Are you interested in starting a law firm without being a lawyer? If YES, here is a complete guide to starting a law firm out of law school with NO money and no experience.
Okay, so we have provided you an in-depth sample law firm business plan template. We also took it further by analyzing and drafting a sample law firm marketing plan backed up by actionable guerrilla marketing ideas for law firms. In this article, we will be considering all the requirements for starting a law firm. So put on your entrepreneurial hat and let’s proceed.
The legal industry is indeed an integral part of any society. In the globe today, there is even a more demand for this industry due to the attitudes of people towards the laws, rules, constitutions etc. governing each society. This is due to the fact that throughout history, societies have established systems of law to govern people. Without laws, there would be chaos, and the rights of individuals would not be protected.
The legal industry has come a long way since the time of ancient Greece and Rome, where young boys learned by apprenticeship the many skills involved in pleading a law case. Today, lawyers need a great deal of training and extensive knowledge of legal matters in order to practice law.
Why Start a Law Firm?
The profession by the way is a large and profitable one that is an integral part of our daily lives and activities. The professionals in this industry who are known as Lawyers provide legal advice and representation to those who have been harmed by defective products, fraud, or unfair employment practices; those who want to buy or sell a house, start a business, or create a will; and those who have been accused of a crime—to name just a few services provided by lawyers.
Lawyers work in cities and towns throughout the United States and across the world, but you will find the highest numbers of lawyers in big cities such as New York, Washington, D.C., Los Angeles, and Chicago. Law firms range in size from a sole practitioner to 4,000-lawyer international practices.
Lawyers have a wide range of responsibilities, including providing legal advice, drafting legal documents such as contracts and wills, filing lawsuits and pleadings with courts, and arguing cases before judges and juries. Some attorneys work as generalists, while others work in specialized areas of law, including the following: administrative/regulatory admiralty and maritime, alternative dispute resolution/arbitration, bankruptcy and restructuring, contracts, data security, etc.
What Does It Take to Start a Law Firm Successfully?
While it is safe to say that the law careers remain popular, lawyers have always suffered from an image problem. Many people think lawyers are pushy, arrogant, and unethical. But it’s important to move past this stereotype; there are a few bad apples in any profession. Most attorneys enter the field because they want to make the world a better place and use the law to protect the rights of people who cannot protect themselves. For many, the field of law is a calling, and most lawyers adhere to a very strict set of ethics when working with clients.
Thus if you are considering starting your own law firm, then you must put it at the back of your mind that the legal industry offers many career options in a variety of employment settings, and the industry is expected to enjoy steady growth in the future.
Starting a Law Firm Out of Law School With No Money – A Complete Guide
- Industry Overview
Only in 2013, the legal services industry in the United States generated 256.66 billion U.S. dollars in revenue according to Statistics. By 2018, this revenue is expected to increase to approximately 288 billion. Industry revenue has increased year-on-year since the 2009 global recession.
- Interesting Statistics About the Legal Services Industry
In terms of gross revenue, the leading law firm in 2013 was DLA Piper. Headquartered in London and Chicago, the firm was formed in 2005 by a merger of three law firms and has locations in more than 30 countries around the world. Law firm Wachtel Lipton had the largest revenue per lawyer at 2.31 million U.S. dollars.
In 2013, more than one million people were employed in legal occupations in the U.S. This number was set to rise to 1.38 million in 2018. The largest share of those was comprised of lawyers. Lawyers also earned the most in this industry, with a mean annual wage of just short of 132 thousand U.S. dollars. Likewise almost 40 percent of graduates of Law in 2013, had taken up employment with law firms by April 2014 and 62.2 percent were working in occupations which required the passage of the bar exam.
Women are still underrepresented in the legal profession: as of April 2013, only 34 percent of employees in the industry were women. In the 50 best law firms for women according to Flex-Time Lawyers and Working Mother, the gender distribution of employees appears to be much more even in the general ranks. However, partners were still predominantly male. In 2013, female lawyers and judges earned 82 percent of the salaries of their male counterparts.
