Checklist

If you read any post on this blog, start with this one. It links to most of the others…

I’m a linear thinker.  Yet another reason why I struggled in law school.  If law school could have been reduced to flow charts, I would have broken records.  In sitting down with a friend who’s starting her own firm, I realized I need to reduce the steps involved to some sort of linear process.  So, here goes.

1.  Address.  Regardless of the type of business, I recommend that you nail down your business address at the beginning of the process.  It’s the one piece of information that goes on all the forms and it usually costs a lot of money in filing fees to change it later.

You can use your home address, though I never recommend doing so to any of my business clients.  Especially if you’re doing family, criminal, or bankruptcy law, you don’t really want clients and opposing parties to be able to figure out where you live…easily.  You can use a PO box, but keep in mind it may not work for your city or county business license (in Nevada, anyway).  If you aren’t ready for an office yet, check out the virtual office option.  I recommend it for a lot of startup companies because you get a business address for very little per month.

2.  Phone Number.  This is another piece of information that goes on all your forms.  Check Google Voice as an option.

3.  Incorporate?  There are conflicting schools of thought on whether lawyers or professionals of any kind benefit from forming an entity like a corporation or an LLC.  If you’re really on a budget, you can save the filing fees by operating as a sole proprietor.  However, I usually strongly recommend to all my business clients that they form an entity as soon as possible.  If you are operating as a sole proprietor, you’d better have malpractice insurance.

4.  Banking.  In many states you are required to have two bank accounts – an interest-bearing client trust account and an operating account.  In some states, the client trust account is called an IOLTA account (Interest on Lawyer Trust Accounts). When you get a retainer from a client, you have to deposit it into the trust account because it isn’t your money until you actually do the work to earn it.  The interest the money earns while it sits in your IOLTA account goes to Legal Aid.  Only after you do the work and invoice the client can you transfer the money FROM the trust account INTO your operating account.  Your operating account contains your firm’s money, so you pay all your expenses out of it.  Never EVER pay your firm’s expenses out of your trust account.  Also, never EVER commingle funds from your two accounts.  Probably the fastest way to get disbarred is to mess with your trust account. (Watch this video starting at 27:50.)

5.  Insurance.  Not all states require their lawyers to carry malpractice insurance, but to operate without it is very risky.  Premiums can be very expensive, so be sure to shop around.  The applications are pretty involved.  I highly suggest that when you sit down to fill out your application, you create a document that contains all the information you use for the application so you don’t spend time assembling the same information every year.  We’re talking dates for licensing and opening the practice, effective dates and coverages of any previous policies, premiums, etc.  Also try to deal with brokers who have experience working with professionals.  Professional liability insurance is a whole different animal from general liability insurance and you want the person finding you the policy to understand the differences.

6.  Law Practice Management.  How do you manage client files?  Well, if you’re naturally organized, then you can create a system on your hard drive through which you can manage the files.  If you aren’t, then check out different LPM options.  The newest trend is cloud-based LPM applications like Clio, LexisNexis Firm Manager, and RocketMatter.  What do I like about cloud-based applications?  You can access them from any device, and they’re typically a lot less expensive than the software you’d install directly onto your hard drive.  Most of these cloud-based applications are geared toward solo and small firm practitioners, both in the features they offer and the price point.  It is possible to piece together a free LPM solution from the options available, which I mention in my webinar Starting a Small Law Firm, but there are limitations to this approach. While there are definitely advantages to choosing an LPM solution from the beginning, to ensure all your data is consistently entered and that you know where to find the information you need, you may want to wait until you’ve been practicing long enough to know your quirks and what sorts of pain points you want to solve with a LPM solution.

7.  Marketing. 

Website: I can’t stress enough how important it is to have a good website to which you regularly add content.  Every week I have a good 200 people visit my firm’s website.  Every day I get at least three phone calls from people who are already confident that I’m the person they want to hire, based on what they read on my website.  If you’re going to spend the money anywhere, spend it first on your insurance, and second on a good website.

