Welcome to Episode 7 of ‘The Josh Gerben Show.’ This is a show I’m putting together about the business of law. I’m just such a huge believer that if attorneys focused a little bit more on the business side of our profession and the business side of their practices that we would all have much more fulfilled legal careers.
So, I hope you have found the initial episodes helpful. If you have any suggestions for a future show on a topic I can cover, please fill out the form on the contact page of my website. That comes right to me, and I’d be happy to take any feedback on the show or any ideas for topics. We’re always looking for new things to talk about here on the show.
Today’s show is all about starting your own law firm. In 2008, I started my own firm with zero clients, and I built it up to a firm now where we have multiple attorneys and thousands of clients. I’d like to go back and tell you about the initial things that I did, and some of the things I didn’t do that I wish I had done to get the firm started.
Should You Start Your Own Law Firm?
First, I think it’s important to know whether or not it is a good idea to start your own law firm. In 2019, entrepreneurism has become sexy, right? Entrepreneurs are often put on a pedestal in our business community. I think the same has become true for attorneys.
When I started my own firm in 2008, people were like, “Solo practitioners, you’re okay, but the real prestige is at the big law firms.” And more and more today, the prestige has gone to the boutiques and attorneys that are out there making it for themselves. Everybody’s talking about the big law firms as being dinosaurs, that things are going away, that the practice of law is changing, etc.
The idea of starting your own law firm has really become a hot topic. A lot of people are thinking about doing it. But, I think it’s really important to know that if you’re going to start your own law firm, you’re essentially starting a business. You’re starting a business, and you need to know if you’re a businessperson, and that you can run a firm. What I mean by this is it’s not just all glitz and glamour to run a law firm. You have to be willing to go in the kitchen and wash the dishes. You have to be willing to take out the trash. You have to do all those things.
I spent my Sunday night putting in payroll, going over reminders at the firm, doing administrative things, and HR-related things. I had to talk to my accountant on a Sunday afternoon just to get everything in order for tax season. There’s all these things that really are not that much fun to be doing that you need to do if you’re going to run your own law firm, and you need to be prepared for if you’re going to run a business.
At the end of the day, it’s just not for everybody. If you decide you want something more out of your legal career, a lot of times, you can do so within the structure that your firm has. You can go to your firm’s leadership. You can make suggestions. You can try to improve things about what your career trajectory is, without just having to go out and start your own firm.
Now, some firms are obviously going to be very receptive to these kinds of things, and other firms may not. The whole reason I started my own practice is because the firm I was working at was not receptive to my wanting more. In 2008, I was working at a boutique firm in DC with about 10 attorneys. I went to my boss and I said, ”Look, I really want to be able to make more money.”
At the time, that was what was important to me. I needed to break out. I wasn’t quite making six figures, and I really wanted to be able to get to that place. She looked at me and said, ”Josh, this is really all I can do for you.” And, at that moment, I realized I needed to make a change. Now, I didn’t want to go work at a large law firm. That was never something that fit me. I was not into that kind of red tape and bureaucracy. I decided I needed to figure out how to do it on my own.
Now, I grew up in a family business, okay. My dad owned and operated a dozen automotive repair centers around the Philadelphia area. So I, from an early age, watched what a business owner had to do. I watched him on his Saturdays and Sundays go into work and cover for people that didn’t show up. I watched him drive around the multiple shops to pick up different things that he needed that were left for him at the various locations.
That’s how we would spend some Sunday afternoons. I would just drive around with my dad at different shops so he could do different little things he had to do to get ready for the next week. That’s what it is to be a business owner. You’re 24/7. You never really get a vacation. I was okay with that. I had seen it firsthand, and I was ready to do it myself.
