The Ultimate Guide to Starting a Law Firm

November 3, 2022In Legal MarketingBy Dennis Dimka
starting a law firm

You’ve decided to hang that shingle and go out on your own; congrats! Starting a law firm isn’t so daunting when you have a team to help you every step of the way. At Uptime Legal Systems, we build products that help new law firms be successful.

This helpful guide will walk you through the steps you need to consider as you start your own law firm—and how Uptime Legal Systems is here to help.

Creating a Law Firm Business Plan

Whether you’re a solo practitioner (with or without staff) or you find yourself in a break-away situation where multiple attorneys are choosing to leave a larger firm to start a new firm/partnership, you need to create a business plan.

A business plan is a written document describing what you want to achieve and how you’ll meet those goals.

Considerations When Formulating a Law Firm Business Plan

A business plan lays out the roadmap for your business’s financial, marketing, and operational aspects. It includes projections of the fixed and variable costs your business will incur each year and how revenue will be earned to cover those costs. It also includes information about why you started your firm, your short- and long-term business goals, what services you’ll offer, and your marketing strategies.

Your business plan is a roadmap for the ever-changing future, shifting as your firm grows and your goals change. It can help you stay focused on what you want, where you want to go, and how to get there, but the plan can also be fluid enough that you can adapt it as your needs, circumstances, and priorities change.

A business plan will contain all of the projected costs of any initiative the firm undertakes, keeping everyone within the company well-informed and uniformly focused. You and your new partners will be able to keep track of where your money is going and understand your financial worst-case scenarios at all times.

Before you write your business plan, think about the big picture.

Starting a law firm is about gaining control over your life and career. Only you know exactly what you want from owning your own business, so take the time to get clear on what you want and make sure it’s exactly what you’re working toward.

Ask yourself a couple of questions:

  • What is my primary inspiration for forming this business?
  • What am I hoping to get out of this?
  • Who do I want to help?
  • What am I good at?
  • What will I need to learn to be successful in this venture?
  • How much time do I want to put into this?
  • What problems can I help solve?
  • What will I consider a success?

The answers to these questions will guide you every step of the way.

Gaining clarity is just one step in the process of successfully setting up your firm. We encourage you to download the Law Firm Startup Checklist and contact us so we can help you with all these steps. We also invite you to check out this strategic plan template to help you get started on your exciting endeavor.

At Uptime Legal, we frequently help law firms jump-start their practice, emphasizing finding and implementing the right technology. Early decisions, including those around tech, can have significant effects years down the line (for better or for worse).

In just one example, when attorneys break away from an existing law firm, it’s typical for the break-away group to be used to having “all the technology stuff” just handled for them at their prior firm. This sort of group will find its most immediate needs met by our LexWorkplace product.

Setting Up Your Law Firm Budget: Startup Costs

What’s the minimum amount of money you need to start your law firm? This is a big question when going out on your own and making such an important investment in your future. That’s a number you want to calculate very carefully, and odds are, the number will be higher than you think.

According to the Bureau of Labor Statistics (BLS), lawyers made a median annual wage of $127,990 in 2021. While that’s well above average (and more than enough for most Americans to live on), it’s not enough to run an entire law firm.

budgeting for law firms

Further, if you’re directing all of your revenue into paying yourself, you’re not going to have any money left to invest in your business. To grow, you’ll need to invest money in hiring qualified team members, marketing, and technology. You’ll also need to budget for the rental of office space and the purchase of furniture, office supplies, etc.

Depending on your jurisdiction, you may have to complete continuing legal education programs to keep your license, which will also cost money.

Ongoing training and development, not only for yourself but for your team, are important to the success of your new firm. Keeping everyone up-to-date in their respective fields will keep your practice modern and encourage growth.

And don’t skimp on the tech. A 2022 study reports that solo firms using tech to improve their businesses earned $50,000 more in revenue. Investing in the right technology can help make your firm efficient and successful right out of the gate.

You will also want to allocate a portion of your budget for professional expenses, which may include:

  • Licencing
  • Continuing legal education
  • Insurance
  • Conferences and events
  • Memberships

Insurance Considerations for Law Firms

Every business needs insurance. Your specific law firm’s insurance requirements will depend on things like your practice area, your employees, the needs of your clients, and other factors.

Here’s a list of different kinds of insurance that will help get you started:

  • General Liability Insurance: This is the most basic type of insurance. It covers most claims that come up during normal business operations.
  • Property Insurance: This will cover the building in which your law firm is located, as well as physical assets like computers and furniture.
  • Legal Malpractice Insurance: Also known as professional liability insurance, this is arguably the most important form of insurance for you to purchase as a practicing legal professional. This insurance is designed to cover claims of negligence or malpractice made against an individual in your firm.
  • Cyber Liability Insurance: Unfortunately, many businesses fall victim to security breaches carried out by hackers and other types of bad actors, and as a law firm, you carry a lot of confidential client information. This insurance offers comprehensive cyber liability coverage, including covering social engineering schemes.

If you’re a solopreneur, these four types of insurance will be enough initially.

However, if you plan on doing any hiring, there are additional forms of insurance you should also consider:

  • Employment Practices Liability Insurance (EPLI): If you have employees, you could become the target of a number of employee-related claims, such as wrongful termination or discrimination claims. This insurance provides coverage related to these types of claims.
  • Workers Compensation Insurance: A mandatory form of insurance in almost every state, this insurance protects your firm from claims made by employees who get hurt on the job, whether it be in the courthouse or the office.
  • Directors & Officers (D&O) Insurance: This type of insurance protects both you and your spouse’s personal assets should you be sued by a competitor, vendor, client, or other parties for wrongful acts in managing your company.