Over the years, the number of citizens employed in the legal industry has steadily increased since 1950. The legal industry currently boasts that the market can continue to expect growth. Paralegals, in particular, have a projected growth much higher than the national average. The legal industry claims to bring in revenue more than three times that of movie exhibition, spectator sports, book publishing, and the restaurant and bar industry, and more than double the accounting industry.
The legal industry has not seen an across the board decline since the 1950s. Between 1997 and 2007 the average gross revenue of the top 250 firms rose 56%. The Bureau of Labour Statistics has projected that paralegal growth will increase by 28% through 2018, with approximately 74,100 more paralegals in 2018 than in 2008. Some studies show that growth just through 2012 will be 10–20%.
Even in times of recession, the legal industry continues to grow. During these hard times, more individuals and corporations are in need of legal assistance for matters such as bankruptcies, foreclosures, and other financial issues. Similarly, when the country is in a state of economic hard times, labour litigation and divorce rates have a tendency to rise. In turn, the legal industry continues its growth in these fields.
Starting a Law Firm – Market Feasibility Research
- Demographics and Psychographics
The demographic and psychographic composition of those who need the services of law firms cuts across the public sector, the organized private sector, families, communities and people of different class from every facet of the society you can ever think of.
Below is a list of the persons, personnel, industries and organizations that need the services of law firms;
- The public sector (Government both at the local, state and federal levels)
- Organized private sector (Such as Oil firms, banks etc.)
- Famous personalities in the society, such as Musicians, Comedians, Footballers, Wrestlers etc.
- Businessmen and Businesswomen
- Institutions of learning such as Universities, Colleges, Training centres etc.
- Estate managers
- Religious Centres such as Churches, Mosques etc.
- Sport Organizations etc.
List of Niche ideas Within the Legal Services Industry That You Can Specialize in
When it comes to the legal industry, and starting a law firm, there are a couple of niche ideas within the industry that a person can choose from. Aside from the niche that is well-known with the legal industry which basically deals with standing in for clients, there are a lot of other niches that can be implemented in this industry, which can really pave a way for any law firm starting up.
Here is a list of niches that a law firm can be specialised in:
- Consultant in the legal profession
- Agent for sports men, this includes footballers, athletes etc.
- Strategists for politicians, (Includes becoming legal advisers to political parties)
- Agents for properties owners, (Includes real estate agents etc.)
- Legal aides for religious, corporate and social organisations
- Social and Public Commentator
The Level of Competition in the Legal Services Industry
The legal industry is indeed a competitive one; this is largely due to the prestige of law firms and the lucrativeness of the profession. Surviving in the business world requires more than, one’s expertise, s there are thousands of experts out there. Knowing how to network effectively and efficiently with key people that matters; decision makers that can decide who will take up a particular case or be in-charge as an agent to a particular real estate, footballer etc.
Without a shadow of doubt, there are lots of big firms who are huge stakeholders in the industry such as DLA piper, though one thing is but certain, there is room big enough to accommodate both the big law firms and the small ones. What smaller law firms need to focus on is establishing and making a name for themselves. They could also look towards specialising in a particular niche such as agents for footballers, and scouts for talents who can even become more famous in the future. They should not really go after the big icing in the cake such as governments, oil firms etc. as a start-up.
List of Well – Known Brands in the Legal Services Industry
There is hardly any industry that does not have big names that have actually made it well in the field. These are the big boys who dictate the market, and have really seen it all in terms of experience, expertise, manpower etc. some of the well-known brands in the legal industry includes but not limited to the following:
- Akin Gump
- Alston & Bird
- Baker Botts
- Baker & Hostetler
- Bingham McCutchen
- Bryan Cave
- Dickstein Shapiro
- DLA Piper
- Faegre & Benson
- Greenberg Traurig
- Haynes Boone
- Holland & Knight
- Jenner & Block
- Jones Day
- Kilpatrick Stockton
- Locke Lord
- Morgan, Lewis & Bockius
Starting a law firm is not as easy as it seems, it is indeed a serious business hence critical economic analysis must be conducted to ensure that the risks and other threats associated with starting a business from the scratch or investing in a business idea are avoided.
