
You should be visible on social media, online networking platforms, and legal directories.
Network, network, network. Joining professional organizations, Law Societies, Bar groups, and associations.
That’s how other lawyers will get to know you and send business your way.
Take Care of Insurance
Professional liability insurance, or malpractice insurance, is compulsory in most provinces.
It can shield you (and your assets) from the consequences and costs of mistakes, omissions, and negligence in delivering legal services.
Cybersecurity insurance can shield you from a cybersecurity breach’s cost and reputational damage.
As a business owner, you must pay workers’ compensation insurance, which protects you against claims for work-related injuries and illnesses by employees.
Also, consider a general business liability policy to cover injury or damage to clients visiting your premises.
Good Planning Will Pay Off
It’s not difficult to start your law firm, but to ensure success, approach the planning as a serious business.
Devise a strong strategy focusing on technology and protecting the security of client data.
Set your office policies, and protect your practice by investing in good cybersecurity.
Then, network like there’s no tomorrow, and success will follow.
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