Category: Practice Development

Anybody out there who is going to try to start and build their own law firm is going to need their butt covered by legal malpractice insurance.  Don’t leave home without it.

Apparently, some jurisdictions (Indiana) allow you to practice law without malpractice insurance. Although I can see the argument on why the state bar association or legislature doesn’t want to interfere with how people do business, the fact is that not getting malpractice insurance when starting your law firm is just dumb.

After practicing for a little over three years, I can tell you that I was sure glad I had insurance to cover any mistakes I may have made.  I was never sued, but I dealt with a lot of clients who were often not educated, not very nice, and willing to do what it takes to make a quick buck if they can.  When starting a law firm, we lawyers deal with people.  People have a lot of problems often caused by their own behavior.  Just because you are helping them with a legal problem, that doesn’t mean that they won’t stop liking your help and decide to sue you.  It is just that easy.  You may know you didn’t commit malpractice, but it doesn’t matter.  You just got sued.  How are you going to pay defense costs?  Do you know anything about malpractice defense law.  I don’t.

I am trying to scare you a little bit here.  I am a young attorney and I know the temptation is there to say “I don’t need malpractice insurance for a while.”  It is too expensive and I’m not going to get sued after I start a law firm.  That is the wrong attitude.  I don’t have the cite here, but I have read that every lawyer can plan on being sued for malpractice at least once during their career.

Another thing to consider when thinking about starting your own law firm is that you may be a young attorney.  You may not know too much.  You are going to make mistakes.  When you make those mistakes, you will not have a partner or older associate there to ask for help.  Remember, when starting your own law firm, you are on your own.  But, you should know this – if you have malpractice insurance, the provider often has an attorney or staff of attorneys that you can call for advice.  It comes with paying for the insurance.

So, the next question becomes “how much malpractice insurance do I need to start my own law firm?” Honestly, I don’t know the answer to this question.  I can tell you that I currently have $100,000.00 in single claim coverage and $250,000.00 in aggregate coverage.  My deductible is $1,000.00.  Now, I only have the bare minimum coverage because I only have about ten clients and most them are wrapping up before my move to Minnesota and starting my own firm.  I did the math and figured out that I didn’t have a client who likely could have a compensable claim against me for more than $100,000.00.  I do a lot of divorce work and my clients’ marital estates simply were not worth that much.

$100,000.00 is probably not enough insurance to have a full time law practice.  One source I was reading said that any full-time practicing attorney should have at least one million dollars in single claim coverage.  I only have the bare minimum because I am not practicing full time.  I plan to get more when I am in Minneapolis starting my own law firm.

The next obvious question is “where do I get malpractice insurance?”  The American Bar Association (ABA) has website devoted to this legal malpractice insurance and they break it down by every state. Pretty cool. Here are my choices for Minnesota insurance for when I move from Indiana and (hopefully) become licensed there.

Another important point is that you want to actually research the companies on a list like the ABA’s.  I suspect most of them are just fine, but you don’t want to sign up with a company like AIG who eventually folds and leaves you in the dark after your start a law firm.  I don’t know if this happens, but as a risk adverse attorney, I am going to put some due diligence into my search for a malpractice carrier.  Furthermore, I want to have a relationship with them because you never know where referrals are going to come from.

In sum, I didn’t get my current malpractice insurance from any of the companies listed in the ABA’s list. I got it the way I want to get clients.  I got it from a business colleague and friend of mine in Indiana.  He sells insurance.  He hooked me up with a good deal.  I gave him some business and he has in turn given me some business and referrals over time.   This kind of relationship is how I want to ultimately use to start and build my law practice.

As I have posted previously, I am still a licensed attorney in Indiana and I have several client matters that I am taking care of before I start studying for the Bar Exam and (hopefully) starting a law firm in Minneapolis, Minnesota.

Trying to handle old client matters, like divorce work, can be difficult when you have a firm deadline for moving and starting a law firm. In my case, my wife ends her job as a medical resident in June.  I need to start studying for the bar exam in May.  We sold our house, so we have to move to a temporary housing location in June.  After that, we need to find a new place to live in Minnesota.  There is a lot to do before I can start a law practice

In the meantime, I have about six open files right now that are mainly family law work.  Several of them should be finished by the end of this month (April).  However, I cannot set any matters for trial beyond the middle of May and there is no guarantee that these cases are going to settle.  I think they will, but I just don’t know.

So, I have a duty to inform my clients of my situation and that they may want to seek new counsel before I start a law firm.  I was on top of things, and I have sent out a letter to all of my clients essentially outlining my situation.  This is an important step if you are leaving a firm, starting a law practice, or transferring jurisdictions.  We attorneys have an ongoing ethical obligation to our clients – no matter what our situation is.

Before you start and build your law firm, some important things to remember in the letter are:

(1)   Tell the client about your impending move
(2)   Tell the client they are entitled to new counsel
(3)   Recommend to the client that they obtain new counsel if they don’t want to stick with you.
(4)   Tell the client they are entitled to their case file with you or your office
(5)   Tell the client about important dates and deadlines
(6)   Tell the client that they may receive back any retainer funds currently held with you or your office and explain to the client that they are still responsible for any outstanding bills.
(7)   Tell the client about how the withdrawing your attorney appearance process works with the court and when you expect the judge to withdraw your appearance upon the filing of your motion.

That pretty much covers it.  You can add any other information, but those are the basics.  Of course you need to do all of this in writing.