If you are considering starting a law firm in the United States for example, your major concern should not be restricted to just acquiring an office facility and equipping the facility or hiring the best hands in the industry, you should also be concerned on how to attract clients and secure mouth-watering legal contracts and agents.
On the average, setting up a law firm in the United States can be cost effective simply though you don’t have to maintain a big workforce, but you have the best hands who can help in executing tasks efficiently and effectively. With key good company’s profile, highly trained, highly qualified and highly experienced staff members in your team, you won’t have to struggle much to win suits, and even secure agents who can vouch for your credibility.
Is a Law Firm Worth Starting from Scratch or is Buying a Franchise Better?
In the legal industry, there is little or no possibility of buying a franchise from a successful law firm or even partnering with a big law firm if you are considering owning an investment in the legal industry. This is because the legal industry is different from others, and it takes a lot of years of hard work to build a brand and make a name in the industry.
But certainly, many people are motivated to start a business based on various factors and incentives. If you are looking towards building a business that you intend controlling, a business brand that you hope to one day transfer ownership to your children and perhaps also sell franchise in future, then starting from the scratch should be your best bet. But if you only interested in making money and multiplying your wealth, then you may as well partner with someone who has already made it in the industry.
Possible Threats and Challenges You Will Face When Starting a Law Firm
Generally in the legal industry, both the already established law firms and start – up law firms are subject to threat and challenges from government policies, global economic downturn which usually affects spending and unforeseen natural disasters (disasters that may cause setback).
Another threat that you are likely going to face when you start your own law firm, is the issue of competition, and been able to stand the taste of time.
Starting a Law Firm – Legal Matters
- Best legal entity to use for a law firm
Whether you realize it or not, one of the first decisions you must make before opening your own law firm is the type of legal entity you will form. Each structure has advantages and disadvantages regarding liability protection, tax treatment, and ease of operation.
Keep in mind that the limitation of liability afforded by the structures discussed below applies only to general business liability, not professional liability. Regardless of the structure you chose for your solo practice, you must maintain appropriate malpractice insurance to avoid exposure to professional liability.
While many law firms operate as professional corporations (PC), and professional corporations require strict formalities. Typically, the entity must have shareholders, a board of directors, and a management team, all operating distinctly from one other. Limited Liability Companies (LLCs) on the other hand are unincorporated entities, meaning that although they are not incorporated, they are separate entities for accounting purposes.
Members of an LLC have more rights to run the business than a shareholder of a corporation. Sole proprietorships are unincorporated entities that require little or no filing with the state government. A sole proprietorship can have only one member and is taxed as a disregarded entity, meaning that all profits and losses are recorded on the owner’s tax return.
As regards choosing what is best for your law firm, the following must be critically looked at and examined:
- How many owners will you have? If you plan to grow, you either need a strong operating agreement as an LLC, a strong partnership agreement as a GP, LP or LLP, or corporation to protect yourself from potential future liability from co-owners.
- How much is limited liability protection worth to you? Filing fees, tax forms, and annual reports cost money. Sole proprietorships and partnerships have lower operational costs whereas LLCs have medium operational costs, and corporations tend to have higher operational costs.
- How much money do you anticipate earning? If the answer is that you anticipate earning less than what you consider a reasonable salary, then there’s no real benefit to an S corporation.
- How organized are you? Corporations require recording meeting minutes and annual meetings, all of which are additional layers of formalities to manage.
- Do you plan to sell the entity at any point in the future? How do you plan to accomplish that sale? Stock sale? Sale of all assets? Shares are easier and cheaper to sell than the assets of a company. LLC ownership and Partnership ownership is less quantifiable, and therefore, it is typically more complicated and costly to sell an LLC or Partnership.