Not every form of insurance is required for every law firm in every jurisdiction. It’s important to do your due diligence when purchasing insurance to make sure you’re covered where you need to be, and that you have enough coverage.

As always, research the requirements of your jurisdiction to find out what’s mandatory.

Creating a Law Firm Marketing Plan

You’ll inevitably have to invest money into marketing your law firm. You can either handle marketing in-house, or you can outsource it to a digital marketing agency like JurisPage.

Either way, you’ll need to put money in your budget for marketing.

If you aren’t going the digital route, at the very least, you’ll need to invest in business cards, a law firm website, and some way of generating leads. That could involve SEO, social media marketing, or even paid ads.

You’ll want to ensure your law firm’s website recognizes and appeals to most of your potential client’s wants and needs when seeking legal counsel.

Here are a few things to keep in mind about where your potential clients may be in their journey:

  • Awareness: The potential client has a problem and they are starting to search for answers.
  • Consideration: They now realize they need an attorney and start considering options.
  • Decision: They’re ready to choose a firm and have a basic understanding of what they want out of a law firm.

Establish Your Law Firm’s Brand

You should also keep in mind that your business’s brand is your relationship with the world. It’s your promise to your clients. It’s how the world identifies you—whether through your logo, a catchy slogan, or adjectives that describe your business.

Carefully and thoughtfully think about how you want to position yourself, not just in the legal world, but in your online presence and beyond.

What’s your value proposition? In other words, what is it that clients can always count on you to provide? Once you land on a value proposition that will resonate with your target audience, you can use that information to build on your brand, including your law firm logo and website. You can also use your value proposition to craft your tagline.

Build Your Firm’s Website

When it comes to actually building your website, you have two options. You can go the DIY route, or you can hire a professional. If you use the DIY option, make sure to utilize tutorials and check to ensure you follow all ABA guidelines about advertising.

If you do decide to work with a marketing or branding agency, it’s best to work with someone who specializes in designing law firm websites specifically, as they know the ins and outs of what works in the industry as well as the rules and regulations that need to be followed.

The tone of your content should be guided by your brand, and there is nothing to say that law firms must be overly formal with their clients. Once you’ve established your branding and core messaging, work it into all your marketing channels: website, social media, professional networks, offline literature, etc.

trey porter law

In marketing, repetition is a good thing. People will find your content in a number of places, and if you’re consistent in your look, feel, and messaging in all marketing channels, clients are more likely to remember you.

Highlight any awards you’ve received to get instant credibility in your field. Including text is fine (and great for SEO), but it’s even more visually effective if you can include logos or images of your awards.

Showing off glowing testimonials and reviews given to you by past clients is almost mandatory. Whether you choose to create a separate page for testimonials or showcase client reviews on your homepage, make sure they stand out and are easy to read. You can also highlight the cases you have won as a good way to gain the confidence of potential clients.

Related:

Law Firm Marketing Strategy

Read our comprehensive guide on developing your firm’s marketing plan.

SEO needs to be a prominent part of every modern law firm’s marketing plans. You need to be seen on the search engine results pages (SERP) to get clicks and traffic. The main goal of writing content should be to become a topical authority in your practice area. That is, a person who is perceived as an authority of a particular niche service.

Remember, every high-quality piece of content you publish anywhere on the web is another chance to get to that coveted top spot on Google. Creating in-depth, original content that answers your target audience’s questions will help you do that.

Link-building, the process of requesting and gaining backlinks from other websites to your own, is also essential for improving your search engine rankings. Link building is a primary ranking factor, as high-quality inbound links are viewed as “votes of confidence” by Google.

Many of the best strategies involve creating high-quality content that people are inclined to share.

Another good way to get backlinks is to join associations and put yourself in the running for legal awards (or purchase them).

Here are some other suggestions for attracting links:

  • Guest posts: Submit guest posts to reputable websites in your industry to earn valuable backlinks,
  • Infographics: The beauty of infographics is that they are informative and easily shared. Every time another website posts your graphic, you should get a backlink.
  • Blogging: High-quality content will naturally attract attention on other websites and generate backlinks.
  • Podcasting: You could create a podcast where you discuss legal topics or field questions, encouraging backlinks.
  • eBooks, case studies, and other downloadable content: Books, eBooks, reports, white papers, and other high-quality content can be used as lead magnets or distributed freely to encourage backlinks from other websites that may find your content useful for their visitors.

You may also want to consider other long-form blogging, a news section, FAQs, newsletters, webinars, or other high-value content that may attract search engines and readers to your website. These pieces can also be used as subjects of social media posts that drive people to your website.

Don’t be afraid to “give content away.” Every time someone publishes your material on the web, you ultimately benefit.

Optimize Your Website

Onsite optimization is the process of making your website more search engine friendly by optimizing your website’s architecture, content, and code. Most of these actions require the input of someone with technical knowledge of your website and SEO.

Additionally, unless you optimize your business for local search, you’re missing out on target clients. This includes adding structured citations in online directories such as Yellow Pages, Yelp, Lawyers.com, and Avvo, along with unstructured citations on blogs, government websites, media websites, etc.

You should also optimize using data aggregators that gather your name, address, phone number, images, etc., and disperse the details to thousands of websites.

