Start Your Own Law Firm

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How to Start Your Own Law Firm

Seven Steps to Going Solo

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Joshua Lenon• Lawyer in Residence at Clio• Attorney Admitted in New

York• @JoshuaLenon

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Agenda

• Seven Steps to Opening a Law Firm (45 minutes)1. Plan Ahead2. Pick Only One Area Of Law3. Pick The Right Area Of Law4. Build A Referral Network5. Build A Website Immediately6. Join Organizations And Listservs7. Sell to Clients

• Further Resources (5 minutes)• Questions (10 minutes)

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Intended Audience

• Associates in Law Firms• Solo Lawyers• Law Students

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Associates in Law Firms

• Entering classes do not know the requirements of law firm structure–Regulatory requirements– Ethical duties–Business needs & market pressures

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Solo Lawyers

In 2016, 23% of surveyed lawyers would start their own law firm.

Source:RobertHalfLegal,May,2016

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Law Students

900 law school graduates of 2015started their own law firms.

Source:NALP

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PLAN AHEADSeven Steps to Opening a Law Firm

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Law firms are easier & cheaper to open than ever.

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3 Areas of Law Firm Planning

1. Regulatory requirements2. Ethical duties3. Business concerns

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Regulatory Planning Steps to Opening a Law Firm

1. Business Plan 2.Business Structure– DBA, LLP or PC,

Partnership3. Business Entity Filing

4. Banking– Operating– Trust

5. Insurance6. Record Keeping

Strategy

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Ethical Duties for New Law Firms

• Diligence (MPRC 1.3)• Communications (MPRC 1.4)• Confidentiality (MPRC 1.5)• Safekeeping property (MPRC 1.15)• Responsibility of Partners & towards non-lawyer

assistance (MPRC 5.1 &5.3

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Business Concerns

1. Methods of billing & payment2. Budgets & “rainy day” funds3. Overhead

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Overhead

The primary costs for running a law firm are employees.

• Seek technology solutions over services• Use services before employees• Hire part time & virtual employees before full time• Hire full-time employees when you hit the growth curve

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Law Firm Growth Curve

You’re losing business because you can’t keep up with demand

You need/want to focus on certain aspects of your business rather than struggling to juggle everything

How to know when to hire your first employeeby Charlene Jimenez in Business Entrepreneur - February 21, 2012

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60% of law firmsspend 1-3.99%

of total firm revenue on technology

24% of law firmsspend 4-5.99%

of total firm revenue on technology

Source:ILTA/InsideLegal TechnologyPurchasingSurvey2016

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Investments in technology lead to rising revenue.

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3.6%

1.1%

6%

-0.7%Mid-size AMLAWSecond100

LawFirmRevenuesinQ12016TechInvesment Revenue

Source:PeerMonitor Q12016reporting

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Professional Services

• Accounting software–Xero (xero.com)–Quickbooks Online

• Accounting services–Kahuna Accounting (kahunaaccounting.com) –Bench Accounting (bench.co)– JurisBookKeeping (jurisbookkeeping.com)

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Back Office Help

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Back Office Help

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Attorney Aid

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Recommended Staffing Expenses

Firms should limit staff salary & benefits, not including attorney draws: 45% of total revenue

Outside professional services (e.g., accountant or management or marketing consultants): 2%

Source: Ed Poll, LawBiz

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Marketing Overhead

Law firms should spend 2-5% of annual revenue on

marketing & business development

Source: EdPoll,consultantandownerofLawBiz.com

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Yes, there’s math.

Desired Annual Billings X 3.7% = Your Annual Marketing Budget.

Source: DustinRuge,HowMuchShouldMyLawFirmSpendonMarketing?2/19/15

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Real Estate Overhead

Most law firms spend more than 5%of their annual budget on real estate.

Source: AmericanLawyer,“WhatEverHappenedto'Virtual'Lawyering,”10/31/16

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Questions that Planning Answers

• What is the next unavoidable business expense?• Is my professional liability insurance in place prior to

accepting clients?–Does this insurance policy cover cybersecurity incidents?–Are there cases that my insurance policy will not cover?

• Am I prepared for a records review?

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Are you personally prepared for building success?

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PICK ONLY ONE AREA OF LAWSeven Steps to Opening a Law Firm

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“General practice can be malpractice.”

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Becoming known for an area of law makes it easier for clients & referrals to find you.

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PICK THE RIGHT AREA OF LAWSeven Steps to Opening a Law Firm

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The ”right” area of law is one that both inspires you, and clients

willing to pay you.

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BUILD A REFERRAL NETWORKSeven Steps to Opening a Law Firm

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Referral Networks

Lawyers are desperate to refer good clients to smart lawyers.

Don’t limit yourself to lawyer-only networks.

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BUILD A WEBSITE IMMEDIATELYSeven Steps to Opening a Law Firm

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Online Promotion

Over 80% of buyers of professional services go to your website to evaluate your capabilities,

regardless of how they may have heard of you.

Source: ICXLegal.com

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Apply these formulas to 2 activities

1. Traditional Networking

2. Online promotion

How Clients Find Lawyers in 2015

• Relationships - 36.6% • Web - 16.5% • Offline Advertising – 5.6%• Hired Same Lawyer Again -

2.4%

Source:Howlawyersgetfoundin2015,Avvo.com,9/10/2015

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Traditional Networking Activities

1. Be a Referral Source2. Public Speaking3. Community Development4. Build a Marketing Culture

Inspiration:TheBusinessGuidetoLaw,KerryLavelle

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6 Areas of Online Promotion

1. Blogging2. LinkedIn3. Effective websites4. E-alerts5. Online rankings6. Ratings directories

Source:2014Alyn-WeissNationalMarketingEffectivenessSurvey

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3 Website Takeaways

• Never spend more than $100 per month on a website & URL.

• Use your law firm URL for email addresses.

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JOIN ORGANIZATIONS AND LISTSERVSSeven Steps to Opening a Law Firm

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Organizations & Listservs

Orgs. and Listservs = instant expertise & mentors.

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SELL TO CLIENTSSeven Steps to Opening a Law Firm

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While lawyers are a great community,THEY ARE NOT PAYING CLIENTS!

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FURTHER RESOURCES

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Recommended Resources for Starting a Law Firm

• Clio blog– https://www.goclio.com/blog/

• Lawyerist blog– https://lawyerist.com/topic/starting-a-law-firm/

• Attorney at Work blog– https://www.attorneyatwork.com/category/startups/

• My Shingle– http://myshingle.com/

• “GPSolo Guide to Opening a Law Office”– http://www.americanbar.org/publications/gp_solo/2014/january-

february/the_gpsolo_guide_opening_law_office.html

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ABA Blueprint

http://www.abablueprint.com/

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QUESTIONS

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Thank You

Joshua Lenon

joshua@clio.com

@JoshuaLenon

Linkedin.com/in/joshualenon

1-888-858-2546

Colin McMahon

Linkedin.com/in/colinmcmahonclio

Support@clio.com

Support.goclio.com

www.youtube.com/user/ClioVideo