How to Start a Law Firm in 2024: A Detailed Beginner’s Guide

So, you’ve taken the decision to start a legal practice; that’s fantastic! Well, it’s a lucrative business (even if you go for personal or business law), but not without competition, to be honest.

Add to that the necessity to follow all the long steps that finally lead to starting your business and setting it up legally in your state, and you have your hands full.

There’s so much you need to do when you launch your legal business to catapult you above your competitors, right from finding a swanky office to recruiting the best legal team.

So, how exactly do you start a legal practice? To help you understand this complicated process, we’ve put together this guide that delves into all you should know.

Related: How to Start a Personal Injury Law Firm

Who Should Start a Law Firm?

Starting your own law practice comes with innumerable benefits, but it’s not always the best option for everyone. It requires you to be an excellent legal practitioner as well as a shrewd entrepreneur.

You’ll be able to pick the cases you want to handle, set your timelines, and choose your workload—basically, you’ll be your own boss. However, for each of these benefits, you’ll be dealing with some challenges.

For instance, you’ll be responsible for all your business operations including formation, accounting, insurance, acquiring clients, and more. All this, on top of practicing law.

So how do you know if you should start a legal practice?

Some things to consider include:

• Understand the why. Be sure your reason for starting your own firm is significant enough to keep you focused even when you face challenges. Otherwise, you can always explore alternative solutions, like switching legal careers, firms, etc
• Think about your timing. Is it ideal? For instance, if you’re fresh out of law school, you may want a little experience or mentorship before starting your solo practice.

What are Some Best Places to Start a Legal Practice in the US?

Wondering where to start your legal practice? Are you looking to change states and are worried about the future of your law firm?

Based on pay, career growth, and home value some states may be better than others for lawyers looking to form a legal practice. States like Washington DC, New York, and California present the most opportunities as they’re highly populated.

This, however, also makes them very competitive. They’re also the states with the highest business lawyer wages according to the US Bureau of Labor and Statistics.

Massachusetts, being home to the largest law Universities like Harvard University and Boston University, is also high up on the list.

Financing Your Legal Practice

Any business needs financial projections of income, expenses, capital, reserves, etc.

Right off the bat, you’ll need a specific amount of money, your initial capital to get you off the ground with formation, licensing, and some fixed costs.

Lawyerist conducted a Facebook poll asking how much their group members had when they started their law firms and it had the following results:

To find your range, here are some of the expenses you should be looking at

• Personal expenses: Your business may not bring in any revenue for a while. You’ll need some money in your account to help you offset your personal expenses during this time.
• Administrative expenses: Initially this would have included leasing an office space. However, you can start with a virtual practice as you save up some money for a lease for a physical office space.
• Hardware: Some essentials you’ll need include a computer, phone service, and a document scanner.
• Software: Once you’ve figured out your workflows, you can determine the technology you’ll need and buy subscriptions for the tools you need to do your job.

Besides initial costs, you’ll also need to keep financing your operational expenses before your cash flow stabilizes. Avoid credit financing until you’re sure your business is going to make a profit.

How to Create a Business Plan for Your Law Practice

A business plan is essentially a roadmap for setting up and growing your law firm and helps you determine where it’s headed. It typically includes things like your mission, goals, marketing strategy, values, financial plan, and more that can shape your business.

Here’s each item in more detail:

• Firm values: Your personal values should reflect in your business values and the culture you intend to create for your firm. For instance, a value like inclusivity should reflect in the way you go about hiring employees, serving your clients, and so forth.
• Business model: This includes the types of clients you’ll be serving, your pricing model, and the cases you’ll want to handle.
• Competitive analysis: This helps you determine where the market gap is and what you can do about it. List your competitors and find out how they’re solving their customers’ problems. Collect your data from social media forums, friends and family, industry newsletters, etc.
• Key Performance Indicators: Start by defining the metrics you’ll use to measure your performance. Make sure you outline your goals in all departments including finance, marketing, and business development. Don’t forget to celebrate your wins to keep you motivated. You can set timelines for tracking your KPIs and use a Kanban board to monitor your progress.

Your business plan will evolve with your business, so keep enhancing it in a timely manner.

How to Start a Legal Practice Officially

Here are all the essential steps involved in registering a law firm and starting your legal practice in the United States.

1. Choose a Business Name

Your business name creates the first impression of your organization on your prospective customers, so make sure your name is easy to remember and gives off the impression you want to give your customers and potential partners.

While zeroing in on your business name, it’s crucial to check all the applicable state laws. Abide by them at all costs, else your business name might not be accepted.

2. Select a Business Entity

There are several options for business entities for legal businesses, including:

• Sole Proprietorship: In this business structure, you’re the whole and sole of the business. All the profits and losses are to be borne by you.
• Corporation: The best business structure if you want to raise funds and curb your business liability. It’s owned by all the shareholders based on their shareholding.
• Limited Liability Company: This business entity brings together the best of Corporations and Partnerships. It offers pass-through taxation and at the same time saves you from business liabilities.
• Partnership: This is an informal business structure like Sole Proprietorship and you enjoy the same benefits as it. However, you can have multiple owners of the business, unlike Sole Proprietorships. You could also start a Limited Liability Partnership to reduce your liabilities.

The type of entities allowed can vary with states so make sure you check with your state authority before getting started.

You should also get a federal employer identification number (FEIN) to be able to recruit employees and become a successful law firm.

3. Open a Business Bank Account

When you start a business, your personal bank account won’t suffice; you’ll have to open a separate business bank account, typically checking and savings, to keep your business funds separate from your personal funds.