The main data aggregators in the U.S. are:

  • Data Axle
  • Acxiom
  • Neustar Localeze
  • Factual

You can submit information to aggregators using Moz Local or Yext Bright Local.

Create a Solid Social Media Presence

Along with attracting new clients by setting up a website, you may also want to use social media to generate traffic and leads. Social media can also be a way to show off your credentials and expertise to fellow lawyers, build your network, and expand your business revenue potential. It’s how you establish authority in your practice area and become known by name.

But you can’t just pick any old social media platform and start publishing.

You want to pick a few platforms, the ones your clients are using most, and get good at using those to build your brand and capture potential clients.

For example, most lawyers are not on Instagram or TikTok despite those being today’s dominant platforms. Why? Because their customer persona doesn’t fit there.

We recommend you pick two social media platforms (LinkedIn and Facebook, most likely) and focus on those. Get good at creating content regularly, replying to comments, and figuring out what kinds of posts get you the results you want.

If you don’t know what to post, the easiest thing to do is to check out what your competitors are doing and determine what is most effective. Most lawyers share information related to their practice area, answer common questions, introduce their team members, and show off their company culture, but they may also talk about other things they’re working on, such as webinars or speaking engagements.

Criminal-Defense-Lawyer-Troy-A-Smith-Facebook

It’s not hard to see why Facebook advertising has taken off. With over two billion active users in a little more than a decade, Facebook hosts a huge ready-made audience to reach out to. It’s why seven million businesses now use Facebook advertising.

Getting started is a big challenge for most law firms, but those that do it properly are seeing impressive results. If you intend to start advertising on Facebook in 2022, consider creating an optimized and engaging Facebook page since this will likely naturally attract followers.

Target a very specific audience to keep ad relevance high. Facebook makes it easy to target clients based on:

  • Career: Profession, job title
  • Where they live: Cities, suburbs, regions
  • Age-group: Baby boomers, millennials, retirees
  • Interests: Sports, hobbies
  • Educational level: University graduates, college students
  • Relationship status: Married, single, divorced

This allows you to get really granular with your ad targeting. That saves you from attracting clicks from people who will never hire you, which is important for your ad campaign’s return on investment (ROI).

The most effective Facebook ad campaigns use ads with multiple versions of copy and imagery that are tested to see which works best.

There are multiple elements of your ad to test, including:

  • The headline (make it enticing)
  • The body text (consider speaking to emotions)
  • Format (bullet points, shorter sentences, etc.)
  • Images (tie these directly to the content)
  • Call to action (tell them what you want them to do)

Like all good ads, your Facebook ads need a call to action that encourages users to take the next step.

For law firms, this is usually one of the following:

  • Schedule a free consultation
  • Click to learn more (from a blog article or other piece of content)
  • Find out more (similar to the above)
  • Register now (for a webinar)

Ads as Part of SEO

Too many law firms waste money on pay-per-click (PPC) advertising that doesn’t produce results.

Ads increasingly dominate the search results pages, and paid traffic supplements the organic traffic you generate from SEO.

To be successful with Google Ads, you need to:

  • Define the search terms you should be targeting
  • Create the right types of ads to target these keywords
  • Create a professional landing page for each ad
  • Constantly test and improve the ads/landing pages using A/B testing

Every click costs you money with Google Ads. In the wrong hands, it can cost you a lot of money.

The Cost Per Acquisition (CPA) or the cost per new client should compare very favorably with other marketing efforts if you set up your ad campaigns correctly.

You can start a campaign today and talk to qualified new clients tomorrow (compared to SEO, which takes time).

Creating successful ads can be a very complicated process, but here are a few pointers:

  • Focus on long-tail keywords, not just head terms
  • Use Dynamic Keyword Insertion (DKI) in your ad copy
  • Target zip codes and postal codes, not just cities
  • Adopt an effective keyword bidding strategy
  • Integrate keywords into your ads
  • Test compelling messaging in your ad copy

You should also invest in local service ads. These are featured above traditional PPC ads and are more valuable. Unless you’re in the running for these spots, competing law firms will likely dominate in your local area.

What’s different about local service ads is that they’re:

  • Pay-per-lead rather than pay-per-click
  • Designed to generate telephone leads
  • Ranked according to the number of positive reviews, proximity, bid, and a few other factors

We’ve only scratched the surface of Google Ads and Local Service Ads here. Find out more in our in-depth article on Google advertising for lawyers. It covers keyword usage, the bidding process, landing pages, how to target local traffic, how to test to improve results, and more.

While it’s straightforward in theory, it takes a lot of labor hours to stay active when it comes to maintaining a website, SEO, and social media. There’s always the option of outsourcing, hiring a digital marketing agency, or just a social media marketer to manage your accounts for you.

Develop Directory Listings

You should also look into building and maintaining profiles for your law firm on digital directories. It’s an easy way to build your online presence and get discovered by potential clients online. Because online directories are hubs for reviews and ratings, they can be an invaluable marketing tool if you’re performing well and have excellent reviews.

A few directories you’ll want to establish a presence on are:

  • Google My Business
  • Avvo
  • FindLaw

In your profiles, you can redirect visitors to your website, where they can engage with your marketing/sales funnel and ultimately become paying clients.

You should also develop a way to garner reviews that can be featured on your website and any directories that will highlight what others think of your work. This can be a powerful tool to help build trust, establish a professional reputation, and help attract new clients.

When setting marketing goals, make sure they are specific, measurable, achievable, relevant, and time-bound. Adjust the plan (if necessary) as you go along.

