Starting your law firm can be a fulfilling endeavor, especially if you enjoy helping people solve problems. But the decision-making process to become a business owner is not as straightforward.
There are numerous things to look at besides having a law degree and the capital to start. These factors are crucial, and failure to consider them spells disaster for the success of your new practice.
This guide will help you decide whether to start your law firm by discussing a few things to consider, plus the benefits and drawbacks you can expect.
Factors to Consider When Starting Your Law Firm
Buying vs. Starting a Law Firm
There are several ways to own a business, including starting from scratch and buying an already established law firm.
Starting your practice from scratch allows you to grow and see the progress, but it can also be expensive to start. Buying a law firm, on the other hand, comes with an existing list of clients and might require less starting capital. However, existing businesses might also require an overhaul, costing you more time and effort than the former.
One of the reasons why businesses fail is because owners do not understand fully how to run them. Besides helping people solve legal problems, you are now an entrepreneur who must possess the skills to run any entity.
Skills such as financial management, problem-solving, strategic thinking, communication, and leadership will ensure that the business side of things runs smoothly.
Cost of Starting a Law Firm
Cost seems like an obvious factor to consider when starting any business but you might be surprised by how many important things new owners forget. Things like licensing, office supplies, hardware, legal software, marketing, insurance, and rent are all important costs to set aside when starting.
The total cost of starting a law firm will depend on things like location, size, your marketing plan, and practice area. Car accident attorneys, for instance, might have to invest in a receptionist and expensive legal software because personal injury cases are often high-volume.
Pros of Owning a Law Firm
- As the practice grows, you get to choose interesting projects and cases, unlike when working at a larger law firm where you might not have that freedom.
- You have the control and freedom to make all the decisions that you think are good for your law firm.
- Besides spending on bills like office rent, all the benefits and profits go to your pocket alone.
- You get to enjoy the freedom of working from anywhere as long as you are getting things done.
Cons of Starting Your Law Firm
- During the start, you might have to take uninteresting cases to remain financially afloat.
- You might never get an opportunity to work with a large law firm again due to the mistaken belief that solo practitioners are not competent enough to work in teams and so on.
- The initial cost of starting a law firm can eat into your finances, and if you are not cautious, quickly leave you in debt.
So, should you start a law firm? The answer is not definitive, and as you can see, depends on a lot of circumstances.
Some of these factors discussed can be improved along the way, but others cannot. If you have a solid business plan, sufficient capital to start, and already know whether you’ll buy or start your practice from scratch, then you can plan things–like marketing–as you go. However, important requirements, like having entrepreneurial skills, cannot be overlooked, and it may be better to take a class or two before starting your law firm.