The statistics show that despite the competition and the hardships encountered by startups, many lawyers still choose to leave the relative safety of legal practice in an established law firm to venture out on their own. You might be one of them.
Before you submit your resignation letter, give the move some serious thought — not everyone has what it takes to successfully practice alone. More importantly, be aware of your motivations so that you do not go solo for the wrong reasons. Running your own law practice needs all the traits of an entrepreneur: motivation, willingness to take risks, resilience and commitment.
If you are certain your goal is to start your own practice, make sure you have what it takes.
First a lesson in 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 from the time an invoice is sent to when it gets 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 cashflow is your paramount factor for survival 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.
Next, examine your motives and balance it against what you are giving up. A simple cost/benefit analysis will suffice. Recognise that you will lose access to the ready expertise within the firm, including resource material, paralegal support and technical (IT) support. If you leave, you probably will experience an initial drop in income. Initially, there may be no structure to your practice, so you must establish your own routine. You may feel isolated and miss the camaraderie within the firm. Without peer pressure, you must be self-disciplined. You also must be technically savvy enough to trouble-shoot problems previously resolved by the firm’s IT support staff; or be prepared to set aside resources to engage outsourced service providers for your IT and bookkeeping needs.
The three minimum requirements are specific skills, capital and a client base.
#1 Skills and experience. You must be a self-starter with not just good technical (legal) skills and experience; but you will also need managerial, personal relations, marketing and communication skills. You must be organized, disciplined and a good decision maker. Not only will you be undertaking legal work for clients, you must also “run” the practice. This involves juggling legal work with keeping a constant eye on the cashflow, managing your staff and engaging in rain-making and business development activities. Finally, runnin a succesful practice also means learning and applying sound business principles to your own new practice – something which they never teach you at law school!
#2 Capital. Avoid financial commitments prior to making your move. Most startups have money in the bank for for the initial four to six months without any income. And even after that, unless you are lucky enough to secure recurrent engagements, you must have the capital to make it through the lean months. Prepare a realistic budget, and secure a line of credit from your bank while you are still employed. Anticipate working longer hours for less money, at least in the initial years.
#3 Client Base. Estimate the client base you will need in order to survive. Make a list of all your prospective clients and divide them into those who will come with you; those who will not and the “not sure” in the middle ground who may require more persuasion. Have realistic expectations of who on your list will come with you. Will you have enough clients to keep your business operating?
Planning The Break.
Start your preparations for leaving the firm at least six months to a year before you resign. Make a list of what you’ll need to operate a law practice — for example, office space and equipment; access to legal research and resources; bookkeeping and professional IT support services; legal support staff; law society compliance issues and procedures etc. Select the proper time to leave. Plan to leave on good terms. There is no reason to burn bridges or forestall future strategic alliances.
Send your prospective clients an announcement of your opening. Include a form for the client’s signature authorizing the transfer of their files. This gives the client an opportunity to decide whether to retain their current relationship or move with you without confrontation.
You’re Now Ready to Go!
Start Small. You have a steep learning curve in relation to managerial and administrative responsibilities. Remember, now that you’re on your own you no longer can rely upon your partners or juniors for help. To develop a support system, form alliances with other sole practitioners; consider hiring outsourced services providers and engaging staff to assist you on non-legal duties.
Market Yourself. 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 find solutions for their challenges. Develop a profile of your ideal client; identify persons in the group whom you know; and craft a marketing strategy that focuses on this target market. 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
Put up your corporate website and consider internet marketing as it is still one of the cheapest and most effective avenues to market specific legal skills. Send personal announcements to business, social and personal contacts as they are good sources of referrals. Become more visible in your community by getting involved in civic and social organizations. Other avenues of promoting legal services include engagement in social networking websites and giving free legal talks at business associations.
Giving up the security and benefits provided by structured employment for the rewards of going solo is a difficult decision. If you are prepared to make the commitment and sacrifices necessary to go it alone, over time, as you build your practice at your own pace, the rewards will come – both tangible financial rewards AND intangible reward in the form of the autonomy and independence you wish for.
