Three Essential Elements for a Solo Practice Start Up
“I feel that luck is preparation meeting opportunity.” – Oprah Winfrey
When starting a solo practice you need to consider taking advantage of three different resources that will improve your performance substantially and won’t actually cost you that much. They will take a lot of the worry out of your practice and help to insure your practice will be successful and your earnings potential will be maximized. They are first, acquiring a financial expert to help get you established, that is an accountant or a CPA. Second, you will need practice management software and third, you will need to get malpractice insurance. As you will see below, they are not that expensive and they will help to alleviate much of the stress and worry of going into business for yourself.
First, a CPA or Accountant
As soon as you consider solo practice, even during the last year of law school.
Interview several advisors until you find one who is willing to work with you. Initially, you will want them to defer or waive the set up charges. Since you don’t have any money or your business established yet, you will need to use your sales skill (which you will need to use for your future rainmaking). You probably don’t have much money, only student debt. But that will be remedied once you start your solo practice. The very fact that you are seeking an accountant or CPA’s expertise should tell them that you are thinking of the practice as a business, and you should be successful. Once you start generating revenue, you agree to continue with their services on a paid basis. And they will have the opportunity to grow with you and earn significant income as they provide future consulting services. Until then, they will have to wait.
Because they are in the best position to help you with some of the start up details. Find one who has many lawyers for clients (ask them). Be professional and assertive but not demanding. How do you file for a DBA? (Doing Business As), what is the best legal structure in for your practice, in their opinion, given your chosen area of practice and personal details? What type of accounting and billing software should you use? How and where should you set up your business accounts like your operating account and trust account? They are the experts and will help you avoid trouble with the taxing authorities and counsel you regarding collections and other details of money management. The cost is a cost of doing business. Again, make sure that they will be willing to defer those expenses until you have begun to generate sufficient revenue to pay them on an ongoing basis, usually the third or fourth month into your practice. You also want them to be in place before you choose your practice management software – my next essential element for your start up.
Second, Practice Management Software
Start exploring this area of technology as soon as you can. Do this by the third year of law school. One excellent site for comparison purposes is https://www.capterra.com/law-practice-management-software/ . This is an excellent resource to compare various software options and pricing. It also allows you to do comparisons side by side making it very easy to compare pricing and features. Consider operating in the cloud (Software as a Service or SaaS) so that you can have secure access for your clients through a password protected, encrypted portal allowing you to access all of your client information from anywhere (but this also requires you use a scanner and go virtually paperless – another conversation for another day). Begin practice using the software that you will eventually adopt if you want to be truly efficient and successful as a business.
After reviewing and comparing software providers, interview other attorneys who are using it on a daily basis. Get the names of individuals from the software providers and if possible. Find someone who is located in the state or city where you plan to start your practice. I recommend visiting attorneys in your area before practice. Ask them about pricing. The monthly cost listed in the Capterra site will probably be an introductory price and you want to know about pricing after the first or second year. You also want to know how costs have increased over the years and what type of support services you can actually expect. Are they responsive to technical glitches? Can you get someone on the weekend or after business hours? This is also a good reason to get the name of a local user who can become your local technician when the service personnel can’t be reached after hours and when you need it most. That attorney may be your lifeline to get your service up and running when no one else is available.
Because practice management software, if chosen carefully after doing your homework, can become a well-rounded composite of your entire practice available at your fingertips. And it isn’t that expensive, about $50 a month. When you want to know the billing status or deadlines for a particular client, you can get that information from anywhere. If you start out with a practice management platform when you are just starting out, you will have time to learn it and work out the bugs. You will determine which platform works best with the accountant or CPA that you have already retained and make sure that the accounting and billing software that this platform uses is compatible with your accountant’s or CPA’s billing software. (see section above). And you will find that it really isn’t very expensive. Again, it is a cost of doing business and will be but a fraction of one hour of billable time on a monthly basis.
Third, Legal Malpractice Insurance
As soon as you start your practice. When you have no clients, the risk to the insurer is non-existent. As you build your practice and acquire more and more clients, the cost will go up, but so will your revenue. If you wait to acquire it later, the cost will be the accumulated risk up to that point and you will pay even more than if you started from the get-go. The annual cost should be about $600 or about $50 a month. Of course, your costs and billable amount will vary. By the way, if you have practice management software, which can do conflicts checking and calendaring, your malpractice carrier will not only be impressed, they will insist on those things in some manner. See, I have already saved you some grief.
You might want to check with other attorneys and who they use. How much coverage would they recommend and how much of a deductible? What type of coverage do they obtain and what would they recommend for your area of practice? (So, it is good to interview other attorneys to get this background information before you start your practice.) Also, there are insurance brokers who can find your best price and coverage and that can save you a lot of time. The internet is your friend, use it to find one.
Because you want to be able to sleep at night and the cost of admission is really quite low, a fraction of a billable hour per month when you first start up. Many Bar associations require it and it will give you the confidence to take on challenges and build your expertise in doing so. It also protects your clients in the event you make a mistake so that you have the ability to provide restitution if that should occur. And if you are sued and you did nothing wrong, it is a very good feeling to have competent counsel to step in and defend you.
Three tools that you should utilize are accountants or CPA’s, Practice Management Software and finally, Malpractice Insurance. All three tools are very affordable and will help to give you peace of mind and greater earning potential.