You’ve always dreamed of opening your own small legal firm.
Doing so would give you more control over the clients you work with, the ability to set your own hours, and the chance to work on cases that genuinely interest you.
Of course, you know that starting a law firm isn’t exactly cheap. Often, it can take you anywhere from six months to a year to be able to pay yourself a good salary.
You want to have your own practice, but you’re concerned about how you can make it happen financially. You’re in the right place — and learning how to start a law firm with a minimal amount of capital is possible.
Read on to learn what you need to know to make it happen.
Outsource What You Can
When you’re sharting a law firm, we know handling all the day-to-day tasks on your own can feel incredibly overwhelming.
You have to schedule consultations, set aside time for casework, meet with witnesses, send out bills, head to court…the list goes on and on.
Even if you have the best time management skills in the world, you’re still going to need a little help.
However, at this stage, you likely can’t afford to hire full-time employees.
Instead, outsource everything that you can.
Hire a virtual CFO to help you keep track of your spending, create financial goals for the future, and teach you to better allocate the funds you do have. Consider working with an outsourced virtual assistant to schedule your appointments and answer common client questions.
Outsource your accounting services, as well. You could also hire a part-time or outsourced paralegal to help you better manage your overall casework.
Going with a part-time hire doesn’t just save you money.
It also allows you to ensure that, when you do bring on full-time staff members, you know exactly the kind of employees you’re looking for.
Invest Available Funds Wisely
No matter how much capital you currently have, you need to make sure you’re using it the right way when learning how to start a law firm.
Do you really need to buy your own office space right out of the gate? Or, is it better for you to rent an available spot until you can afford to purchase a space that’s in a much better location?
You might also consider renting out meeting/conference rooms by the hour or on a per-client basis when you first get started.
When it comes to marketing, determine what you have both the skillset and the time to handle on your own, and what would be better outsourced to the experts.
Your website and logo design, for example, are usually the first interactions that any potential client will have with your business. It’s always wise to hire a professional designer to create your logo and website.
But when it comes to content marketing, like blog posts covering what to do after a car accident or helping someone get more information on how to file for divorce?
You have the expertise to write those posts on your own.
You’ll, of course, have to buy office supplies and furniture, but do your research and find suppliers who are willing to offer you a discount. In some cases, you may even be able to find used furniture on sites like Craigslist, Facebook Marketplace, and even eBay.
You should spend on legal and accounting software, but ask yourself if you truly need the latest and greatest computer model.
Consider Business Loans
When you’re opening your own law firm, even if you have a healthy amount of savings set aside, you often still need more cash than what you have.
Since law firms aren’t exactly the kinds of businesses that you can crowdfund, you’ve likely already considered taking out a business loan.
There are a few key things to keep in mind here.
First, borrow the smallest amount of money possible to avoid getting trapped by high-interest rates that end up doubling or even tripling the original loan amount.
Additionally, pick a loan with a realistic term length. Will you truly be able to pay back a $50,000 business loan in full within two years? Would you rather have higher monthly payments but pay off the loan faster, or more affordable monthly payments but a longer loan term?
Research your lenders carefully, as well. Speak with references and ask how they plan to put together a lending package that’s consistent with your unique needs. Know any fees and commissions associated with the loan.
Above all, be sure to check the Consumer Complaint Database for any past or active litigation or complaints about the lender. If you see a laundry list of problems, it’s definitely time for you to walk away.
Need More Tips on How to Start a Law Firm?
Though getting your finances in order is certainly the most essential — and stressful — part of learning how to start a law firm, it’s far from the only thing you need to consider.
You still have to think about what makes for a great office space, how you’ll define your legal niche, and above all, the most effective ways to market your new law firm.
Then, you should focus on expanding your professional network, getting client reviews, and eventually expanding your practice.
It’s a lot to take in, but we have the advice you need to make smart financial choices throughout the entire process of creating and growing your law firm.
Keep checking back in with our blog for advice on how to save, how to spend, and how to borrow in the smartest possible ways. Also check our Law section for more great legal articles including expanding your law firm.