With that in mind, I’m not trying to discourage you from starting your own law firm. I think it’s been the best thing I’ve ever done in my life. Compare that and having kids, and they’re both up there as the two most important things I feel I’ve done. But, it’s just not for everybody. And I think that if you’re thinking about starting your own law firm, these are just very important considerations to make. I just want to be realistic about what it is and to not have you think it’s just all glitz and glamour all the time.
Where to Start When Planning Your Own Law Firm
One of the questions I get about starting a law firm is, “where do I even start?” Typically, I have two places that I really think people need to get under wraps before they can even think about launching.
1. You need to decide on what niche practice you’re going to do
If you’re going to be a solo practitioner or a couple of attorneys, you are not going to be everything to everybody. There is just no way. You need to get really good at one thing, maybe a couple of things, but that’s it. You need to figure out what your niche is going to be, and you need to set it in place and pretty much set it in stone.
2. You need to know where to get your clients from
Some people may start their own law firm by being able to bring a book of business with them from wherever they are. Those are the lucky ones. The other ones, like me, are going to start with nothing. You’re going to start with no clients, so you need to have a client acquisition plan. And, in my case, when I started my law firm, I really had no clue. I was very, very young.
I was 27 years old (I looked about 15), so I wasn’t sure people were going to want to hire me as an attorney. What I did while I was still working at my job is build a couple of websites. I first created a general law firm website, and then I created another website that was just targeted at trademark services. The general site was just like, “Hey, I’m a general small business lawyer. I can help with your contracts, your leases, this, that, and the other.” And the trademark website was, “We’re going to help with your trademarks.”
At the time, 2008, mind you, Google Adwords was not nearly as expensive as it is now, and I was able to run some tests. I would put up ads in the Washington DC-area for attorneys to help with leases, LLC formation, business contracts, etc. Then, I put up ads for trademark attorney. If you can’t tell where I am today, I can tell you which ads worked. They were on the targeted niche practice for a trademark attorney.
At the time, you only had to spend a dollar or two per click to get people to your website for some of the really critical terms associated with needing a trademark. Some of those clicks now will cost 20 bucks, if not more. So, it’s a little bit of a different environment.
The way I started may not be the best way for everybody else to start today, just because it’s such a different environment when it comes to what you can do with Google and search. But, when I saw the types of inquiries I was getting through the website by using Google Adwords, I had my ‘Aha’ moment. I said, ”Okay, I’m getting a couple of calls a day. I can convert some of these people to clients, and I’m going to have enough money to feed myself.”
That’s when I pulled the trigger, and I said, ”Okay, I’m just going to go tell my boss what I’m going to do.” I developed some infrastructure. I said, ”Okay, where am I going to go with this?” I figured out my niche practice, then I figured out how I was going to get my clients. I figured out I could go fishing online, and I was figuring out how to catch fish. That’s what you need to do before you just walk away from a secure job. You need to make sure you understand those two things.
What You Need to Do to Operate a Law Firm
Once you figure out what your niche is going to be and how you’re going to acquire clients, the next thing we have to figure out is how to open the doors to your law firm. If you’re starting from nothing, which is where I did, you need to start building in infrastructure and things that will allow you to operate a law firm. I’ve got a list of things that I think would be very helpful to somebody that’s starting their law firm.
- Name your firm
- Set-up your practice as a corporate entity
- Create a website
- Accept credit cards
- Choose a phone system
- Set-up an email
- Have IT security systems in place
- Prepare client engagement forms
- Implement a docketing system
- Get malpractice insurance
- Decide where you’ll work
1. Name your firm
The first item on our list is coming up with a name for your law practice. You’ve got to figure out what to call it. I went with the obvious, Gerben Law Firm (now Gerben IP). I ended up using a more traditional name because I was so young when I started, and I wanted clients to know that we were at a law firm, that we were a real law firm because we were mostly going to be advertising online to obtain clients.
