After investing both significant time and money into law school and passing the bar exam, you became a lawyer. At some point in time—perhaps early in your career, perhaps later—you decide it’s time to captain your own ship. You spend time planning the type of practice you want to have, where you want to be located and maybe even what to call it. But after stepping up on the deck and positioning yourself behind the big wheel, you quickly realize the challenge isn’t over once you pull that ship out of dock. Rather, it’s just beginning. How will you keep it afloat and on course during the inevitable periods of rough seas ahead? Therein lies the larger challenge.
Get out your telescope and look toward the distant horizon. Planning ahead to handle the financial burdens of a plaintiffs’ practice will position your firm for success in the long term.
First, you will need to consider the investment required simply to open the doors of your new practice.- You’ll need a suitable location. Will you purchase or rent? What will it cost to furnish and maintain your office? What about utilities? Have you thought about IT, office equipment and insurance?
The investment deepens when you consider personnel. Attracting and keeping good employees will not only require competitive salaries, but benefits as well. Have you priced out health insurance recently?
While these factors are not unusual across many industries, maintaining a successful plaintiff’s practice over time presents a unique set of considerations.
First, where will your clients come from? Having a foundation in place for the practice of law is an obvious necessity, but you need someone—make that a lot of someone’s—to represent. While your mentor used to wax poetic about the “good old days” when clients simply knocked on the door or were referred from a familiar face, today the reality is that given the sheer number of lawyers in your space, you must have an executable marketing plan or you simply won’t remain competitive. Substantial marketing and advertising costs are now the norm, not the exception.
How will you establish a recognizable presence in the marketplace? Will you advertise on television, the radio, in publications, on billboards or on the side of a bus? What about sports arenas or entertainment venues? How will you be seen and remembered?
What about the internet? What will your digital footprint entail and what will it cost? A website is no longer a luxury, it’s a must. You’ll need a budget to create, maintain, update and optimize the site. An investment in targeted digital marketing can help ensure you’re found by potential clients before they find your competition.
Once you’re out of the harbor and you’ve built your client base, you’ll need to fulfill your duty to competently and zealously represent their best interests. Doing so will also enhance your professional reputation, drive future business and increase your bottom line.
But to be a fierce advocate, you will have to invest in the case and be prepared to take it from start to finish. There will be significant costs for investigation, medical records, discovery and depositions, expert analysis and testimony, motion practice—not to mention potential mediation, trial and appeals. Each client’s case is unique, but all require attention, resources and more often than not, long-term investment. With the growth in your case inventory, you can expect a concomitant and exponential increase in the capital outlays required.
Despite the financial commitment required both to run your practice and to prosecute your cases, your fees are entirely dependent upon the successful completion of each case. Thus, while up-front investment is a certainty, the question as to when—or even if—your investment will be repaid or will be profitable is anything but.
Unlike many other industries and professions, where outside capital fuels the engines to operate day-to-day, for many years plaintiffs’ attorneys were only able to self-finance. They simply reinvested their hard-earned fees or leveraged their personal assets and savings just to power through the choppy waters of financial uncertainty. Such financial burden is often not only stressful, but also overwhelming. While some attorneys may seek outside financing from traditional banks, many find insufficient limits in the amount available or onerous restrictions that are simply incompatible with the peaks and valleys so common in a plaintiffs practice.
Fortunately, the days where the only options were self-financing or a restrictive bank loan are in the past. There are now various specialty lenders designed to address the unique financial needs of a plaintiffs’ practice. Just like with other industries, your individual business needs at any given time will dictate how to utilize available financial resources. If you need capital to cover operating expenses such as payroll while waiting on settlement funds, you may access your credit to do so. If you need money to retain experts, cover motion costs or prepare for a rapidly approaching trial, then your line will be there for such litigation purposes.
In sum, there are now many financial options available to ease the burden while you steer your ship through the vast ocean of your practice, and to help you and your firm reach the desired shore intact.