Business Cards:  I’m going to assume you believed me and reserved a domain name for your website.  For the love of all that is good in this world, PLEASE spend the $10 a YEAR to have an e-mail address that is you@yourdomain.com.  IMHO, nothing compromises your professional image more than listing a hotmail, yahoo, or (heaven forbid) netzero account on your business cards.  You don’t have to do a logo or get too fancy, just get your own domain name.  Pretty please?

Where to Find Clients: This depends entirely on your practice areas.  I practice exclusively corporate transactional law, so my first marketing move (after the website and business cards) was to join the local chamber of commerce.  That’s where the businesses are.  The trick is to market to your sales force and not to your end client.  Figure out who else works with your target client and go where they go.  If you do probate work, join a funeral director’s trade association.  If you do family law, make sure you know some hairstylists and manicurists.  Don’t laugh.  They’re often the first to know when a marriage is in trouble.  If you do estate planning, find some financial advisors.  Networking groups are a great place to start, but don’t spend too much time in them if you’re not seeing a return on your investment.

Also, some state bars have a lawyer referral service.  The Nevada bar charges $50 a year for the service and you’re guaranteed to get calls.  Keep in mind they won’t be qualified leads and most of them are crap cases, but it’s a good start.

How to Keep Clients:  This goes back to my rant about the importance of client service. Return phone calls, be available to your clients, keep them updated on what’s going on, and don’t screw them over.  It’s pretty simple really, but amazing how many clients come to me after not hearing from their lawyer for weeks or months on end.  Remember that old adage from business classes in college?  Where it costs 4 times as much to get a new client as it does to keep an existing client?  If you keep your clients happy, they will be your best source of referrals. Whether they come back to you for repeat work, or refer others to you, keeping your clients happy is paramount.  Now, some clients are just miserable and will make you miserable.  The longer you’re in practice, the better you get at seeing these types of clients coming.  When you do, politely decline the representation.  Their money isn’t worth the ulcer you’ll get trying to please the un-pleasable client.

How to Keep in Touch with Clients:  I market my practice on two different levels – online and in person.

The first is online.  My website is the hub, which I am constantly developing with blog articles, and I point all my marketing efforts at the website.  I blog, then promote the blogs on Twitter, Facebook, LinkedIn, and Google+.  Once a month I compile the blogs into an e-mail newsletter I send through Constant Contact.  But who gets that newsletter? That brings me to level #2 – in person marketing.

When I started my practice, I attended every single networking event I possibly could and dutifully entered every single business card I got into my address book.  Over time, I amassed a pretty decent database of people I’d met and invited them to subscribe to my newsletter.  The newsletter audience is now composed of people I met in person and those who have subscribed to it through my website.

Every month when I send out my newsletter, I receive no fewer than a half dozen responses from people I haven’t talked to in over a year who need my help with something.  I’m 99% certain that without my newsletter reminding them, they would never have thought of me.  And without the newsletter, I wouldn’t have kept in touch with them.  I’m one person.  I can’t have coffee and lunch meetings with all 1,800 people in my address book on a regular basis.

Going back to the website, now that I’ve built it up to the point where it’s generating its own traffic, I have backed off on the in-person networking.  The in-person stuff is exhausting and time consuming.  You can only eat at so many rubber chicken lunches before you throw a tantrum.  Plus, once you have built some momentum, you have work to do!  You can’t sacrifice the client work in favor of networking, but it’s a delicate balance to strike.  You have to keep filling the funnel but also allow the time to do the work.  It’s a constant struggle for any business owner, but if you have a website that’s doing the marketing for you literally while you sleep, it makes the struggle a bit easier.  More on marketing…

8.  Picking the Right Clients

Maybe not now, but some day you will have enough business and can pick and choose your clients.  That’s one of the biggest perks of having your own firm – having the ability to decline people who have PITA written all over them.  Let me assure you, you WILL pick bad clients and they WILL make your life hell.  It’s a little like dating.  Over time, you will learn the warning signs and politely decline the representation before they start burrowing into your psyche.  Here are just some of the warning signs, from my experience:

