Tag: legal practice development

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Starting a Law Firm? | The Future of Law Practice and a Takeaway from the ABA Techshow

Great post by lawyer David Bilinsky on his blog Thoughtful Legal Management about the use of technology and the future of the law practice.

As a practicing family law attorney, I understand much of what Mr. Bilinsky is trying to say.  I do wonder, however, whether many lawyers are simply resistant to change because they are too set in their ways.

I invite you to go read the post and add your thoughts.  I don’t have a great deal to add other than the post is very interesting and though provoking.  I remember talking with another lawyer in a courtroom, lawyers-lounge a couple of years ago.  The lawyer was telling me all about how the IPad would revolutionize how he practices law.  I sat there doe-eyed as he discussed schedule management, billing, document storage, etc.  He said he could do all of this straight from the IPad.  At the time, I was a little taken-aback and skeptical.  Now, I laugh at my nievity.

I’m not saying that technology is the answer or that it is evil incarnate.  I’m just saying that the practice of law is undeniably changing and I’m not sure if it is for better or worse.

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Starting a Law Firm | Choosing Clients Carefully

When starting a law firm, you need to choose your clients carefully.  I realize that this is much easier to say than to do, but I can not emphasis enough how important client selection is.

In my 3+ years of working as an associate for a small general practice firm, I took on a lot of different kind of cases.  Probably too many different kinds of cases.  Regrettably, nobody ever told me to be careful about the kinds of clients and cases I took on.  I wish somebody would have because, for me, it could have been the difference between being a happy lawyer and being a miserable lawyer.

Clearly, if you start a law firm, telling yourself that you will only accept clients and cases you want to work on is a bit academic.  After all, you have to eat.  I also realize that I’m not always going to like all of my clients and they probably won’t all like me.  That is just a given.  But, being careful about client selection can make your lawyer life so much better.  My general rule of thumb is this:   don’t take on a dog just because it pays.

I wanted to write this article in my starting a law firm blog after reading a really interesting and well written article in my Indiana Bar Association magazine:  Res Gestae.  (I’d link to the publication online, but, unfortunately, it doesn’t have an online presence.)  The article is by a regular columnist, Donald R. Lundberg, and is entitled “Choosing clients wisely: a key to fulfillment in the practice of law.”  It’s in the April 2011 issue.

The article brought up some great points that I want to briefly summarize here.  The author advises that every time a new or old client brings your law firm a new matter, you should consider a number of things, including:

  1. Your Competence to handle the matter
  2. Past lawyer history on the case (are you the second or third or fourth lawyer on the case?)
  3. The client’s emotional connection to the case (are they too close and not able to distance themselves from it?)
  4. The problem dump (is the client wanting to dump their problems on you so that it is now your problem and not theirs?)
  5. The micromanager (this one should be self-explanatory)
  6. The needy client (also known as the constant caller)
  7. The non-payor and/or the slow-payor (in my experience, this one usually encompasses all of the above).
  8. Conflicts of interest (this one is obvious, but I point it out to say that it is also a good way to explain to the client why you won’t take their case)

That is the list.  I think it is a pretty good one.  There are probably other items to add, but I think you get the point.  Being a lawyer can be tough.  When you make yourself miserable by working on cases you don’t like, or for clients you can’t stand, your job starts to feel like a noose.  I’ve been there.  It’s not fun and I’ve thought about quitting the practice because of it.

If you are going to start and build a law firm you are going to need clients.  You are also going to work on some cases at the beginning that you probably won’t take later.  That is ok.  But, if I can recommend anything, it is to enjoy your job as much as you can.  Choosing your clients and cases wisely is the way to start your law firm the right way.

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Starting a Law Firm | Getting Paid for Your Work

A common problem that I, and anybody starting a law firm, will have is getting paid for your work.  The easy answer to always getting paid is to ask for a large enough retainer for the work you know you are going to be doing.  Easy, right?  Good luck getting a lot of work, I say.

Here is the problem: other attorneys will charge less than they should to get a new client.  An example:  Attorney 1 says to the potential new client that I charge  $2,000 for an initial divorce retainer.  Attorney 2 says to the potential new client that I will $1,500 for an initial divorce retainer.  Who is the client going to choose?  Most of the time, I would bet, the potential new client will pick lawyer 2.  It’s a simple market issue.