Catchy Business Name ideas Suitable for a Law Firm
When it comes to choosing a name for your law firm, a person needs to be very careful and meticulous. This is so because law firms are professional entities and it is usually a good norm that a catchy business name can do the magic at times.
Here are some catchy business name ideas you can choose for your law firm;
- Lathrop & Gage (LaGa)
- Blackwell Sanders Matheny weary & Lombard (BlackSand)
- Thompson Cobum (Thomco)
- Husch & Eppenberger (HuschBerger)
- Bryan Cave (B-Cave)
- The Simmons Firm
- Solution providers Inc.
The Best Insurance Policy Needed for a Law Firm
Just like in other professions, and also in many countries of the world, you can’t operate a business without having some of the basic insurance policies that is required by the industry you want to operate from. Besides, the nature of the legal industry requires that you have the proper insurance cover in place or else you will be forced out of business if anything goes wrong with the cases or agents you are handling.
So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best insurance policies for your law firm; it is their duty to help you assess the risks involved in the type of law firm you intend running and then advice you accordingly.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own law firm in the United States of America;
- General insurance
- Health insurance
- Payment protection insurance
- Liability insurance
- Workers compensation
- Business owner’s policy group insurance
Intellectual Property Protection and Trademark
If you are considering starting your own law firm, then you should consider filing for intellectual property protection. Filing for intellectual property protection for a law firm goes beyond protecting your company’s logo and other documents, but also protecting your software applications and of course the name of your company. And also due to the nature of the business and the proliferation of law firms springing all over, it is important that an intellectual property protection and trademark be made.
To file this, and to also register your trademark in the United States for example, then you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subjected to the review of attorneys as required by USPTO.
Is Professional Certification Needed to Start a Law Firm?
The legal industry is one of the industries that is highly regulated so as to prevent costly malpractices that can jeopardise the dispensation of justice in any country. It is for this reason that if you are looking towards beginning a law firm, then you should acquire certain certifications; that will give you edge amongst your competitors. The truth is that, the more relevant legal certifications that you and your team have, the easier it is for you to convince people to patronize your services.
Majorly for law firms the basic certification that must be obtained before the practice of the profession is the NBLSC. The NBLSC is an American Bar Association (ABA) accredited organization providing Board Certification for US Lawyers. Board Certification is a rigorous testing and approval process that officially recognizes the extensive education and courtroom experience of attorneys. NBLSC provides Board Certification for Trial Lawyers & Trial Attorneys, Civil Lawyers, Criminal Lawyers, Family Lawyers and Social Security Disability Lawyers.
List of Legal Documents You Need to Run a Law Firm
In many countries of the world, and of course in The United States of America, the legal industry is amongst the industries that is highly regulated so as to avoid the ineffectiveness of the judiciary system. If you are considering starting a law firm, then you are expected to meet the legal documents requirements as stipulated in the constitution of your country.
These are some of the basic legal document that you are expected to have in place if you want to start a law firm in the United States of America;
- Certificate of Incorporation
- Security Clearance Certificate
- Business License
- Business Plan
- Non – disclosure Agreement
- Memorandum of Understanding (MoU)
- Employment Agreement (offer letters)
- Operating Agreement
- Company Bylaws
- Operating Agreement for LLCs
- Insurance Policy
Writing a Business Plan for a Law Firm
If you are looking towards starting a law firm, then one of the first steps that you are expected to take is to consult experts to help you write a good and workable business plan. The truth is that, in order to successfully run a law firm, you would need to have a good business plan in place.
A Business plan is the blue print that is needed to successfully run a business; with a workable business plan in place, you will reduce the trial and error approach of doing business. You will be able to manage your business with purpose and perhaps precision; you will know what to do per time and how to handle challenges, growth and expansion.
So if you want to start your own law firm, you are required to write a detailed business plan that can pass reality test when subjected to it; you should work with the facts, figures and other indices in the legal industry as it applies to the country you intend starting the business.
