Checklist for Starting a Law Firm
Introduction
The process of starting your own law firm can be both exciting and intimidating. Reasons for being your own boss include work-life balance, work flexibility, autonomy, unlimited decision-making, and financial freedom. With that comes stress, uncertainty, consequences for bad decision-making, and the risk of insolvency.
Planning is key to successful start. Most new businesses fail in the first year of operation or operate at a loss. Law firms are no different. To succeed, you will need to know how to think like a business owner in addition to thinking like a lawyer. You will also need to know what essential tools are needed to get your firm off the ground from the moment you are sworn in to practice.
Regulatory Tasks
State Bar Profile, Card and Wall Certificates
Once you are sworn in, you need to create your State Bar profile. On the State Bar’s website, click on the Attorneys tab and go to the State Bar Profile Help Guide.[1]. Once you create your profile, you can print a paper bar card[2], or order a plastic one. You can also order a wall certificate. If you intend to practice in federal court, you must apply for admission to each federal district court and pay the one-time admission fee. Once admitted, you can order wall certificates for that court.
Rules of Professional Conduct (RPC) and Ethics
Adhering to the RPC is crucial to your success as a lawyer and avoiding disciplinary action. Once your profile is created, you should print and review a current copy of the RPC.[3] You should also print a current copy of the handbook on Client Trust Accounting[4] (CTA) for California attorneys. Additionally, you should register for the State Bar’s Ethics/CTA classes,[5] which are conducted online via Zoom or on a similar platform. Registered participants will receive helpful resource materials including a PowerPoint presentation, handbook, exam, and link to class.
Open an Operating Account and IOLTA
Once your firm name is established, you need to open a business checking account and if you intend to hold money on a client’s behalf, you will need to open an IOLTA[6] (Interest on Lawyers’ Trust Accounts). An IOLTA may not be needed under certain circumstances. The IOLTA class and handbook are helpful to assist you with determining whether your business platform requires you to have an IOLTA. Lawyers have statutory and ethical obligations to safeguard funds they hold in trust for their clients or other people. Lawyers must keep those funds separate from their business and personal accounts and must maintain accurate books and report timely and completely to their client regarding the status and accounting of these funds. To strengthen public protection and better support attorneys in fulfilling their client trust accounting duties, the State Bar implemented the Client Trust Account Protection Program (CTAP). With very few exceptions, all California lawyers must comply with the reporting requirements through their State Bar Profile. The new requirements may be found on the State Bar’s website.[7]
Insurance: Malpractice, Life, and Business
Rule 1.4.2.(a) of the RPC requires you to disclose in your fee agreement whether you have professional liability insurance. The CCCBA and the State Bar sponsor several insurance programs specifically designed to serve the needs of licensed attorneys. These programs include malpractice, life, and business insurance. Information on these products is available on CCCBA’s Member Benefits page[8] and at CalBarConnect.[9] Keep in mind, when selecting malpractice coverage, you may find it beneficial for coverage that covers the cost of defending against discipline proceedings. The added coverage is often minimal but good to have in case you need representation in defense against a State Bar complaint.
Create a Fee Agreement
California Business and Professions Code section 6148 requires a written fee agreement anytime it is reasonably foreseeable that the costs to a client, including attorney fees, will exceed $1,000. You can find sample fee agreement templates on the State Bar’s website by typing “sample fee agreements” in the search window or go to the forms page.[10]
MCLE Compliance
With few exceptions, all active State Bar licensees must complete 25 hours of Minimum Continuing Legal Education (MCLE) in their three-year compliance periods and file a report with the State Bar. For MCLE compliance and fees, visit the State Bar’s website for MCLE.[11]
Business Arrangements:
Choose Firm Name and Create Your Branding
You must form your legal entity. Select a name that does not violate the RPC. For example, the name cannot be misleading to the public (i.e. Attorney and Associates if you are a sole practitioner). If you intend to operate as a sole proprietor, check with your county recorder’s office to see if the firm name is already in use by someone else. Once the county recorder approves your selection, you will need to publish the fictitious business name statement in a local newspaper (unless the name selected is your own personal name).
California professional law corporation name endings permitted by the California Secretary of State and State Bar include: A Professional Corporation, A Professional Law Corporation, Professional Corporation, Law Corporation, A Professional Legal Corporation, and others. Depending on the type of entity formation you select, you may be required to register with the State Bar. If you intend to operate in a corporate form, check with the Secretary of State to see if the corporate name is already in use by someone else.
Once you have selected a firm name, you should think about your branding. Creating a logo, website, and email address is a good start to branding your business. There are a lot of companies that will assist you with branding. Selecting an email address is the easiest and least expensive part of branding. Take your time constructing your website and logo, even if you need to purchase temporary business cards until your website and logo selection are complete.
Office: Home, Brick-and-Mortar, or Virtual?