Defining Processes and Procedures

After you choose a name, a logo, and some other key components that will help define your law firm’s identity, you will need certain documentation to actively run your business and make sure it’s legitimate.

You’ll certainly need a business license to identify your business for tax purposes and to operate at all. Some jurisdictions go further and require a state tax identification number, trade name registration, and zoning approval if you open a physical location.

If you’re going to be hiring employees, you must get an Employer Identification Number (EIN).

Lastly, you’ll need a federal license if you operate in a federally regulated field such as security or transportation.

Related:

How to Organize Your Legal Files

Whip your legal files into shape with our complete guide to organizing your law firm’s files and data.

Next, you get to build the systems and processes that will define how work is structured in your organization.

Everything is up to you, from the way you operate your business and who you hire to what clients you want to work with and when.

If neither you nor anyone else in your new firm understands how to put processes and procedures into place, seek an outside source to help you. If left to chance or approached casually, no amount of good intentions is going to help provide consistency in how things are done in your firm.

After you’ve decided where you’re working (physical office, out of your house, a hybrid situation, etc.), it’s time to ask yourself a few more questions regarding your processes:

  • What are my working hours?
  • Where will I hold client meetings?
  • How am I going to send and receive mail?
  • How will I keep client information secure?
  • Who will be in charge of administrative tasks?

The answers to these questions will be unique to every law firm, so you need to really contemplate how you want to run your business.

For instance, a remote firm will have entirely different answers than a firm with a physical space. It’s about creating processes and procedures that work for you and your new team.

As long as you document everything, you’re on track to maintain structure and improve productivity for everyone involved in your firm. Setting up concrete workflows (or standard operating procedures/SOPs) is a good way to hold yourself accountable and avoid burnout, not just for you but for others in your firm.

You’ll be much better at time management and feel far more productive with workflows in place.

Another key action is to regularly revisit your internal operations and workflows to see what’s working and what isn’t and to continually improve as things take shape at your law firm.

All of this can sound boring, but it’s important to set a solid foundation for growth. And once it’s in place, you don’t have to think about it all that much. Taking thoughtful steps will pay off in the long run because you will have plans in place that will help things run smoothly.

Finding & Implementing Law Firm Software

The software and services you use will either help or hinder your productivity. You’ll use many different tools to optimize productivity.

If you want to be a good lawyer in the 21st century, you have to be comfortable with modern technology.

Still, you don’t want to use technology because it’s “the thing to do.” Use a tech stack that improves your life and the efficiency of your law firm.

Any piece of technology you use should fit into your workflow, not force you to build a workflow around it.

You should have already set business goals. Now pick a selection of technology to support those goals.

To stay on top of tech, you should:

  • Stay competent in modern technology in general by being aware of algorithm changes and other updates that can affect your business
  • Conduct regular training with your team to ensure everyone is comfortable with tech in the office
  • Run a paperless law firm to avoid clutter and stay organized, as well as have easy access to all records
  • Keep things mobile, so you can work efficiently and stay responsive to clients even when outside the office
  • Have a written security policy, follow effective data security practices, and conduct data security threat assessments regularly to make sure your tech is healthy and working optimally

Here are some tools to consider:

  • Google Suite or Microsoft Office
  • Paperless office tools
  • Law practice management software such as LexWorkplace
  • Accounting software
  • Timekeeping and billing software
  • Legal research tools

Related: Law Firm Software

Explore our comprehensive list of the best software for law firms.

Law firm software comes with lots of labels and classifications, some of which can be broad, overlapping and outright vague.

In general, law firm software comes in three distinct categories:

  • Practice management: Time, billing, client/contact management, calendaring, docketing, form generation
  • Document management: Document storage, email management, version management, index/search, tagging
  • Accounting: Business accounting, trust accounting, GL/AR/AP, financial reporting

Here at Uptime Legal, we spend considerable time helping law firms navigate the world of small law firm legal software. We encourage you to reach out to us for a free consultation for questions about choosing the right law firm software and solutions that will help your firm succeed right from the start.

Practice Management Software

It can be overwhelming for many firms that are just beginning their search for case management software. Uptime Legal works closely with hundreds of law firms across North America and has had hundreds of conversations about legal practice management software.

We recommend that every law firm searching for law practice management software start by identifying the most important features and functions. This will help you narrow down the (long) list of suitors and provide a framework to help you compare options.

Law Practice Management (LPM) software is a platform that, to varying degrees, manages each aspect of your law firm.

The scope, features, and capabilities of any given Law Practice Management application vary from product to product; though broadly speaking, LPM software performs the following functions:

  • Client & Contact Management: A central database to store information for clients, courts, related parties, and other contacts.
  • Matter Management: A central database of matters, cases, and projects. Stores the most relevant information pertaining to each matter.
  • Calendaring: Individual calendars for each user, along with an aggregated, firm-wide view/calendar. Synchronization with Outlook calendar.
  • Task Management: Create tasks and to-do items pertaining to specific matters or projects. Assign tasks and set deadlines.
  • Time and Expense Tracking: Track billable hours and related expenses for a particular client or matter.
  • Billing: Invoicing, including billable hours, contingency work, and fixed-fee matters.
  • Conflict Checking: Search the database for related names, document each conflict check.
  • Business Accounting: Standard business accounting, including a chart of accounts, bank/operating accounts, standard accounting reports (P&L, balance sheet).
  • Trust Accounting: Trust/IOLTA accounting for management of trust funds, including trust account reporting.
  • Document Assembly/Automation: Automatic preparation and population of specific court documents and forms.
  • Document Storage: Built-in cloud storage for related documents and files.
  • Document Management: Advanced document management, including full-text search, document tagging & profiling, and version management.
  • Email Management: The ability to save emails specific to matters via Outlook integration.
  • Mobile App: An Android or iPhone application for time entry and some subset of software functionality.
  • Open API: An open API (Application Program Interface), allowing you or third-parties to develop integrations with the software.
  • Client Portal: A client-facing online portal to share documents and updates with clients and other third-parties.

