Starting a Law Firm | Overhead

Starting a law firm is all about keeping costs down and profits up.  Simple statement, right?  Well, it’s easier said than done.

Here are some questions I keep asking myself and which I believe are common questions all solo attorneys have:  Don’t I need an office to be legitimate?  Don’t I need a secretary right away?  Don’t I need a computer, printer, paper, pens, pencils, three-hole-puncher, and so much more?  Don’t I need a fancy suit and lots of expensive business cards to hand out?

When answering questions like those above, ask yourself another question:  How am I going to pay for these things?  I find that once I start with thinking about a budget and how much I can afford, the supercilious things tend to melt away a little bit.  The obvious overhead killers are office space and support staff.  I don’t have the end-all-be-all answer to those questions, but  here are my thoughts.

(1) Office Space

I’ve been practicing out of my own home office now for about three months.  It creates some definate challenges, but my clients don’t seem to care at all.  My lease payment is $0.00 and I use the phone line and internet connections that my wife and I are already paying for.  (As an aside, I do need to worry a bit more about internet security now that I have client files on my home/office computer.  I’ll talk more about that in a different post).  So, my at home office cost is nill and it keeps overhead extremely low. Right now, I pocket most of what my clients pay me which is pretty cool.

There are some drawbacks.  I don’t feel very professional.  I don’t put on a shirt, coat, and tie like I did previously.  I also don’t get mentally prepared to hustle every day like I did when I was at my old law firm.  I find that missing step to mean I’m less motivated to use time in the optimal fashion.  I bill by the hour and every minute that I’m not hustling feels like (and probably is) lost money.  Now, I’ll admit that the stress level has gone down significantly and I no longer have a constant back ache.

Another drawback to the home office is that I get calls on my personal cell phone and I get mail constantly in my home mailbox.  Is this a big deal?  No, but it is annoying.  It cuts off the home/work separation.  I miss going to work, hustling all day, and then coming home to my work-free sanctuary.  I found that an actual office puts my mind in a different place which is directly related to working hard and billing hard.  Both of those things are integral (in my mind) to having a successful law practice.

Those are the main drawbacks of a home office.  In the main, I highly recommend a separate room in your home be dedicated as your office.  Failure to separate the room will result in less work getting done.  Other than that, working from home isn’t so bad.  The getting calls on my personal cell phone is easily solved by getting a new land line or cell phone completely dedicated to the law firm.  The getting work related mail at home problem is easily corrected by getting a P.O. Box.  Once those problems are corrected, the difficulties created by a home law office are lessened a great deal in my opinion.

(2) Staff

I don’t want to sound demeaning or rude in any fashion to administartive or secretarial staff, but I often found that when I was at my old law firm that I could do things more quickly and efficiently when I did them myself.  I also got the results I wanted without having to worry that a mistake had been made which could create major headaches and more work down the road for me.  So, I ended up doing a lot of things myself.  Did it get old?  Yes, but I did it, and I made a lot of money for the firm.

Now, a lot of the staff issues can be resolved by the use of technology.  There are so many things out there that make an attorney’s life easier.  For instance, I just got clued in on Dragon Dictation which is an automatic dictation software which records your voice and the changes your voice to writing.  I haven’t tried this yet, but I am dying to get it.  I did a lot of dictation at my old law firm and this option would be a lifesaver at times.  Furthermore, there are many different tools out there to modifying your firm into a mostly paperless office.  This cuts down the need for secretarial time quite a bit.

Do I alway want to go without staff?  No, no, no.  But, at the beginning of my starting a law firm venture, I know that I need to keep overhead low while I build up a client base.  Failure to keep overhead low can be the death knell to a fledling law practice.  I don’t want the death knell.

One last thing about staff – you will need them eventually.  Answering the phone, typing your own letters and pleadings, and handling mundane details like mailing and copying is both extremely annoying and time-consuming.  Getting back to my earlier comments about time, an attorney has to have good staff to do things quickly and efficiently in order to properly structure his time.  Time is money.  This is never more true than for somebody who makes their money billing by the hour.

In sum, keeping overhead low at the beginning of your law practice is of the utmost importance.  Leverage technology and get efficient with it.  Keep the money you make and don’t spend it on things your new firm can’t afford.  Will you need to put more money into the firm for a while as your are building it?  Sure.  But, you don’t have to go crazy and you can watch your budget.  Now, just keep your financial head on straight and keep on hustling as you start and build a successful law firm.