California Bar Journal
OFFICIAL PUBLICATION OF THE STATE BAR OF CALIFORNIA - SEPTEMBER 1999
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MCLE SELF-STUDY

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Starting Your Own Law Firm

It always may be an enticing idea, but remember: there are many complex issues you will face

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By BRADLEY HEISLER
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We've all had those days while working at a law firm. The senior partner is yelling at you, a co-worker screwed up, the library book you need for your case is missing. The inevitable impulse is to quit and start a new practice where you are in charge.

It's a scary leap, however, from wanting to start anew and actually leaving your firm. Before jumping, there are many questions you will need to answer. This article provides initial tips to give you a taste of some of the complex issues you will face.

To successfully start a practice, you must have adequate answers to some important questions. There are no right answers to these questions. Each owner of a new law office answers these questions in slightly different ways. Lawyers who start a practice, however, without having any of these answers increase their chances of failure.

Where do I get clients?

Getting existing clients to switch.

You can effectively start a practice by convincing current clients to move with you. If this is your strategy, carefully consider the ethics and legality of your actions. In California, ethical rules exist that govern what types of solicitation are proper. If you need to aggressively solicit your current firm's existing clients, investigate thoroughly the legality of your actions before deciding to leave your current practice. Also, California has enacted the Uniform Trade Secrets Act and client lists and similar client-related information may qualify as trade secrets of your current firm. You must make sure that your strategy for informing clients does not involve misappropriation of these trade secrets.

Establishing marketing strategy.

Numerous marketing strategies can attract potential new clients. These marketing strategies, however, require some time before producing results. If you implement your marketing strategies properly, you can start to attract new clients before you actually leave your current firm. It is important to be wary of prolonged "moonlighting" type situations. For instance, your moonlighting efforts may attract a client who has a serious conflict of interest with your current firm. Scenarios exist where you would be ethically obligated to disclose to your firm the conflict, hence destroying any potential advantage you hope to gain by beginning your practice before leaving your current employer. You should also carefully review any employment agreements to make sure your marketing efforts do not violate your obligations to your employer.

Subcontract with old firm.

Bradley HeislerMany lawyers start practices with business from their former firm. Such arrangements can provide the best of both worlds for your old firm and yourself. Your old firm benefits from having an outside attorney who understands the client's business and the way in which the firm likes to provide legal services. The firm is also given more flexibility should overall workload decrease. In addition, the firm avoids having to battle with the departing attorney to keep the client's business. For the departing attorney, this arrangement provides a reliable source of clients, although at a lower hourly rate. However, the departing attorney has the benefit of being his or her own boss, rather than continuing to conform with the firm's rules.

Where do I locate my practice?

The wired office.

As communication technology continues to evolve, maintaining the high overhead necessary with a standard office space has diminished. Today, an attorney can handle the affairs of a client for years without ever meeting face-to-face. In place of these personal meetings, lawyers communicate by phone, fax and e-mail. More than fine leather upholstery or awe-inspiring art collections, telephones can significantly enhance the professional nature of your new law firm. With services such as remote call-forwarding, paging and voicemail, a well-implemented telephone system can often substitute for a receptionist, secretary and switchboard.

Home office.

With telephones and technology, many solos start their practice in a spare bedroom. Not only do you save overhead, you can also maintain the ultimate casual work environment. You can work in your house slippers, avoid commutes further than the grocery store and still maintain a prestigious image through the use of appropriate technology and other strategies.

Executive option.

One cost-effective option is to locate a new practice in an "executive suite," where the services of receptionists and support staff are shared with other attorneys and executives. The cost for executive suites vary widely.

Some limit themselves to legal services and provide enhanced benefits to their attorney customers, such as maintenance of a law library and qualified legal staff. Other executive suites cater to a wider business spectrum. Executive suites typically have common areas, including conference rooms, which can be reserved and used by the suite's tenants.

Additionally, many suites offer other services such as receipt of mail and telephone reception services, even if you do not actually rent space. For instance, your practice can be started out of your home with all calls to your "office" routed through the receptionist at the executive suite. The receptionist places the caller on hold, then calls you at home to inquire whether or not you would like to take the call.

If you do not wish to take the call, the client receives your own personalized voicemail or otherwise leaves a message.

