You took a bold step to hang your own shingle and then jumped with both feet into the tumultuous arena of a plaintiffs’ law practice. While it took an investment of three years in law school and the passing of a bar exam to proudly hang that sign, it’s not long before the greater challenge becomes clear: how do you keep yourself “open” for the long-term?
The financial burdens of operating a plaintiffs’ practice are not for the faint of heart.
Getting started—the basics
At the outset, you need capital to set up your practice: obtain office space, furnish it, turn on the lights (and keep them on!) and hire staff. The laundry list of foundational elements is long: internet service, technology, supplies, case costs, legal support resources and subscriptions . . . and on and on.
Then you need people to do the work—that means hiring a staff. Employees not only expect a salary, but benefits as well: health insurance, life insurance, property insurance, malpractice insurance, etc. There seems to be no limit to the investment required, just to get your practice up and running.
Bringing in clients
Having the framework in place to practice law is great, but it doesn’t mean much without clients to represent. In the “old days,” referrals were a common way to obtain clients. Not today—substantial marketing and advertising costs are the expected norm.
How will people find and choose you when they need legal representation?
Will you advertise? If so, will you put up billboards, run ads on television, on the radio or in publications?
Will you need to invest in targeted digital advertising? In today’s marketplace, a website is no longer a luxury, it’s an absolute necessity. Do you have one in place? Is it effective? Do you have the money to maintain, update and optimize it?
Generating case revenues
Once you have clients to represent, you’ll want to competently and zealously represent your client’s best interests to get them justice, enhance your reputation, and increase your bottom line (and comply with your ethical obligations).
But, this means you must invest in the case, including investigation, discovery and depositions, expert analysis and testimony, trial costs and potential appellate review. Each client requires the same attention, dedication and investment. As your client base grows, so too does your capital investment, exponentially.
Yet, despite all of the hard financial requirements, the fees that you earn to run your practice are wholly contingent upon the successful completion of each case. Thus, all of that investment is required up front, with no guarantee of when—or even if— you’ll get that investment back.
Unlike most other industries, where outside capital is the lifeblood to run and grow a business, plaintiffs’ attorneys often self-finance, sinking those hard-earned fees and leveraging personal savings and assets to keep their firms running through the inevitable peaks and valleys of a contingency fee practice. The financial burden is, for many, both daunting and formidable.
Because of the unique challenges of running a plaintiffs’ practice, a business loan or line of credit is an effective means to keep your firm well positioned to handle all of your business needs, including both operational and litigation costs. As with financing provided to other industries, your business needs at any given time will dictate how to deploy the resources available to you. If you need the resources to pay operating expenses while waiting on settlement funds, you may elect to use the line of credit to do so. If a trial date is approaching and money is needed for litigation expenses, than you may elect to use the line for that purpose.
In short, there are many options to take the financial burden off your shoulders so that you may concentrate on what you intended to do since taking that first law school class: practice law and do it well.