You’ll also need an Interest on Lawyer Trust Account (IOLTA) for money held in trust for clients.

4. Get Professional Liability Insurance

Professionals get sued all the time for negligence or malpractice, and lawyers aren’t any different. Legal malpractice can come in the form of misinterpretation, conflict of interest, poor advice, etc.

It’s important to get professional liability insurance to secure your legal practice from financial losses, in such instances

5. Get an Office Space

You’ll need to get an office space to start your business operations and build your credibility as a legal services firm for client development.

Even if you begin by establishing a virtual practice, or start by working from home, you’ll eventually need a physical location to meet potential clients or opposing counsel. So have this as part of your financial plan.

Establishing Systems and Processes at Your Own Law Firm

By this point, you have a clearer idea as to what your business framework will be. Now, all you need to do is build your processes, such as your working hours, client meetings, communication channels, and more.

Consider various legal practice tools that will help streamline your workflows. Here’s a look at some relevant tools to consider.

Choose Relevant Tools

As mentioned, you’ll need basic hardware, like a computer, scanner, printer, etc.

Now, let’s get specific on the software. You’ll need to manage all your communication, calendar, and documents as well as have a cloud storage option for your files.

Besides, having physical copies, your important tools must be safely backed up online. This not only ensures the safety of your documents but also makes your processes more efficient. Tools like Dropbox and Google Drive can be a good place to start.

Choose an integrated suite for all your email communications with clients and your internal team. This is especially important if you plan on having a remote team.

Next, you need to select a cloud-based customer relationship management system that will track your client needs and store information on client prospects.

With time, you can adopt more legal automation tools for some of your repetitive functions.

Track your processes and identify which ones are the most monotonous, for instance, you can automate the process to generate leads.

Marketing and Building an Online Presence for Your New Firm

Having a solid marketing plan will be crucial to promoting your legal services. This requires some business knowledge and strategic planning.

Here’s how you can get started.

Get Listed in Local Directories

Local directories and listings aim to connect people with local businesses that provide the services they’re looking for. Have your practice listed on directories like Yelp, Google My Business, and Avvo by creating a profile and providing relevant information.

Here’s how your GMB listing would appear on a local search.

This includes your business name, address open hours, services offered, official website, and contact details. This boosts your law firm’s local SEO.

SEO

For an even wider search visibility, invest in search engine optimization (SEO) and blogging. For this, you need an official website.

You want your business name to come up, not only when prospective customers search for your business, but also when they’re searching for the services you offer.

A good place to start would be learning what your customers are searching for by conducting keyword research. You can use Ahrefs or Semrush keyword research tools to know how to conduct keyword research easily.

PPC

Pay-per-click is a digital marketing tactic that involves promoting your business by paying certain amounts each time someone clicks on your ad. Google and Facebook provide the best PPC services.

On Google, a PPC ad could look like this.

Social Media

This is a free and easily accessible channel to promote your legal practice. You won’t necessarily need a big budget unless you switch to paid ads.

By using social media marketing, you can establish a relationship with your customers and have them know your firm better. You’ll have a chance to build your public image, earn referrals, amplify your company values, and increase your visibility.

Video Marketing

According to recent research by Wyzowl, 89% of people admit that a video they watched convinced them to buy a product from the business, emphasizing the importance of video in digital marketing.

You can start using video marketing as part of your content marketing strategy or social media advertising strategy. Videos help you spread brand awareness, build trust with your audience, and increase your conversions too, making them powerful marketing tools for you.

So, how do you create powerful videos that can drive home your message? Shooting a video and publishing it doesn’t make sense. You need to leverage a powerful post-production platform such as Movavi Video Editor that can help encapsulate your message in a compelling manner.

Using such platforms, you can split, merge, and edit your video clips to create legal videos that attract and engage your audience.

Traditional Marketing

While digital marketing tactics are quickly taking over the ad world, there are still some traditional tactics that will get you results, especially when yours is a local legal agency.

For instance, you can try getting your business up on a billboard, sponsoring local events, or good old word of mouth.

Networking and Hiring For Your Own Law Practice

Starting a law firm as a business owner involves lots of planning and research, and you’ll need all the help you can get. If you’re fresh out of law school, having a few mentors is crucial.

If you’re already in the industry, you’ll need support from fellow lawyers and other business owners, which makes it important to network with other attorneys in the industry to ensure business growth.

You can do this by attending industry events and joining online lawyer communities like American Bar Association, Florida Bar, or forums such as Quora, LinkedIn, and Reddit.

Functions, such as bookkeeping and filing taxes can be challenging. You may consider hiring professionals to help you with that.

Starting a Legal Practice is Not Easy, But Doable

As you can see, starting a law firm takes more than just experience with legal practice; it needs some business skills as you’ll be in charge of all your operations.

That said, it is rewarding, as you’ll be able to choose your line of practice, set your work hours and workload, and so much more.

Marketing your business and getting it known may be one of the difficult tasks you’ll face. But you can leave that bit to the experts, and focus on streamlining your operations.

Up next, read our article on creating a law firm’s business plan.

Author: Reena Aggarwal is the Director of Operations and Sales at Attrock, a result-driven digital marketing company. With 10+ years of sales and operations experience in the field of e-commerce and digital marketing, she’s a people’s person and considers the human resources as the most valuable asset of a company. In her free time, you would find her spending quality time with her brilliant, almost teenage daughter and watching her grow in this digital, fast-paced era.