The statistics show that despite the competition and the hardships encountered by startups, many lawyers still choose to leave the relative safety of legal practice in an established law firm to venture out on their own. You might be one of them.
Before you submit your resignation letter, give the move some serious thought — not everyone has what it takes to successfully practice alone. More importantly, be aware of your motivations so that you do not go solo for the wrong reasons. Running your own law practice needs all the traits of an entrepreneur: motivation, willingness to take risks, resilience and commitment.
If you are certain your goal is to start your own practice, make sure you have what it takes.
First a lesson in business realities: Don’t assume you’ll immediately make money from your new clients. Even if you do receive engagements from the word “go”, the national average indicates it takes up to 120 days from the time an invoice is sent to when it gets 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 cashflow is your paramount factor for survival in a new firm.
Next, examine your motives and balance it against what you are giving up. A simple cost/benefit analysis will suffice. Recognise that you will lose access to the ready expertise within the firm, including resource material, paralegal support and technical (IT) support. If you leave, you probably will experience an initial drop in income. Initially, there may be no structure to your practice, so you must establish your own routine. You may feel isolated and miss the camaraderie within the firm. Without peer pressure, you must be self-disciplined. You also must be technically savvy enough to trouble-shoot problems previously resolved by the firm’s IT support staff; or be prepared to set aside resources to engage outsourced service providers for your IT and bookkeeping needs.
The three minimum requirements are specific skills, capital and a client base.
#1 Skills and Experience. You must be a self-starter with not just good technical (legal) skills and experience; but you will also need managerial, personal relations, marketing and communication skills. You must be organized, disciplined and a good decision maker. Not only will you be undertaking legal work for clients, you must also “run” the practice. This involves juggling legal work with keeping a constant eye on the cashflow, managing your staff and engaging in rain-making and business development activities. Finally, runnin a succesful practice also means learning and applying sound business principles to your own new practice – something which they never teach you at law school!
#2 Capital. Avoid financial commitments prior to making your move. Most startups have money in the bank for for the initial four to six months without any income. And even after that, unless you are lucky enough to secure recurrent engagements, you must have the capital to make it through the lean months. Prepare a realistic budget, and secure a line of credit from your bank while you are still employed. Anticipate working longer hours for less money, at least in the initial years.
#3 Client Base. Estimate the client base you will need in order to survive. Make a list of all your prospective clients and divide them into those who will come with you; those who will not and the “not sure” in the middle ground who may require more persuasion. Have realistic expectations of who on your list will come with you. Will you have enough clients to keep your business operating?
Planning the Break
Start your preparations for leaving the firm at least six months to a year before you resign. Make a list of what you’ll need to operate a law practice — for example, office space and equipment; access to legal research and resources; bookkeeping and professional IT support services; legal support staff; law society compliance issues and procedures etc. Select the proper time to leave. Plan to leave on good terms. There is no reason to burn bridges or forestall future strategic alliances.
Send your prospective clients an announcement of your opening. Include a form for the client’s signature authorizing the transfer of their files. This gives the client an opportunity to decide whether to retain their current relationship or move with you without confrontation.
You’re Now Ready to Go!
# Start Small. You have a steep learning curve in relation to managerial and administrative responsibilities. Remember, now that you’re on your own you no longer can rely upon your partners or juniors for help. To develop a support system, form alliances with other sole practitioners; consider hiring outsourced services providers and engaging staff to assist you on non-legal duties.
# Market Yourself. 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 find solutions for their challenges. Develop a profile of your ideal client; identify persons in the group whom you know; and craft a marketing strategy that focuses on this target market. 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
Put up your corporate website and consider internet marketing as it is still one of the cheapest and most effective avenues to market specific legal skills. Send personal announcements to business, social and personal contacts as they are good sources of referrals. Become more visible in your community by getting involved in civic and social organizations. Other avenues of promoting legal services include engagement in social networking websites and giving free legal talks at business associations.
Giving up the security and benefits provided by structured employment for the rewards of going solo is a difficult decision. If you are prepared to make the commitment and sacrifices necessary to go it alone, over time, as you build your practice at your own pace, the rewards will come – both tangible financial rewards AND intangible reward in the form of the autonomy and independence you wish for.
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