There may come a time in your career as an attorney that you consider opening your own law firm. Perhaps you have progressive ideas you’d like to execute upon, but don’t have the support of your current firm. Maybe you’d like to branch off into new areas of litigation, but can’t do so in your current practice.
Taking the leap to start your own firm can be daunting, but rewarding. Making the decision requires careful planning, and you’ll need a plethora of resources to do so. Here are 7 tips on what to consider as you move toward starting a new firm:
- Analyze your existing portfolio
You’ll need to have a solid handle on what your case existing case portfolio prior to branching out into a new practice. Carefully detail all of your cases, and assess their potential values and when you anticipate timing of fee disbursements. This is always important, but especially so when you’re planning a big move such as starting your own firm.
- Identify your strong suits
What is your area of expertise? Maybe it’s the type of cases you specialize in at your current firm, be it personal injury, medical malpractice, nursing home abuse, mass torts, or something else, such as being an exceptional litigator or excelling at the management side of running a legal practice.
Making the leap to being your own boss means you have the ability to shape your firm how you want, including giving you the opportunity to explore other areas of litigation. Perhaps you want to grow a practice centered around mass torts or have a practice that is diverse. The transition to your own firm can afford you the flexibility to start down a new path.
- Determine how you’ll build your caseload
Cases are key—how do you plan to acquire them once you’re up and running? There are a multitude of channels available through which to advertise for new cases or you may also sign up new clients based on referrals from other attorneys. Will you be able to “buy out” a portion of your existing portfolio as you depart your current firm? These are important questions to ask yourself before you get too far down the road in your new venture.
- Create (and stick to) a budget
The better you plan, the more successful you’ll be. Constructing an accurate budget is imperative, so be sure to consider any and all costs, no matter how significant (or insignificant) they are. The more conservative you are in budgeting the less stress you’ll face in the long run. Consider all operating costs—rent, utilities, additional staff, case management software, office supplies, IT needs…the list is endless.
- Research your financing options
Once you’ve determined how much this is all going to cost, you need to consider how you’ll fund your new venture.
There are a variety of options, all with their own pros and cons.
- Self-funding used to be the norm. However it may not be the most efficient mode of financing a new firm while simultaneously building your personal net worth.
- Heading to your local bank is also an option, but will they fully understand and appreciate a law practice that runs on contingent-fees? Banks typically consider hard assets only—your house, car, monies in your accounts—but in reality your case portfolio (and its associated fees) is one of your largest assets. While you’ll likely be able to obtain some level of funding through a bank, it may not be adequate to see you through.
- There exists other specialized funding companies that exclusively serve the legal community and have extensive working knowledge of contingent-fee litigation. Working capital through these vendors is more likely to align with the lifecycle of your cases and obstacles you’ll need to overcome in starting your new firm. In addition, you should consider working with a lender that has industry knowledge and offers support in other areas such as budgeting, valuing your portfolio or making introductions to a network of resources and other attorneys in your space.
- Use your network
Those who’ve gone before you can become an excellent resource. Reach out to your peers that may have opened a firm or transitioned to a new area of practice for insight on how to best go about your new venture. Also, leverage your relationships to create opportunities for case referral to help build your portfolio quickly and with confidence.
- Go about it the right way
It’s never easy to separate yourself from the status quo. Leaving your current firm will likely be no different. Doing so in an ethical and transparent way can foster an ongoing, positive relationship with your peers, mentors and contacts as you move on to the next chapter.
If you’ve been thinking about starting out on your own, Counsel Financial can be a great resource to you in throughout the process. As a lender exclusively to the plaintiffs’ bar and with over $1.5 billion loaned to date, we truly understand contingent-fee practice and the unique challenges you face. Not only can we provide funding for your firm’s initiatives, we can also assist in the process of meeting your goals and connect you with reputable resources along the way. Visit CounselFinancial.com or call (800) 820-4430 to learn more.