If you do wish to take the call, the receptionist can patch the call through, creating the impression to the client that you are at the same location as the receptionist.

Don't share confidences.

When considering any form of shared space, carefully protect the confidentiality of your client's records. Most errors and omissions insurance carriers carefully examine any shared space arrangements, particularly when the names of attorneys in separate practices are listed together on signs, letterhead or other marketing efforts. To assure absolute confidentiality to your clients and malpractice carrier, don't share support staff, filing cabinets or networked computers.

Neighborly referrals.

The location of your office can help you attract new clients. For example, sharing space with other attorneys who have unique specialties different from yours can result in a source of referrals. Similarly, sharing space with other professionals can widen your circle of acquaintances, increasing the likelihood of receiving referrals from these business associates.

Do I need to hire support staff?

Virtual secretary.

One huge difference between a law firm and going solo is a support staff. Law firm support staffs handle countless mundane but critical tasks. When starting a practice, you are responsible for performing such functions as document preparation, docketing of deadlines, maintaining your appointments calendar, tracking time and billing clients. One option to minimize overhead and maximize simplicity is to hire a "virtual secretary," or use technology as a replacement for support staff. Case management systems can handle calendaring, docketing, appointments and deadlines. Innovations such as speech recognition software (which can now be obtained from various vendors for a few hundred dollars) can simplify document preparation for those of you who are not used to typing your own documents.

Allocate detail time.

For those of you who are blessed with a highly qualified support staff, don't underestimate the amount of time needed to handle these basic functions. Don't expect anything near your current level of productivity in your new practice. Add time to deadlines for printing, proofing, folding, signing, stamping, weighing and placing your correspondence in the mailbox.

Share support.

Many new practices benefit from sharing staff with other attorneys. This can be especially effective when utilizing shared space with other attorneys. As long as client confidentiality issues are properly addressed, sharing staff with other attorneys can give you the right amount of support at the right price.

Hire a top paralegal.

Instead of a large support staff, consider hiring a top-flight paralegal to help you perform research, handle documents, prepare pleadings and become your right-hand person. Bear in mind that there are significant expenses related to hiring a full-time person, such as providing a benefits package that will be attractive enough to lure a paralegal away from an established law firm. Don't give up. Sometimes the lifestyle benefits of working in a new practice are sufficient to entice a quality paralegal to consider a reduction in pay and benefits.

Can you handle day-to-day details?

Make time for administrative work.

In a well-run law firm, most associates spend less than 25 percent of their time on management-related activities and the remainder of their time billing clients. In a new practice, plan on a reversal of such percentages. When the practice is first being set up and systems are being established, a significant amount of time will be spent in such non-legal activities.

Create an administrative framework.

In starting a practice, you must address all administrative details. The following lists some of the administrative items you need to handle:

Client trust account

Letterhead

Docketing system

Accounting and billing system

Retainer agreements

Office space leases

Office equipment (e.g., telephones, computers, furniture, copier, fax machines, etc.)

Maintenance and support contacts

Library and other legal research resources

Vacation coverage

Business formation

Document storage

Malpractice insurance

Perhaps the most important thing to remember is: Know thyself.

Some attorneys are somewhat burned out in the practice of law and look at starting a practice as an opportunity to spend a greater percentage of their day doing things other than billing.

Other attorneys have known nothing other than the legal side of their current firm and have little or no aptitude or interest in the management side.

While most attorneys can handle the weighing of an envelope and the licking of a stamp, ask yourself whether you enjoy such administrative, non-legal activities. In starting a practice, a majority of your time will be spent in such activities. This is especially true if you choose to forego support staff initially.

A new beginning?

A new law practice requires confidence. The greatest source of uncertainty in opening a practice often comes from fear.

With that in mind, prepare for all contingencies. If you carefully plan, you can develop a tolerable fallback plan and eliminate paralyzing uncertainty. For instance, you may decide that should you fail, you will go to work for your uncle Freddy's law firm where he has agreed that he will have a job waiting for you. You can then start your practice confident that failure will not result in bankruptcy, or worse, the need to beg for your job back with your old firm.

Bradley Heisler is the founder and principal of Heisler & Associates, an intellectual property law firm in Roseville and is a member of the State Bar's Law Practice Manage-ment and Technology Section executive committee.