Note that there are important differences between Practice Management and Document Management software. Practice Management software is well-suited to manage your firm’s time tracking, billing, calendaring, contacts, and tasks. Some Practice Management software also includes limited or “light” Document Management.

To be clear, Practice Management and Document Management software are not the same, and you should clearly understand your firm’s document management objectives before implementing new Practice Management software.

To learn more about the best Practice Management systems for law firms, contact us for assistance or read this article for more information. In the next sections, we go into more detail about document management and accounting software.

Document Management Software

Legal document management software, also known as a Document Management System, is software (cloud-based or on-premise) that stores your law firm’s documents and provides a comprehensive set of tools to find, organize, and manage those documents.

This is in contrast to basic file storage systems (which do little more than hold your files), or even law practice management applications that provide built-in, but basic, storage of your documents.

None of these should be confused with true legal document management software:

  • OneDrive, Google Drive and Dropbox are not Document Management Systems.
  • Your on-premise file server (ie: “The S: Drive”) is not a Document Management System.
  • Practice management applications that include basic file storage are not Document Management Systems.

Many Practice Management applications describe “document management” as among the software’s features. However, this often misleads or confuses potential buyers, as the phrase “Document Management” strongly insinuates the rich capabilities of a true DMS, whereas Practice Management software almost always provides only rudimentary document management.

You’ll often see “Document Management” listed as a feature, when really the Practice Management software includes functionality more akin to basic cloud storage (like Dropbox or Google Drive) rather than true legal document management software capabilities.

This is especially important to understand when evaluating a document management system for small law firms.

Related: Best Legal Document Management Software

See our rundown of the top Legal Document Management products used by law firms today.

Generally speaking, legal document management software is special software that stores your documents and provides tools to manage them. The “manage” part of a document management software’s capabilities is what sets it apart from using a basic on-premise file server or simple cloud storage.

Document management software can come in either an on-premise variety (installed on your own local servers) or it can be cloud-based. The scope, features and capabilities of any given legal document management software varies from product to product.

Though broadly speaking, DMS software performs the following functions:

  • Document & File Storage: The basic storage of documents and other types of electronic files.
  • Document Profiling/Metadata: The ability to apply attributes (metadata) to documents, including document classifications, types, and tags, as well as the ability to apply internal notes to documents. For instance, the ability to classify a document as a contract or an order so it is easy to find the right document at the right time.
  • Full-Text Search: The ability to search across all documents (and sometimes email), including the file name, metadata and content of documents.
  • Unique Document ID: Every document is assigned a unique ID, which does not change even if the file name or location of the document does.
  • Document Check-Out/In: The ability to check a document out, prohibiting others from changing it while the document is checked out to you.
  • Microsoft Office Integration: Direct integration with the Office suite, typically including at least Microsoft Word and Outlook.
  • Document Version Management: The automatic creation and tracking of versions of documents as they are changed.
  • Email Management: The ability to easily save email messages to a matter, typically via an Outlook add-in. Learn more about Email Management for Law Firms.
  • Permissions & Access Management: The ability to permit (or restrict) access to particular matters or data within your firm.
  • Favorite & Recent Documents: Quick and easy access to recently accessed documents, as well as the ability to "pin" documents as a favorite.
  • Matter Notes: The ability to create and save Matter Notes within the DMS software.

More modern, cloud-based Document Management Systems sometimes include these more sophisticated features:

  • Full Windows & Mac OS Compatibility: Native Windows and Mac support, without the need for virtualization software (such as Parallels).
  • Practice Management Integration: Integration with your chosen Law Practice Management software such as Clio Manage.
  • Geographic Data Redundancy: Automatic replication/backup of your data to geographically redundant data centers.
  • End-to-End Data Encryption: Full encryption of your data in transit and at-rest, adding enhanced security and compliance.
  • Multi-Factor Authentication (MFA): Requiring a second factor to log into the system, enhancing security and compliance.

With these features in mind, let’s take a look at the best legal document management software for small law firms. We encourage you to learn about each application, visit the publisher’s website and even share your own experience with each application.

Legal Accounting Software

Accounting is another essential function of any business. However, law firms have unique needs when it comes to accounting.

Most law firms need:

  • General/Business Accounting
  • Trust/IOLTA Accounting
  • Cash Basis (vs. Accrual)
  • Multiple Billing Types (hourly, fixed fee, contingency)
  • Law Firm-Centric Financial Reporting

Today there are many options available for law firm accounting. So many that it can be outright confusing, especially given the mix and overlap of some law firm accounting software and law practice management software.

A common point of confusion is the different types of law firm accounting software. The term “law firm accounting” tends to be thrown around somewhat carelessly and is often (inaccurately, in our view) used to describe billing and trust features, even when they lack the core/traditional accounting software fundamentals (like a chart of accounts, P&L, and balance sheet).

Additionally, there is general-purpose accounting software. That is, accounting software meant to be used by any business but does not necessarily include the law-firm-specific functions you may need.