  • Someone who has already fired lawyers.  If they’ve fired one lawyer, that’s in the safe zone. Anyone who’s been through two or more lawyers is usually a red flag.
  • They are solely focused on the fee and try way too hard to get you to reduce it (these people will never be happy no matter what you do).
  • They challenge you to convince them they need a lawyer. Clients who have to be talked into using a lawyer are almost always mad that they relented and hired you and will make you pay for “manipulating” them.
  • People who expect you to work weekends. Let me be honest here. I pretty much always work weekends. I just don’t tell my clients because then they EXPECT me to work weekends. I even use Boomerang for Gmail to schedule e-mails I draft over the weekend to send first thing Monday.  Manage expectations.  You’ll be glad you did.
  • Clients that expect you to solve all their problems in the initial consultation.  These clients expect you to work miracles and will never be happy with less.
  • Clients that want you to take a reduced fee with the promise of more work down the road.  I’ve fallen for this one more than once and the future work never comes.  Lesson learned.

9.  Starting the Representation

So you have a client.  Congratulations!  Now, how to handle the logistics of the representation.

You should definitely use engagement letters to formally mark the start of a representation.  And you should definitely use disengagement letters to mark the end.  If you decide not to represent someone, you should definitely use nonengagement letters.  The bottom line is, working with a lawyer or any service professional can be daunting to someone who isn’t used to the process.  You want to make it as clear as possible, in writing.  The time you decide against using a writing to communicate the start, end, or nonexistence of a representation is inevitably the client who will get squirrelly on you and cause a bar complaint.

The easiest way I’ve found to handle engagement letters is Echosign.  It’s an online service for which I pay something like $30/month that enables me to upload my pre-written engagement letters with blanks for the client name, the scope of service, and the rate.  I even put an expiration date on my fee agreements so someone doesn’t come back a year down the road and try to hold me to the fees in effect a year prior.  Where I’d spend about 10 minutes putting together a fee agreement in Word, printing to PDF, sending to client, then receiving the client’s signed copy, printing it out to sign it myself, then scanning a copy to my files and e-mailing it to a client…I can send a fee agreement through Echosign in about 15 seconds.  It’s amazing.

Here’s how it works in more detail: You create a fee agreement in Word or OpenOffice and leave blanks or spaces for bits of information that would change from client to client, like client name, matter, rate, etc.  Then you upload that document to Echosign and place fillable form fields where you made the blanks.  You can specify for each form field whether you fill it out before sending, whether the recipient fills it out, or whether either party fills it out.  You also create fields for the client to sign.  I also recommend you also give yourself a place to sign, so that both you and the client have to sign in order for the representation to begin.  Then click Submit and voila, the client gets a copy.  Once the client signs it, it comes back to you for signature (if you’ve set it that way).  Once you sign it, Echosign automatically emails both parties a copy.  It’s AWESOME.

10.  Getting PAID

We’re certainly not in this game for the glory, so at some point you have to get paid for your services. I echo Jay Foonberg’s admonition – GET PAYMENT UP FRONT.  While very few lawyers work this way, there is absolutely NO REASON not to implement and stick to this policy.  Chasing clients for payment can quickly and easily run a solo practitioner out of business.  I’m not kidding.  And it’s a completely unnecessary risk.  Any client who can’t pay you up front is unlikely to pay you at all.

If, like me in the beginning, you have a hard time insisting on payment up front, make sure you accept credit cards.  Then, if they ask you to wait to be paid, essentially extending them credit, tell them to borrow the money from Visa or MasterCard.  Be careful of merchant processors, though.  You have to make sure that NO fees come out of your trust account.  Not all merchant processors understand this.  In fact, my first processor who claimed to understand this instead overdrew my trust account which resulted in an immediate notification to the bar.  Then they wanted to charge me a $400 termination fee.  I fought them for 8 months before they finally relented and let me out of the contract.  Be sure your credit card processor thoroughly understands the importance of keeping the funds separate and get those promises in writing before you sign anything.

The pool is calling.  More later.