After you have informed your clients of your move, you can then proceed towards moving and hopefully passing the bar exam (or waiving into your jurisdiction) and starting and building your own law firm.

I sold my home in Indiana today.  Actually, my wife an I received an offer with a small amount of earnest money from the buyer.  Given that we put a lot into the house and looked after it in a kindly fashion, I doubt there will be much trouble with inspections and I fully expect us to be moving out by June 7, 2010.

I’m glad we sold the house and that we can now move on, but I am nervous about my quest to start and build my own law firm.  The more we do here in Indiana to move, the more nervous I get about all of the things I need to accomplish before I can open up a family law firm.

I need to take and pass the Minnesota bar exam.  I need to set up a website.  I need to worry about office space.  I need business cards.  Malpractice insurance.   A forms library.  I need telephone, fax, email.  I need paper.  I need pens.  I need to worry about a lot of things.

I have been running my own firm in Indiana now for about three months.  So, I have gone through the early motions of starting a law firm and I know a fair amount about what it will take.  I was at a general practice firm here in Indiana for about three years.  I took a few clients with me when I knew I was moving and I knew I could finish them up in 3 or 4 months.  So, I know a fair amount about what it takes to start and run a family law firm in Indiana.  But, obviously, Minnesota is a little different.

Actually, running my own practice hasn’t been that hard so far and I have made pretty good money.  The biggest problem has been how to invoice and keep track of billing without proper billing software.  I have been doing it with various programs that have all been bad.  Actually, I keep wondering if one client still owes me $150 and whether I sent the invoice.  I know, pretty silly.

I’ll post more when I figure out more about financial record-keeping software.  That wasn’t really the point of this post.  I suppose the point was to let everybody know I sold my home in Indiana and I am getting  that much closer to making the move to Apple Valley, Minnesota and starting a law firm more real.  Oh, and we sold the home in a week after putting it on the market.  We sold it to a family medicine resident and her husband.  My wife is a family medicine doctor, so I think we had a good in.  Anyway, I’m happy we sold it.  One less thing I need to worry about.

In my continuing quest to learn how to start a law firm in Minneapolis, MN, I thought I would talk a little bit about how to gather the information necessary to try and start and build a practice.

I love information.  I love books.  I love the ability to go to a book store, library, or other source to get knowledge.  I was just reading a really interesting article in the New Yorker about the Vatican Library in Rome and all of the neat things they are doing.  But, this post isn’t about libraries.

What this post is about is the information that I am trying to compile to teach myself how to start a family law firm in Apple Valley, MN.  The first thing I did several years ago was start looking for some simple information which was written by an attorney.  An old book that a lot of attorneys who want to start their own practices have mentioned is Jay Foonberg’s How To Start and Build a Law Practice.  This guy appears to be the original man on the subject.  If you are thinking about starting a law practice of your very own, there is no better place to start than here.

So I read it.  And it’s good.  But, there are other sources of information that I have located.  Of course, blogs are good – especially this one.  However, the version of Foonberg’s book that I was using was a little dated and lacked a lot of modern day marketing/networking information.  The best sources I have found so far are Solo By Choice, by Carolyn Elefant and the starting a law firm blog.  Both of these sources are excellent and very appropriate for me – a guy in his early 30s with about 3 years of practice under his belt and who is very adept at technology and social media.

I hope anybody reading this post tries out just one of these sources of information.  Isn’t knowledge great?

Update 09/16/2011:  

I wanted to do a mea culpa on this post and admit that I am young (31), just starting out as a solo lawyer, and you should probably take everything I say on this blog with a grain of salt.  

I have almost 4 years of practicing experience under my belt but it isn’t enough.  As I said in another post, if you are going to start a law firm out of law school or without doing much work as a practicing lawyer previously, you should get more legal experience.  Every bar association in the country has a mentoring program.  If you lack experience, I would recommend a mentor.  I have done a poor job at times being an attorney and it wasn’t due to lack of desire, it was due to lack of experience.  We have people’s lives in our hands and we need to take that responsibility very, very seriously.  

As some of you may notice, I started blogging over a month ago in an effort to document my efforts to start a law firm.  I have the concept:  start a firm in Minnesota once I am licensed there and blog about how I am doing it.  I plan to talk about the process, the trials and tribulations, my successes, and my failures.  All fairly started stuff.

The problem is that I am trying to write the blog for another very important reason – I want to generate search engine optimization so my future clients can easily find me by doing a google, bing, or other search on a search engine.  The more I blog, the more traffic I get. The more traffic I get on this blog the more likely somebody needing a divorce or family law attorney will find me.  Ok, that all makes sense.

But, is it ethical?  I am not licensed in Minnesota.  Doesn’t the name of my blog suggest a possible ethical conflict when I am not licensed in Minnesota?  What if a potential client thinks I am making representations that I am licensed?  This is all scary for me.  I’ve included several posts and a legal disclaimer at the bottom of the page about my licensure status.

So, I’ve realized that I need to be very clear that I am blogging about starting a family law firm.  That is what this blog is about.  I also probably need to change the name to “starting” or some other moniker.  It’s not about practicing in Minnesota because I am not licensed there and I don’t want to make any inference to any reader that I am.

I think this post is important because I think a lot of young entrepreneurs like myself who are savvy with social media, need to be aware of the ethical constraints of blogging.  I just read a really interesting (and somewhat scary) in the Indiana Bar Association magazine about the ethical issues surrounding social networking and social media for lawyers.  The point is that I need to be careful about what it is I am actually blogging about, and that is starting and building a law firm.