As a first step towards finding the right law firm accounting software for your firm, consider whether you want accounting functions built into your law practice management software or if you prefer to keep accounting and case management functions mostly separate.

Related: Best Law Firm Accounting Software

See our list of the top accounting applications used by law firms.

Law practice management, billing, and accounting are three related but discrete functions. And each can be managed with different software (or an all-in-one software suite).

Some Practice Management applications include complete accounting, and some Practice Management applications provide time tracking, billing, and expense tracking, but they leave the actual accounting to separate software (which it may integrate with).

Law Practice Management applications like Clio, Practice Panther, and Time Matters do provide time tracking, billing, and even reporting on billings, but they do not provide the other needed accounting functions and instead integrate with applications like QuickBooks to complete the picture.

Next, we recommend that your firm makes an inventory of the specific capabilities and features that you require in your law firm accounting software. For this, you should confer with both your legal team and your accountant.

Features that are often, but not always, available in law firm accounting software include:

  • Chart of Accounts
  • Bank/Operating Account Management
  • Online Banking Integration
  • Credit Card Management
  • Loan/Line of Credit Management
  • Expense Tracking
  • Inventory/Asset Management
  • Time Tracking
  • Billing/Invoicing
  • Profit & Loss Statements
  • Balance Sheets
  • Cashflow Statements
  • Tax Reporting
  • Bank Account Reconciliation
  • Trust Accounting
  • Amortization Functions

Consider whether your firm would be best suited for combined practice management / accounting software (or separate software for each), and consider the specific features your law firm needs.

Cloud Storage

Law firms across the country are moving away from on-premise file servers to cloud-based storage and document management systems.

Even before the Covid-19 pandemic, law firms have been eying the cloud as an alternative to the costs, headaches, and inflexibility of on-premise file servers.

Today, the modern law firm needs:

  • Access to client, matter, and firm documents (all of them) from anywhere
  • Access to documents without the burden of clunky VPN connections
  • Enhanced data security and compliance measures
  • Simplicity and ease-of-use, to encourage adoption across the entire firm

Naturally, this leads many law offices to search for the best cloud storage for law firms. And today, there is no shortage of cloud-based storage and file systems competing for your dollar.

But which is the overall best cloud storage for law firms?

  • Which has the functionality your firm needs?
  • Which is the most secure?
  • Which is the easiest to use?
  • What’s the difference between Document Management and Cloud Storage?

Basic Cloud Storage

Basic cloud storage is just that: Simple, lightweight storage for your firm’s documents and data. Basic, not in the negative sense, but in the sense that the platform is easy to use and doesn’t try to do too much.

Basic cloud storage is loosely the cloud equivalent of your law firm’s S: drive or on-premise file system. With basic cloud storage, you can create a set of firm-wide, top-level folders (for instance: a folder per client, per matter, and so forth) and store and organize documents within.

Your firm’s cloud file system looks and works much like any folder structure within Windows Explorer. The big difference is that it’s accessible to your entire team from anywhere (within a web browser or via a desktop sync application).

Basic cloud storage solutions include services that you have probably already heard of, such as Microsoft OneDrive, Google Drive, DropBox, and Box.com.

Many cloud-based Law Practice Management solutions also provide in-line cloud storage (something like a built-in OneDrive within the software).

Related: How to Build a Law Office in the Cloud

Our start-to-finish guide on how to build (or evolve to) a completely cloud-based law firm.

The pros to these types of basic cloud storage solution options are that they are quick to set up and implement, easy to use, and generally low-cost. However, the cons are that they offer limited DMS features, limited search capabilities, and no email management, and they come with some common sync problems.

Because of their sync problems, basic cloud storage platforms can be a good (or great) fit for smaller teams (law firms of up to 5 people). However, a fundamental problem with all of these services is they attempt to synchronize to each of your user’s computers. This works okay for a couple of people, but when you get to more than a few users, the synchronization becomes inefficient and inconsistent, leading to inconsistencies (version conflicts, etc.) in data from one person’s computer to another.

If basic cloud storage is simply “a place online to make folders and put stuff,” a Document Management System (DMS) is a more comprehensive, robust system to store and manage documents in the cloud.

Document Management Systems

Document Management Systems have been around for a long time. Years ago, a law firm might acquire document management software and install it on the firm’s on-premise server. Today, most document management systems are cloud-based, which means they provide both the storage of your documents and a rich feature set to help manage those documents.

Beyond simple folders and files, a cloud-based law firm Document Management System will often provide:

  • Client/Matter-Centric Org
  • Full-Text Search (docs & email)
  • Microsoft Office Integration
  • Document Version Management
  • Document Tagging & Profiling
  • Document Check-Out/Check-In
  • Permissions & Access Controls
  • Pin Favorite & Recent Documents
  • Unique ID Per-Document
  • One-Click Open / One-Click-Save
  • Integrated Email Management

Oftentimes law firms start with basic cloud storage, and as their team grows, they find the capabilities of basic cloud options lacking one or two key features that the firm needs (such as full-text search or document tagging).

The same also happens for firms implementing cloud-based Law Practice Management, which may advertise “Document Management” as a feature. Soon after implementation, these firms find the document storage and management capabilities therein are simply too limited.

The pros of a Document Management System are:

  • Robust Feature Set
  • Full-Text Search (docs & email)
  • Centralized Cloud Storage
  • No Synchronization Issues
  • Highly Scalable

The cons of this type of system are:

  • More Substantial Investment
  • Data Migration/Conversion Required

Generally speaking, the more functionality a system offers, the bigger the investment. By way of example: the LexWorkplace document management base package is $395/month, which includes up to 5 users and 1TB of storage.