Detailed Cost Analysis for Starting a Law Firm
There are several expenses that you would have to make before successfully launching your own law firm. It is important to state that the location you choose to launch your business will definitely impact on the overall cost of starting the business which is why it is very important to have concluded and analyzed your feasibility studies and market survey before drawing up a budget and sourcing for funding for your business.
Here are some of the basic costs you must look towards fulfilling when starting a private security company in the United States of America;
- The Total Fee for incorporating the Business in United States of America – $750.
- The budget for Insurance, permits and license – $5,000
- The Amount needed to rent a suitable office facility with enough space in the United States of America (Re – Construction of the facility inclusive) – $50,000.
- The Cost for equipping the office (computers, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – $15,000
- The cost for starting a filing system, approximately put at $5,000
- The Cost of Launching an official Website – $700
- Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $2,500
- Other miscellaneous – $1,000
Going by the report from our research and feasibility studies, we will need about $100,000 to set up a small scale law firm in the United States of America.
On the average, you would need over $150,000 US dollars to start a medium law firm in the United States of America. If you choose to start a large scale law company, then you should look towards budgeting about 1.5 million US dollars and above. This money include paying legal experts and other professionals who will be on your payroll.
- Financing Your Law Firm
If you choose to start your law firm on a small scale, you might not need loads of resources to launch the business, but if you decide to start on a large scale, you will sure need to raise the required start – up capital to launch the business. In essence you are expected to generate your start – up capital.
When it comes to financing a business, one of the first thing and perhaps the major factors that you should consider is to write a good business plan. If you have a good and workable business plan in place, you may not have to labour yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for start – up capital for your private security company;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Applying for loan from your bank / banks
- Pitching your business idea and applying for business grants and seek funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
- Networking with like minds in the industry.
Choosing a Location for Your Law Firm
Choosing a location for your business is not what you should do without due consultation. The truth is that if you get it wrong with the location where you have decided to pitch your business tent, you are more likely going to struggle to make headway with the business. One of the major reasons why business struggles, fails and eventual close shop is the fact that the owners decided to choose a wrong location for the business.
For a law firm, there are many factors that must be considered before settling for a particular location, and it includes but not limited to the following:
Consider the Quality of life:
- Quality of professional life-: what kind of cases and clients can you expect to get where you wish to practice?
- Quality of social life-: Is the location close to museums, cinemas, young people, intellectuals etc.
- Quality of recreational life-: Do you want proximity to swimming, skiing, boating, hunting etc.
- Quality of economic life-: will you earn well there?
Consider other miscellaneous factors such as:
- Proximity of office to public transportation for clients and staff
- Proximity to eating places for client entertainment and meeting
- Proximity to law library
- Proximity to other lawyers for further consultation
- Is the office also accessible to persons with disabilities
All these factors must be holistically looked into and considered before settling down for a particular location for a law firm.
Starting a Law Firm – Technical & Manpower Details
If you are about starting a law firm, then you should be ready to purchase some basic appliances and other things that will make your firm effective and efficient. These are the basic technical areas you are expected to spend part of your start-up capital.
Some of the things you must consider having are as follows:
- Furniture and electronics
- Telephone system
- Computers, software, printers
- Scanners and photocopy machines
- Fax machine
- Docketing and calendaring systems
- Time tracking and billing systems
- Filing etc.
Likewise, it is essential that the necessary manpower is put in place. This is because law firms cannot operate efficiently and effectively as a one-man business. This is also necessary and must really be considered too.
The Services Process Involved in the Legal Services Industry
The services process involved in the law firm depends on the niches of legal services a firm is into. On the average, the process starts with getting clients, who might have one case or the other to answer in the law courts, or in some cases been in charge of properties for a particular client.
After this has been ascertained, the billing process now evolves, it should be noted that the billing process for law firms is not static, this is largely due to the fact that some cases can take more than expected, and the law firm must be reimbursed throughout this period, while in other cases, a law firm can be in charge of a particular property for more than a decade, the firms will be paid as far as they continue offering services.