In the last 10 years, there’s been a shift toward using names for firms that are not just the last names of the partners. And I think this is a really interesting development, and I like it as a trademark attorney myself, I really like it, because you can build a brand into a firm, and it’s not reliant on everybody sticking around. Partners can come and go, and you don’t have to change the name of the firm. Plus, there’s not an ego thing between the partners as to whose name is first, whose name is last, whose name is in the middle, and it just lets that whole thing go away. I think it’s really important to consider using something that’s not just a traditional law firm name, but I fully understand if you would like to stay traditional.
My first website was trademarkarmor.com, which you can find on Wayback Machine. But, at the end of the day, I just felt like it was too hokey, and I really wanted it to be a more traditional firm. That’s why I went back to just everything being Gerben IP, and I’m happy with it. We’re thinking about maybe a minor change to something like Gerben IP just to make it a little bit more boutique-sounding if you will, and that’s something we’re actively considering. So, the name doesn’t have to be set in stone necessarily, but I would consider the difference between using your surname and try to find a name that’s a little bit more unique.
As a trademark attorney, I’m going to give you this advice. Whatever name you do settle on, please, please, please run a trademark search. You don’t have to call me, but you should definitely do a little bit of trademark searching on your name to make sure you’re not stepping on anybody’s toes, and it’s certainly a good idea to file and register your federal trademark on your name, even if it’s just your last name. Really something to consider.
2. Set-up your practice as a corporate entity
The next thing you have to do to open a business is you have to have a corporate entity. Don’t do sole proprietorship or anything like that. You need a corporate entity for liability protection. As an attorney, you probably know that. In most cases, you’re going to use a limited liability company or what, in some states, would be called a professional limited liability company for attorneys or PLLC.
Obviously, I’m not here to give you any legal advice on what corporate entity to go ahead and form. Either way you do it, you’re very likely going to want to be an S Corp, which is a tax designation that allows for passthrough taxation on your income. Talk to your accountant about whether or not you need to set up for an S Corp, because the timing on that can be critical, especially for your first year’s tax returns, which are always so much fun to do.
Even as an attorney, I am amazed at these forms that we need to fill out for taxes every year. I still cannot get my head around them and rely heavily on my accountant for them. But make sure you have the LLC or the corporation in place, and make sure you talk to your accountant about needing the S Corp designation.
3. Create a website
An absolute must-have in today’s world is a website. You may even be relying on the website 100% to obtain new clients if you invest in digital marketing ads that drive visitors to your pages. And even if you’re not, that is your public face. We are not going to be having fancy offices as a new law firm, so we need to have the website looking really good. This is the one place you really need to open up and spend some money, and you need to be ready to invest. I think $10,000 to $15,000 is an extraordinarily reasonable investment to make in a website, and you probably need to spend that much to get something good.
I have a previous video that we’ve already done on how to create a law firm website, and I encourage you to go check it out. But, again, make sure you’re budgeting a pretty significant amount to get that website done right, because not only does it have to be a normal website, it has to be mobile. All these other things have to go into it these days, so you need to be ready to spend some money.
4. Accept credit cards
Next on our list is accepting credit cards. You may say, “Well, I could just accept checks or whatever.” No, you must accept credit cards, and here’s why. Getting paid faster and easier is going to be critical. You do not want to have accounts receivable as an attorney. That means you’re waiting on that money to come in. And when you’re a small law firm, a lot of times, you can’t wait on that money. You know, big law firms, they may wait 60 days to get a check from a client, and they have a lot of money in the bank to be able to float things while they do.
You getting started, the quicker you get paid, the better. Now, some people don’t like credit cards because it costs about 2% or 3% off the top. If you charge someone 100 bucks, you may only collect 97 after credit card company gets their share, and then you may go invest in credit card company stocks because you realize what a racket it is. But, you need to be able to accept credit cards because getting that money quicker is critical.
In our case, the vast majority of engagement with our clients, we require payment upfront to begin work or a retainer. It’s very easy to just get somebody to give us their credit card information, or we have a secure portal on our website where they can submit it, and it gets the process going like that as opposed to waiting for a check in the mail, waiting for approval on a check from somebody, waiting on a bank transfer.