We recommend you start your search for the right law firm cloud storage platform by making an inventory of the specific capabilities and features you require. For this, we recommend you confer with each area within your law firm: from attorneys to support staff.

Use our checklist here as a guide, and identify which of these are must-haves for your firm:

  • Web-based Access to Documents
  • Windows and Mac OS Support
  • Organize with Folders / Subfolders
  • Organize by Client / Matter
  • Full-Text Search (docs & email)
  • Microsoft Office Integration
  • Complete Data Encryption
  • Multi-Factor Authentication (MFA)
  • Geographic Data Redundancy
  • Document Version Management
  • Document Tagging & Profiling
  • Document Check-Out / Check-In
  • Permissions & Access Controls
  • Pin Favorite & Recent Documents
  • Unique ID Per-Document
  • One-Click Open / One-Click-Save
  • Integrated Email Management

Regardless of the specific features your law firm needs, two things that are universally important are data security and compliance.

Any given cloud storage service, ranging from simple cloud storage to robust cloud-based Document Management software, should have specific data security and compliance measures in place. As a law firm, you’re certain to be storing sensitive information.

And depending on your practice area, you may even hold data subject to regulations such as HIPAA, Sarbanes Oxley, or PCI Compliance.

In your search for the right software, look for features such as these:

  • Data Encryption In-Transit
  • Data Encryption At-Rest
  • Multi-Factor Authentication
  • Geographic Data Redundancy

MFA (Multi-Factor Authentication) is another vital piece of the security puzzle. Passwords are often compromised, so a username/password alone is not enough to keep your data secure.

MFA provides an important additional layer of security by requiring a second means of authentication (usually your smartphone) prior to accessing your data.

With your must-have features itemized and your security requirements defined, you’re ready to evaluate the top law firm cloud storage solutions, and we strongly encourage you to contact us so we can help evaluate your needs and help you make the best decision for your law firm.

Law Firm Productivity: Using Office 365

In the beginning, Microsoft’s Office 365 was simply a bundle within the Office suite which was provided on a monthly (subscription-based) model. Office 365 (also known as Microsoft 365) has come a long way since then, and today delivers a suite of installable software and cloud-based tools to manage your business.

  • Microsoft Teams: Teams provide group chat and collaboration. At its core, Teams is a group chat and instant message tool, but it’s also deeply integrated with the other elements of Microsoft Office and can provide a kind of central dashboard for your law firm.
  • Word: Word allows you to create, view, edit and collaborate on documents. Word is the most well-known word processing application and is used by most law firms (and other businesses) across the world.
  • Excel: This allows you to create and view spreadsheets, charts and tables. Excel is great for managing financials, tracking performance metrics, or even organizing general lists of information in a structured fashion.
  • PowerPoint: Allows you to create great-looking presentations; from project plans, to product pitches to meeting agendas.
  • Outlook: A versatile tool that allows you to send, receive and manage email. It also provides a rudimentary contact database and calendar, which can be shared and accessible across your law firm.
  • OneNote: This is a tool to create, store and manage notes. Think of OneNote as your “database for everything” from case notes, to legal research, to managing and storing miscellaneous information that doesn’t fit well anywhere else. You can maintain your own personal notebook as well as create firm-wide, team-wide or even case-specific notebooks.
  • OneDrive: OneDrive is simple, secure cloud storage. OneDrive will replace your on-premise file server and serves as a single, central file system for your entire firm. Most law firms create top-level folders for each client or matter.
  • Exchange: This is the email service, or “back-end” of email for your law practice. Exchange is where you’ll create mailboxes for each of your firm’s users as well as manage distribution groups and email permissions.
  • Groups: Microsoft 365 Groups are the basic framework of how you organize and structure Office 365 within your law firm. Groups allow you to organize and grant access to specific 365 resources; for instance you might create a Family Practice group for the family law practice within your firm, which may include shared folders, calendars and tasks relevant to that practice group.
  • Skype for Business: A tool for video calls and conferences. However, Teams is largely taking Skype’s place as the go-to video chat tool (and for most firms, we recommend using Teams in place of Skype).
  • SharePoint: This allows you to create Sites. Each site can contain libraries (folders for sharing across your firm) and lists (for any kind of information, including clients, contacts, and matters). SharePoint is often used by law firms to create a firm-wide portal or Intranet.
  • Power BI: A big data and analytics tool. Power BI is sometimes useful to large law firms that need to aggregate and analyze large volumes of data.
  • To-Do: Microsoft To-Do is a simple task management tool that integrates with Outlook. To-do replaced the legacy “Tasks” in Outlook, and is suited for individuals or very small practices. Midsize and larger law firms may prefer to manage tasks in dedicated Practice Management software.
  • Planner: This is Microsoft’s tool for managing simple projects. Planner is good for individuals and small teams that like visual, card style (Kanban) views for project management. Midsize and larger firms may prefer to use their Practice Management software for managing cases and projects.
  • Project: Microsoft’s project management software, used instead of To-Do and Planner for more robust and complex projects. Project includes task management as well as more sophisticated tools such as Gantt charts.
  • Access: Microsoft Access is a long-standing database tool. Access allows you to (relatively) easily create your own quick-and-dirty database, sometimes useful when your core applications aren’t well suited to store specific information. While not a perfect analog, Access is being replaced by Microsoft’s web-based Power Apps.
  • Yammer: Yammer creates a social network for your entire organization. Think of it as a private Facebook for your law firm. Yammer is also useful in larger organizations to build community and support engagement.
  • Bookings: This is Microsoft’s tool for managing online booking and appointments, similar to tools like ScheduleOnce and Calendly.
  • Power Automate: Previously called “Microsoft Flow,” this is an app integration and automation service, similar to tools like Zapier. Power Automate can connect separate applications (that wouldn’t otherwise talk to one another) and automate repetitive data entry.
  • Power Apps: Microsoft’s no-code/low-code service for building your own web-based apps. Power Apps serves as a modern, cloud-based counterpart to Microsoft Access, and is useful to law firms that need to develop niche or specialized applications.
  • Sway: An alternative to PowerPoint for creating presentations, newsletters or other content.
  • Forms: Microsoft Forms is a platform to create simple online forms that store data within your Office 365 database. Similar to services like Google Forms and Formstack, law firms can use Microsoft Forms for client contact and intake forms.