Now, let’s say you sometimes lower your retainer to stay competitive in the market. The problem that this can create, and which I have often faced in my own practice, is that clients often pay the initial retainer and that’s all you are going to get.  You can sit there and recite the trust account, bill-by-the-hour, security deposit speech to the potential new client until you are blue in the face.  The client will even sit there, appear to be listening, and nod his or her head like they understand.  Then, three months down the road when the initial retainer runs out, the client doesn’t pay another bill.  Another month goes by and no payment.  You get the idea.

To combat this problem, a  useful to call the client and say:  “Hi Joe, your divorce is going fine and I think we are close to an agreement.  I’d like to get this finished up, but I am waiting for a payment.  When do you think you will be making this payment so we can get this finalized?”  The client is often sightly embarrassed and may respond: “Oh, sure, I’ll pay that off in a couple weeks.”   That doesn’t sound too evil does it?

I don’t condone not finishing work all the time.  Your first duty should always be as an officer of the court.  If a judge or another attorney is expecting you to do something you should do it – and you should bill for doing it.  Afterwards, you can always call the client and tell them about what you just did for free and how you won’t be doing much more on their case without  a payment.  If they still insist on not paying you, send them a nice withdrawal letter, file a motion to withdraw with the court, give them their client file, and wish them luck.  (If they owe you a lot of money, many jurisdictions allow you to file an attorney’s lien on the case so you can hopefully get paid after you withdraw).

When starting and building a successful law firm, you must always be concerned with getting paid.  That is how you pay the rent, the utilities, the paper costs, and all the other fun overhead expenses.  I’m sure I don’t need to tell you that you get paid by collecting these fees for your law firm as well.

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Starting a Law Firm | Good Busy v. Bad Busy

As anybody reading this blog may know, I have a lot more time on my hands while I wait to be licensed in Minnesota and the official starting of my law firm.

The extra time has allowed me to do a lot more blogging and research into how to start a law firm.  I think this has been good.  I know I need to do these due diligence kinds of things before I start a law firm in Minneapolis.  I also know that I have come a long way towards learning how to optimize technology to help build my fledgling law firm.  It has been work, but I have enjoyed it for the most part.

Yet, taking all of that into account and not dismissing it out-of-hand, I am starting to wonder whether there is such a thing as good busy versus bad busy?  For example, I have begun to question how important some of this internet marketing and blogging stuff is.  Shouldn’t I be out there hustling, lunching with people, joining trade associations, utilizing person-to-person networking, and generally trying to rake up real, tangible work?  Isn’t that a little more useful than focusing so much on my internet presence?  Maybe, maybe not.  It could be good.  It could be bad.

I call this “bad busy”.  Good busy is serving my clients, doing great work, and getting paid what for your efforts.  Bad busy is focusing too much on things that aren’t important when trying to start a law firm.

As I’ve stated in other posts, what I learned in 3+ years of practice is that you have to get out there and you have to sell yourself and your skills.  You gots to hustle.  I think I am pretty good at that.  However, lately, I have been more focused on internet marketing and blogging because it is easier and fun.  It is also a medium of marketing that I needed to get better at.  Before about two months ago, I would have laughed at you if you told me I would get a Twitter account.  I’ve got one now and I can understand the effectivness of it.  Building that knowledge is good busy.

But, and there is a real fine line here that I sometimes can’t see, I can focus too much on things like Twitter and blogging and social media.  I bet a lot of lawyers and idle procrastinators out there might also have this problem.  It’s not that your lazy or you don’t mean well.  It is just that sometimes we all can be too focused on bad busy when trying to start a law firm.   Bad busy is bad.

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Starting a Law Firm | Public Defender Contracts and Getting Paid

I am not one for short blog posts, but I want to share some disturbing news I was reading over the Easter weekend related to my fears about starting a law firm.

While visiting family in Iowa, I was reading the Cedar Rapids Gazette’s business section.  There was a disturbing article about lawyers not getting paid for their public defender contract work by the State of Iowa.  Wow.  If you can’t rely on the state to pay your attorney’s fees bill, who can you rely on?

I have a constant fear of not getting paid.  I do a lot of family law work and I have had a lot of clients who do not pay their bills.  As a young attorney worrying about whether I can start and maintain a successful law firm, I worry about how I am going to get paid all the time.  One thought I have had when I consider how to make my new law firm successful is to sign up for the public defenders program in Minneapolis, MN.  But, if a state supported program isn’t going to pay the bill, why would I want to do that?

