Lawyers USA Your Business Partner

This column will examine the “rules of the road” for a new venture that more lawyers are considering: opening a solo practice.

The highly publicized troubles of large corporate firms make the prospect of having their own firm seem more attractive to many young or newly unemployed lawyers. But more than 60 percent of private law practice lawyers are solos or in small firms, so the competition is intense.

An old economics bromide holds that, “whenever there is change, there is opportunity.” Clearly, there is tremendous change currently, so there also is tremendous opportunity now to start a new business. However, you must understand what you want to accomplish with your new practice as well as the business and economics of practicing law.

• Entrepreneurial skills

The solo lawyer needs all the traits of an entrepreneur: motivation, acceptance of risk, resiliency, commitment and persistence.

A good approach to finding out if you have what it takes is to do a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) of yourself to make certain that you’re ready to operate your own firm.

Any such analysis will to some extent be subjective, but it will help you decide what you want to be, what you want to do and where you want to do it.

It’s easier to start a new solo practice in some practice areas than others. You should first consider legal specialties where the capital requirements are less and where it’s easier to reach prospective clients who have more urgent immediate and personal needs and are less concerned about the team behind you.

Practice areas that meet these parameters are where “the rubber meets the road” areas such as personal injury, family law, bankruptcy, immigration, personal real estate and the like.

• Business realities

Don’t assume you’ll immediately make money from your new clients. Even if you do work for them in your first few weeks, the national average is that it takes up to 120 days between when a law firm sends out an invoice and when it is paid.  For that reason alone, having a financial reserve helps ease the angst of starting your practice. You should have a minimum of six months of living expenses, and preferably a year.

Managing money is your number one consideration for success in a new firm. Practice needs should always be met first, and personal needs should be the minimum expense necessary to maintain your desired standard of living.

The one essential is that your new law firm should not be a bank for clients. When you bill clients, you are extending them credit. Lax collections mean you need more cash to stay in business while waiting for clients to pay. The new firm that stays on top of receivables will have the cash to survive and grow.

• Relationship development

The best advice for any business, in good or bad times, is to offer real substantive value so that clients will see that you’re a thought leader, knowledgeable in what you do and available to help them create solutions for their challenges.

To bring the value you can offer to clients’ attention, you need to put together a marketing plan that will help you build relationships with potential clients.

Relationship development is a marathon, not a sprint, and a marketing effort doesn’t have to be complicated. Identify the people most likely to hire you for the work you want to do, communicate with them to let them know who you are and then build close relationships with these people to help them achieve their goals.

Develop a profile of your ideal client and craft a marketing strategy that focuses on this target, not on everyone. You can increase your revenue dramatically by focusing on clients who will give you the work that you want.

New law firms build loyalty by communicating frequently, offering something that competitor firms can’t or don’t, and creating something new that clients need or want.  Selling solutions, not billable hours, will ensure your new firm’s long-term future.

A coach, syndicated columnist and speaker on topics relating to  The Business of Law,®  Edward Poll, J.D., M.B.A., CMC  is a strategic law firm planner whose ideas have helped thousands of lawyers increase their revenue, improve their profitability and enhanced their satisfaction with the practice of law. His honors include being a Fellow of the College of Law Practice Management and a charter member of the Million Dollar Consultant^TM Hall of Fame. Contact Ed at (800) 837-5880 and see more at www.lawbiz.com and www.lawbizblog.com.

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