These tools serve as the bedrock of your law firm’s technology, and can function as a set of foundational tools for everyone in your practice.

Office 365 is Software-as-a-Service (SaaS), and it’s provided in a subscription-based-license (SBL) model. This means that everyone in your law firm will have the latest version of the Office suite for a fixed per-user, per-month fee.

How secure are cloud solutions like Microsoft Office 365? Can lawyers store client data in the cloud without violating ethical obligations?

Related: How to Use Office 365 for Law Firms

Our complete guide shows you how to setup and customize Office 365 to work the way law firms do.

Every lawyer must take appropriate measures to keep their client’s data secure. Today, most commercial cloud-based platforms offer significantly more in the way of data security and system reliability than old, on-premise/server-based systems did.

According to the American Bar Association:

“Most fears about trusting client information to ‘the Internet’ are misplaced. One misconception is that client information may be intercepted as it travels across the Internet. Modern encryption has progressed to the point where it is unbreakable. Cloud companies understand that their reputations for protecting customer information are crucial. A single security breach would cost them dearly. Your client information is more secure stored on a reputable, professionally managed cloud server than on your office computers.”

Microsoft’s Office 365 employs world-class cloud infrastructure and security. However, the exact level of security and redundancy depends on the edition you select. For instance, Microsoft’s entry-level editions don’t include data retention or geographically redundant backups. Consult with your IT or Cloud provider to ensure you’ve selected the right options regarding your client and firm data.

Law firms are moving away from on-premise servers and software and moving to cloud-based solutions in droves.

Microsoft Office 365, in particular, gives lawyers and law firms these distinct advantages:

  • Eliminate servers and IT headaches: Office 365’s cloud-based services, including Exchange and OneDrive, eliminate the need for on-premise servers and the (inevitable) IT headaches that come with server ownership.
  • Always have the latest version: Office 365 comes at fixed, per-user, per-month fee. This replaces the financial ups and downs of buying server equipment and purchasing (and re-purchasing) Office licensing.
  • Security and compliance: When the right edition and options are selected, and when they’re implemented properly, Office 365 (and your data within it) is orders of magnitude more secure than the alternative of on-premise server equipment.
  • Work anywhere: Office 365’s services, including OneDrive, OneNote, Teams, and SharePoint, gives your entire law firm the same work experience and access to the same resources no matter where they work.
  • Practice management platform: When implemented and configured properly for a law firm, Office 365, alongside your other legal software, provides a cohesive, end-to-end platform to manage your entire law practice.

Still, Office 365, out-of-the-box, is a bit unfinished when it comes to running a law practice. Office 365 is made for the masses, not just law firms, and isn’t “ready-made” for a law practice. What’s more, the sheer number of different apps and services it provides can make knowing where to start and which tools to adopt daunting.

We encourage you to adopt these Office 365 for law firm frameworks when they fit (and leave out what doesn’t).

  • Microsoft 365 Groups
  • OneDrive
  • Teams
  • OneNote
  • Forms
  • SharePoint
  • Calendar
  • Tasks

In Microsoft Office 365, Groups is the basic building block of organization and security within your Office suite. You can permit (or deny) access to certain resources and organize related tools by Microsoft 365 Group.

The best place to start when customizing Office 365 for your law firm is by defining Groups. Create a Group for each logical team, practice area, or function that will have its own dedicated resources (such as group-specific folders, documents, calendars, and so forth).

Office 365, calendars, cloud storage, practice management, and billing software are all tools that can transform your law firm into a well-oiled machine. But you’ll still need to tie everything together in a cohesive, easy-to-use way.

  • You can certainly buy and set up Office 365 on your own, though this is a time-consuming process, and early mistakes can be costly.
  • You can hire a local IT consultant who likely knows Office 365 but will probably be resistant to help with your legal software.

To build and manage a comprehensive, cohesive Law Office in the Cloud, we recommend Uptime’s Practice Next.

Practice Next is a suite of essential cloud-based practice management and productivity tools that includes everything your law firm needs to work in the cloud. Contact us today to learn more about how this option can help you streamline your law firm’s use of Office 365.

Conclusion

You now have many of the tools and much of the information you need to start your law firm off on the right foot.

Use the knowledge you’ve gained to create a sound strategy before you launch your new law office. And when you do, know that you’re not alone. There are hundreds of resources out there to help you get started. Our blog is full of helpful advice for people starting their own law practices.

And if you want professional help with your law firm, you can schedule a free consultation today. We look forward to hearing from you and working with you.