Another reason for sharing this article is that it discourages me in the respect that I might not be able to make it on my own.   If you read the story, one of the lawyers apparently couldn’t afford to pay her secretary and her home mortgage because of the State of Iowa’s failure to pay her public defender bill.  That should scare anybody who wants to start their own law firm.

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Starting a Law Firm | Overhead

Starting a law firm is all about keeping costs down and profits up.  Simple statement, right?  Well, it’s easier said than done.

Here are some questions I keep asking myself and which I believe are common questions all solo attorneys have:  Don’t I need an office to be legitimate?  Don’t I need a secretary right away?  Don’t I need a computer, printer, paper, pens, pencils, three-hole-puncher, and so much more?  Don’t I need a fancy suit and lots of expensive business cards to hand out?

When answering questions like those above, ask yourself another question:  How am I going to pay for these things?  I find that once I start with thinking about a budget and how much I can afford, the supercilious things tend to melt away a little bit.  The obvious overhead killers are office space and support staff.  I don’t have the end-all-be-all answer to those questions, but  here are my thoughts.

(1) Office Space

I’ve been practicing out of my own home office now for about three months.  It creates some definate challenges, but my clients don’t seem to care at all.  My lease payment is $0.00 and I use the phone line and internet connections that my wife and I are already paying for.  (As an aside, I do need to worry a bit more about internet security now that I have client files on my home/office computer.  I’ll talk more about that in a different post).  So, my at home office cost is nill and it keeps overhead extremely low. Right now, I pocket most of what my clients pay me which is pretty cool.

There are some drawbacks.  I don’t feel very professional.  I don’t put on a shirt, coat, and tie like I did previously.  I also don’t get mentally prepared to hustle every day like I did when I was at my old law firm.  I find that missing step to mean I’m less motivated to use time in the optimal fashion.  I bill by the hour and every minute that I’m not hustling feels like (and probably is) lost money.  Now, I’ll admit that the stress level has gone down significantly and I no longer have a constant back ache.

Another drawback to the home office is that I get calls on my personal cell phone and I get mail constantly in my home mailbox.  Is this a big deal?  No, but it is annoying.  It cuts off the home/work separation.  I miss going to work, hustling all day, and then coming home to my work-free sanctuary.  I found that an actual office puts my mind in a different place which is directly related to working hard and billing hard.  Both of those things are integral (in my mind) to having a successful law practice.

Those are the main drawbacks of a home office.  In the main, I highly recommend a separate room in your home be dedicated as your office.  Failure to separate the room will result in less work getting done.  Other than that, working from home isn’t so bad.  The getting calls on my personal cell phone is easily solved by getting a new land line or cell phone completely dedicated to the law firm.  The getting work related mail at home problem is easily corrected by getting a P.O. Box.  Once those problems are corrected, the difficulties created by a home law office are lessened a great deal in my opinion.

(2) Staff

I don’t want to sound demeaning or rude in any fashion to administartive or secretarial staff, but I often found that when I was at my old law firm that I could do things more quickly and efficiently when I did them myself.  I also got the results I wanted without having to worry that a mistake had been made which could create major headaches and more work down the road for me.  So, I ended up doing a lot of things myself.  Did it get old?  Yes, but I did it, and I made a lot of money for the firm.

Now, a lot of the staff issues can be resolved by the use of technology.  There are so many things out there that make an attorney’s life easier.  For instance, I just got clued in on Dragon Dictation which is an automatic dictation software which records your voice and the changes your voice to writing.  I haven’t tried this yet, but I am dying to get it.  I did a lot of dictation at my old law firm and this option would be a lifesaver at times.  Furthermore, there are many different tools out there to modifying your firm into a mostly paperless office.  This cuts down the need for secretarial time quite a bit.

Do I alway want to go without staff?  No, no, no.  But, at the beginning of my starting a law firm venture, I know that I need to keep overhead low while I build up a client base.  Failure to keep overhead low can be the death knell to a fledling law practice.  I don’t want the death knell.

One last thing about staff – you will need them eventually.  Answering the phone, typing your own letters and pleadings, and handling mundane details like mailing and copying is both extremely annoying and time-consuming.  Getting back to my earlier comments about time, an attorney has to have good staff to do things quickly and efficiently in order to properly structure his time.  Time is money.  This is never more true than for somebody who makes their money billing by the hour.