Starting a Law Firm – The Marketing Plan
- Marketing Ideas and Strategies for a Law Firm
Law firms is not a business that you have to retail products which is why you must do all you can to maximize any opportunity that comes your way.
So when you are drafting your marketing ideas and strategies for your law firm, make sure that you create a compelling personal and company’s profile which must include the profile of your board of directors and management team. The truth is that if you have highly qualified, trustworthy and successful security professionals in your board and core management team, it will definitely give you leverage in the market place.
Here are some of the platforms you can utilize to market your private security company;
- List your business on local directories / yellow pages (both online and offline)
- Attend legal related expos, seminars, and business fairs et al
- Leverage on the internet to promote your business
- Introduce your business by sending introductory letters alongside your brochure to all the corporate organizations, community leaders, schools, hospitals, hotels and government offices in your target area.
- Create different packages for different category of clients in order to work with their budgets.
- Engage in direct marketing, referral marketing and also email marketing.
Possible Competitive Strategies for Winning your Competitors in the Legal Services Industry
It might be challenging competing as a newbie in the legal industry especially in a highly organized market like that of the United States of America, which is why you must be deliberate in choosing your board members and your core management team.
As a law firm, if you have the required expertise and equipment to carry out a case, then you are likely not going to struggle to compete in the industry. Hence, ensure that you put in your best whenever you have the opportunity to handle any case. You should be known for winning cases/ representing clients very well at all times.
Possible Ways to Increase Client Retention for a Law Firm
When it comes to business no matter the industry you choose to pitch your tent in, one of the easiest ways to increase customers’ retention and perhaps to attract new customers is to satisfy your customers always. If your customers are satisfied with your services delivery, they can hardly source for alternative service provider or products.
Statistics has it that one of the major reasons why customer’s source for alternative service provider or product is when there is a drop in quality. Another reason is poor customer service. If you can continue to improve on the quality or your services and your customer service delivery, then you won’t struggle to maintain your loyal customers.
Thus as a law firm, you must be proactive and ensure that your past jobs speak and indeed speak volumes about you.
Strategies to Boost your Brand Awareness and Create a Corporate identity
When it comes to creating brand identity for a legal business, the calibre of clients you have worked for and the nature of cases you have handled is always a major brand booster.
It is pretty important to work with your consultants to help you map out publicity and advertising strategies that will help you walk your way into the heart of your target market. First and foremost, you should ensure that your brand is visible and well communicated which is why you should make provisions to work with different class of people in the society.
All your publicity materials should be done by some of the best hands in the industry. It is still safe to say that the best way to improve your brand awareness is by representing your clients well at all times. Thus, your professionalism matters a lot.
Creating a Suppliers / Distribution Network
The structure of the legal industry does not give enough room for supplier/distribution network. While legal matters cannot be handled in isolation, it is the duty of law firms to liaise with one another, and relevant government authorities if need be to speed up the dispensation of justice in the country.
Tips for Running a Law Firm Successfully
The truth is that, irrespective of the kind of business you run, your ability to get all the members of your team on same page at all times is one of the keys you need to successfully run the organization.
As the head of a law firm, it is you responsibility to give direction to the business. Part of what you need to do is to ensure that you create time for office meetings; a time where challenges, feedbacks, projections and relevant issues are discussed. The meetings could be daily, once in a week, twice a week or once in a month. The bottom line is that there should be consistent meetings in your organization.
Carrying out appraisals on a regular basis and training your employees will help you run your organization effectively. Encourage your employees to pursue certifications in their various area of specializations; it will help your organization’s profile and of course it will help the individuals. You can choose to fully or partially sponsor some of the certifications.
Lastly, you should keep your doors open for suggestions from members of your team and your clients. It is very important to reward excellent performance in your organization; it will go a long way to encourage healthy competition in your organization.