The Ultimate Guide to 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 are starting a 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:

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.

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:

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:

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:

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.

Staring a New 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:

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.

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.

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:

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:

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.

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:

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:

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:

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:

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:

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:

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:

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.

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:

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:

Here are some tools to consider:

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:

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:

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:

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.

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:

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

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:

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.

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:

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).

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.

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 for starting a law firm 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.