In sum, keeping overhead low at the beginning of your law practice is of the utmost importance.  Leverage technology and get efficient with it.  Keep the money you make and don’t spend it on things your new firm can’t afford.  Will you need to put more money into the firm for a while as your are building it?  Sure.  But, you don’t have to go crazy and you can watch your budget.  Now, just keep your financial head on straight and keep on hustling as you start and build a successful law firm.

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Starting a Law Firm | Getting to Know the Court Staff

One of the cardinal rules of being a lawyer – and I’m talking about every kind of lawyer – is to remember to be polite to a fault to the court staff and clerks.  This takes on even more importance if you are litigator or in court often, and it is of the utmost important when starting a law firm.

I won’t give specific examples, but I will say that the clerks would often call me if a filing mistake had been made or something needed to be corrected.  That kind of courtesy can be a true lifesaver and the court staff does it because they know you and they like you.

During my time in Indiana, I was also able to get court dates scheduled, for the most part, when I wanted them scheduled.  My clients liked that, I liked that, and the court staff was willing to accommodate.   Many times, I was also able to make as many copies of court documents as I pleased without having to worry about paying for paper.  That might not sound like a big deal, but when you are in court every day and going through a lot of paper, it is great.  I even had one of the clerks call me and remind me that I had a minor collection hearing that I had forgotten about.  The clerk didn’t have to call me, but she liked me, so she did.

For the most part, I think the court staff liked me because I made and effort to talk to them about their day and was always ready to help them with their jobs.  One good way to get the court staff to like you is to always file your own court pleadings.  That way, you are able to meet with the court staff face-to-face and talk to them.  They get to know you.   They get to know about your wife, your children, your home, and everything else about you.  You get to learn the same things about them.  I try to treat the court staff with the utmost respect (as I do with my clients).  My attitude is that people are people wherever you go.  If you try to be gregarious and helpful, people are going to like you.

I also don’t see anything wrong with using people skills to help build your law practice.  That is what being a solo attorney is all about – networking with people.  I think that is why many attorneys decide to start a law firm, because they like people.  A lot of solo attorney work is dealing with clients, the court staff, and your own employees on a personal level.   I like that.  That is what I want to continue to do as I go down the path of starting my own law firm.

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Starting a Law Firm | Billing Your Clients

Starting a law firm is all about generating revenue and cash flow in order to survive.

It is very important to instantly have cash available so that you can do things like pay for your telephone, rent, internet, and all of the other costs associated with starting a new business.  How do you instantly develop cash flow?  You start a firm which caters towards the market.  The most common fields for market driven clients are probably family law and criminal law.  Many attorneys practice in both of these areas – especially when starting their own law firm.

For this post, I will discuss family law as the practice area to choose when specifically focusing on a field that lawyers starting their own firm can use to instantly generate revenue.

Here is an example:  a person calls your number and says he is looking for a divorce attorney.  You talk to them a little bit about their problem and quote them a rate for a retainer.  If they agree to your retainer, you typically will meet with them in your office in a few days.  That is usually when the client will pay you.

When the client comes to your office, you negotiate your billable rate, the scope of representation, and how much it will cost.  Also, you must make sure that you are competent to handle the matter and that you feel that you have something to offer the client.  If you are not able to ethically represent the client or handle the matter competently, you shouldn’t take on the case.  If the client agrees to hire you, you have him or her PAY YOU FROM THE START and you place the retainer money into a trust account.  After that, you should feel free to start working on their case.

For each unit of time that you work, you charge the rate of your agreed billable hour.  So, if the client gives you a $2,000.00 retainer, place it in trust and then bill the client on a monthly basis at your billable hour rate.  If your billable hour rate is $200 an hour, you should likely charge in increments of .2 or something like that.  .2 of an hour is equates to about twelve minutes.  Thus, if you put in twelve minutes of time working on the client’s case, you charge them .2 on their bill.  .2 at $200 an hour is a bill of $40.00.