Accepting credit cards is critical, and where you can start is authorize.net. That’s going to be your payment gateway. That’s what a lot of people use. It’s what we’ve used since the beginning. Very easy to use, strongly recommend them. I make no money for recommending them, but that’s where I would go. So, you need to start there. Then, you need to talk to your bank because you’re going to need something called a merchant account.
Final tip here, when you’re asking your bank about a merchant account, you should not only ask the bank where you bank for your business, but you should look around. There’s other places that can offer these services, and the rates can vary. Last year, just by shopping my rates, I saved about $7,500 in credit card processing fees. Wish I’d done that a little earlier. So, word to the wise there.
5. Choose a phone system
Next up on our list is a telephone. The one thing I would strongly discourage here is any kind of fancy phone system. In today’s world, using Voice over IP, or even just getting yourself a cell phone if it’s just you as a solo practitioner, would be my suggestion. Voice over IP is great because if somebody misses a call, the message comes in via email. So, now we have an email with the transcribed message that we can put in a file or we can send around the firm to whoever needs to respond to it, and we don’t need a lot of new hardware whenever we’re hiring somebody new.
I used a cell phone from day one in the sense that I just got a second cell phone for the business. I didn’t want it on my personal phone because I don’t want to get business calls at 10PM and things like that. I just got a separate cell phone. I wasn’t tied anywhere. I didn’t require a big purchase of any kind of software, from a telephone company or anything like that. Don’t invest in all that stuff. You just need to be able to answer the phone and do so simply. I really would strongly suggest looking at Voice over IP.
6. Set-up an email
Perhaps one of the biggest things you’re going to have to figure out is how you’re going to do email. I mean, email is your lifeline when you’re a solo practitioner or a small firm. And we use Google mail. Now, it’s not @gmail.com. We actually have an email address where my email is jgerben@gerbenlawfirm.com, and Google mail has these enterprise solutions. I love it because there’s all these apps you can pull in and they help you with all sorts of management of messages and things like this. It’s wonderful.
I think Outlook is great for a large firm. I think that’s what a lot of lawyers are used to, so they gravitate to that whenever they go out on their own, and it’s fine. If you want to use it, and you’re comfortable setting it up and dealing with it, that’s great. Strongly recommend looking at Google mail. There’s just so much you can do with it. Matter of fact, all of our docketing system is tied in through an app in our mail. It’s just amazing. All the different things you can do, and I strongly recommend you look into that because it’s going to give you flexibility going forward.
7. Have IT security systems in place
Now, along with email, you need to think about your IT security because so much is going to be in the cloud, and you need to have best practices in place for all your technology. For example, your email must have two-factor authentication for login. That means that when you go to log in, you need to get a code on your phone too. That’s critical for protecting client emails and ensuring clients’ privacy. You should look at encrypting emails, if necessary, depending on your practice area.
You should also look at how you’re storing files if they’re in the cloud. Again, use two-factor authentication to be able to get access to those files. And make sure you have a retention plan so that, you know, as you get along in your practice, are you leaving everything in the cloud? Are you able to take some things off and store them securely offsite, something like that? Have a plan, write it out.
8. Prepare client engagement forms
Next up is making sure you have an ability to engage a client. How are you going to do it? We need an engagement letter in most circumstances, right? And I think you probably know this from working wherever you are, but you need to have an engagement letter.
You could do that via your website. We have a really cool portal where people can go in, and they can actually sign their engagement agreement right through a web portal we have, or you could do it the old fashioned way where you send someone a PDF, ask them the DocuSign, however you’re going to do it, but make sure you put some thought into this. You have your letter ready to go. When you open up, if you get a new client, you don’t have to scramble to create this process or create this letter. Very important to just have it and have it ready to go.