The least expensive office is likely a home office. The challenge, however, is when a client wants a face-to-face meeting. During the height of the pandemic, most client meetings were held remotely using computer video. Nevertheless, if you operate a home office and need to meet face-to-face with a client, you can meet at the client’s residence or ask a colleague if you can use their conference room. Conference room rentals are also available at CCCBA for its members and the new Contra Costa County Law Library in Martinez for the general public. Keep in mind, depending on the city where you reside, you may be required to obtain a business license to operate a home office, regardless of whether clients come to your home.
The most expensive is office space. Most office spaces are rented based on a yearly or multi-year lease. Usually, rent is based on a price per square foot. Additionally, some landlords pass CAM (common area maintenance) costs to the tenant (on top of office rent) to reimburse the owner for the expenses paid to maintain the property. CAM charges can include taxes and insurance the owner pays.
Virtual office space is hybrid approach to a home office and brick-and-mortar. For a low fixed fee, you can use their address location for advertising, meeting with clients, mail delivery (and in some cases telephone calls). For an excellent Contra Costa Lawyer magazine article on software and office set-up resources, see: https://www.cccba.org/article/going-virtual/ for more information.
Mentorship
Perhaps the most important tool for success with starting a law firm is mentorship. As a CCCBA member, you can join numerous sections[12] (including barristers/young lawyers and solo practice/small firm). Most sections are set up to provide you with mentorship.
Networking and Advertising
Revenue is key to avoiding insolvency. Before you open your firm, you need to have a plan in place for generating revenue. Networking and having an advertising plan are good places to start. Don’t be afraid to ask other solo practitioners how they generate revenue. Most will share the do’s and don’ts with you. You just have to ask.
Case Management and Online Research
There are several case management platforms in the market. Although price is a major factor in your selection, reviews by attorneys that have used the software and software capabilities should be key to your decision. For example, if you are a general practitioner, you want a case management program that you can use in every type of case that you practice. Many platforms (including Clio, PracticePanther, and Smokeball) offer free trial periods of their software. Members of CCCBA also have access to discounts on a variety of practice management software and legal technology solutions. See CCCBA member benefits.[13]
Having access to online research is important. Members of CCCBA enjoy use of vLex FastCase.[14] Additionally, the Contra Costa County Law Libraries offer free access to online research databases, including CEB. Clio also offers a free guide to starting a law firm. Smokeball offers free trust accounting and billing software for CLA members.
Join Contra Costa County Bar Association
Membership brings professional development, networking events, continuing legal education, connections to new clients and an opportunity to lead and shape the legal community of Contra Costa County. CCCBA offers programs and benefits for all legal professionals, from attorneys and judges to paralegals and law students.[15]
Join California Lawyers Association
After you create your State Bar Profile, you will be able to pay your bar dues online through your profile. You will also be able to join the California Lawyer’s Association (CLA) and various sections. Like CCCBA membership, the CLA offers programs and benefits for its members. Recognizing the importance of trust accounting and billing, effective November 12, 2024, CLA members can get FREE access to Smokeball’s trust accounting/billing software (a $588 per user/per year value)[16]
Conclusion
There are many reasons to hang your own shingle. Whether you began your legal career with BigLaw and eventually experienced burn-out; or whether being your own boss, flexible working conditions, and autonomy is simply more attractive to you, starting a law firm can be rewarding.
[1] https://info.calbar.ca.gov/knowledge/en/my-state-bar-profile-guide
[2]https://info.calbar.ca.gov/knowledge/en/order-a-bar-card
[3] https://www.calbar.ca.gov/Attorneys/Conduct-Discipline/Rules/Rules-of-Professional-Conduct/Current-Rules
[4] https://www.calbar.ca.gov/Attorneys/Conduct-Discipline/Client-Trust-Accounting-IOLTA/Client-Trust-Accounting-Handbook
[5]https://www.calbar.ca.gov/Attorneys/Conduct-Discipline/Ethics/Ethics-Schools.
[6]https://www.calbar.ca.gov/Attorneys/Conduct-Discipline/Client-Trust-Accounting-IOLTA/ethics=
[7]https://www.calbar.ca.gov/Attorneys/Conduct-Discipline/Client-Trust-Accounting-IOLTA/Client-Trust-Account-Protection-Program.
[8]https://www.cccba.org/member-center/member-benefits/#page_section_7
[9] https://www.calbarconnect.com/solutions/insurance/
[10]https://www.calbar.ca.gov/About-Us/Forms
[11]https://www.calbar.ca.gov/Attorneys/MCLE-CLE.
[12]https://www.cccba.org/cccba-sections/
[13]https://www.cccba.org/member-center/member-benefits/#page_section_10
[14]https://www.cccba.org/fastcase/
[15]https://www.cccba.org/member-center/
[16]https://www.smokeball.com/bar-associations/californiabill.