On the client’s monthly bill, you must be sure to type in what you did to earn that money.  This is important to you, your client, and the ethics committee of your jurisdiction (to determine if the charge was reasonable – and, yes, this can come up.)  Here is an example of a .2 charge for a divorce case:  “Telephone call with Mr. Smith re filing of Petition for Dissolution of Marriage.”  Enter that information into your billing software (you do have billing software don’t you?) and, viola, you’ve just created an acceptable and reasonable bill.  If the client doesn’t pay your bill at the end of the month, you can now transfer the money from the trust account to pay your bill and then refund any remainder to the now fired client.

Again, when starting a law firm you must know how to ethically and reasonably bill your clients in order to generate immediate and business saving cash flow.

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Starting a Law Firm | Experience

Starting a law firm is not easy and it isn’t for the faint of heart.  My first recommendation to all graduating law students is that starting your own law firm after law school is not your best bet for making it as a solo attorney.

Experience is the key to hanging out your own shingle.  Why?  Because, law schools don’t do a very good job of preparing lawyers for the practice of law.  How do you get experience?  For starters, you need to be licensed in your particular jurisdiction.  After that, in general, most graduating law students do one of two things: (1) they get a job in private practice, or (2) they get a job in the civil or government arena.

Getting a job in private practice. 

Hopefully, you can find a job as an associate in a law firm after graduation.  Your first job will make a big difference on the kind of experience you obtain.

If you start a job with a large firm, you are not likely to have client contact right away and you, therefore, won’t need to worry as much about the procedural minutiae of practicing law.  Conversely, if you get a job with a small law firm, you are more likely to get practical experience quickly.

After you get your first job, my recommendation is to get as much client and courtroom contact as possible. You should also ingratiate yourself with an older attorney.  Establishing a mentor relationship can prove invaluable.  After that, if you work hard, and keep your nose to the grindstone, you may be ready to start a law firm.

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Starting a Law Firm | Market Research

I probably haven’t talked enough about market research when starting a law firm.  I did quite a bit of market research when I was first thinking about starting a law firm.

Mirriam Webster defines market research as:

“research into the size, location, and makeup of a product market”.

That does a pretty good job summing up what I am trying to do with my market research.  I know my location.  The town where I hope to open an office is Apple Valley, Minnesota.  As with all big cities, there are many suburbs of the Minneapolis/St. Paul area in the Dakota County area.  Also, I don’t want to limit myself to one specific town or county, but I know from my prior practice in Indiana that it is best to develop a network in a specific county when starting a law firm.  You need to get to know the other attorneys.  You need to know the judges and their staff.  You want your office to be close enough that you are spending too much travel time getting from your office and to the courthouse.  All this involves detailed market research.

The size of my market is larger than I am used to in Indiana.  Obviously, the Twin Cities are much bigger than South Bend, Indiana.  I don’t know what challenges that will bring.  I have been through the Apple Valley courthouse and know it’s general layout.  It isn’t terribly different than all the courthouses I have ever been to.  Also, there is a great law library attached to the courthouse.  This should be very helpful in establishing a form library.  I’ll talk more about the need for a form library in a later post.

I also know the competition in my area.  There is one large law firm with about 30 attorneys.  My guess is that they eat up a lot of larger, business type work.  They are a bit out of my league as for as the clientele I want to attract, but I think I know who the big dog in town is.  Otherwise, there are many solo and small law firms in the area.  It doesn’t seem to be overly saturated with lawyers.  I’m not there yet, but I don’t think it will be terribly difficult to get a foothold.  I do find it interesting that there seem to be a lot of solo practitioners in the family and criminal law area.  I know the legal job market isn’t the best, but I was surprised at the number of solos.  Again, I hope that isn’t a problem for my new law firm.

One good thing about Apple Valley and the Dakota County area is that driving and transportation is very easy.  I am used to an older town with some crazy city plans.  It isn’t a big deal, but I earn my money by the hour and I want to be able get to the courthouse or to wherever my client needs me to be quickly.

Finally, I think I know the marketing and advertising structure of the attorneys in my market.  I am happy to report that I think I see some avenues of getting my name out there quickly that other attorney don’t appear to be taking advantage of.  It is both a blessing and a curse of all attorneys who start a law firm that they inevitably have more time on their hands to market themselves than more established attorneys do.  Would I rather have the problem of having too many clients and too much to do?  Yes.  But, I’ve got more time to make that dream a reality.

As I’ve stated in prior posts, I’ve already begun networking with attorneys in the area to get feel for things.  If my wife and I could just find a home and move there, things would be a little easier in my quest to start a law firm.