9. Implement a docketing system
Another must-have is going to be some kind of docketing system. Depending on what kind of practice you are in, your needs are going to be different. But you need to have a way of keeping track of cases, and you should think about this in advance. Are you going to use a calendaring system? Are you going to use an off-the-shelf program that’s being offered to legal professionals? Do your research, get it in place before your doors open so that when you start accepting matters, you start accepting cases, they go right into your docketing software and you never risk missing deadlines or important client notifications.
10. Get malpractice insurance
And the last thing on my list before you open your doors is getting your malpractice insurance in place and general liability coverage that you would normally have for business. But malpractice is an absolute must in today’s world. Get it in place. It’s going to be expensive, it’s going to be painful, but you just have to have it. There’s plenty of attorney malpractice carriers out there.
You can do your research, do some looking around and shopping on rates, get it in place, talk to an insurance broker about other general types of business insurance you should have. There’s a few different things you can get depending on if you’re a solo practitioner, or if you have people working for you. But, get that all in place, pay for it. Just a necessary cost of doing business. Nobody likes paying for insurance, but trust me, it’s worth it.
11. Decide where you’ll work
I separated this one out because it’s the one thing I do not think anybody should do, and that is acquire office space. I know we all need a place to work, and that’s fine. If it’s just you, it’s called a coffee shop, a shared office, your house, your apartment. Do not invest in fancy office space. I think that there’s a lot of ego in the legal industry where people think that they’re only as good as the office they’re practicing out of. I want to dispel that right now.
When I opened up my law firm, I practiced out of my apartment. I eventually got a shared office space so that I could have an address at an office building. Then, they could send me my mail, and I could go in there if I needed to meet with a client. It took eight or nine years before I had a couple of people on staff where I needed a small dedicated office that I rented. But even then, it’s not ritzy. It’s not glamorous. It’s nice. It’s comfortable, but that’s all it is.
Don’t get into signing long-term leases and things like this either. You don’t know where you’re going to be in five years. Why would you ever sign a lease that’s going to lock you into office space for five years? The office space I’m in, I’m year-to-year on. If something changes, something happens, we’re very flexible. We’re not stuck in a long-term lease. Again, just do not spend too much on office space.
Your clients simply will not care. If anything, go to them. If you don’t have a fancy office, offer to go to their place, right? Hey, you’re making a house call. They’re going to love that. It keeps them from having to spend the time of travel to you. I just think it’s so, so important not to overspend on office space and not to lock yourself into a lease, so please take that to heart. It’s been something that’s allowed me to remain very flexible in my business and keep my overhead way down, which keeps my fees down and clients end up loving that.
I hope you found today’s episode helpful. A lot of functional resources in here, but I wanted to at least put that out there so that if you’re thinking about starting a law firm, you can see the laundry list of things you need to even start considering. I’m sure there’s even more for your particular practice area or practice that I didn’t include on my list.
That being said, I think it’s such a cool discussion to have about starting a law firm and I want to keep it going. I would like to know, what is the biggest single concern you have in starting your law firm or had when starting your law firm?
So, please email me your question to josh@joshgerben.com. I’ll take the questions, I’ll post them on Facebook, Instagram, LinkedIn. I’ll talk about them in the next show. I would love anything we could do to get the discussion going about starting a practice of law.
Thank you, again, for watching the show, and I look forward to seeing you at the next one.
I hope this episode put you in the mindset of thinking about starting your own law practice. If you have any questions about the business of a law firm, feel free to send me an email at josh@joshgerben.com or jgerben@gerbenlawfirm.com.
You can also follow the show on YouTube, LinkedIn, and Instagram.
Josh Gerben is a nationally recognized trademark attorney and sought-after thought leader for the national news media. In 2008, Josh founded Gerben IP, a boutique intellectual property firm, with the goal of providing businesses and individuals with a way to protect their growing brands with the help of experienced attorneys, and without breaking the bank.