Going Solo Part IV
This week’s topic is “Going Solo and Running a Small Estate Planning Practice – Part IV”. These materials are based, in part, on materials I prepared for a 2012 seminar hosted by the Maine State Bar Association entitled “Essentials For Solo and Small Firms Practitioners”.
In Part I of this series I discussed some introductory thoughts about going solo, practicing with precision and practicing efficiently. In Part II of this series I continued the discussion of “Practicing Efficiently” and began my coverage of “case management”. In Part III of this series I continued the discussion of case management. In Part IV I want to turn to some practical considerations surrounding opening a new law practice. Remember, to try to keep it simple and to start slow, especially if you haven’t practiced in a firm setting. While these materials generally contemplate a small traditional office practice, many practices begin (and remain) at home. Many practices are virtual and use rented space for client meetings.
Practical Considerations. The following is an overview of what I think are some practical considerations in going solo:
1. Business Plan:
First order of business – come up with a business plan. This does not have to be complicated. My first plan: Estate planning, probate and tax law firm; single member PLLC; no employees; doing business in Maine.
The following will provide the reader with a little more framework surrounding the decisions that underlie my first business plan.
Practicing in Multiple Jurisdictions: If you are just starting out, pick a state and wait a while before launching yourself into another state. Keep it simple and try to not to spread yourself too thin. If the primary goal of your practice is to avoid making mistakes while serving your clients well, adding jurisdictional coverage before you have solid understanding of what you are doing in your primary jurisdiction will not likely advance that primary purpose.
General Practice or Specialized Practice: I would not recommend a general practice unless you are going to be practicing in a small town or have obtained a high level of skill in a particular area already. Skills and knowledge simply don’t come cheaply and mistakes are can expensive both in terms of time and money. If you can, focus on an area and build out. If you can stick it out and are good at what you do, the work will come. I tend to think a lawyer is better off focusing on limiting liability rather than making money. For this reason I tend to view a general practice as a liability pit.
Entity Choice: I selected a PLLC because it was easy and simple, particularly administratively. Initially I operated federal as a sole proprietorship. Once my wife joined the practice we made an S Corporation election. There are many entity choices to consider. For an overview table of entity’s in Maine, please e-mail me.
2. Startup savings, costs and expenses
The ideal: I have read that it is suggested that you have enough cash available to cover start-up costs and at least the first 6 months to one year of operating expenses plus personal living expenses. That would be the ideal situation.
The truth: The truth is that few of the people will go solo with the ideal amount set aside outside of a retirement account unless you count credit. If you rely on credit, you might expect to borrow between $10K and $15K on the low side to get through year one. There are a lot of places to save and a lot to spend and managing cash flow is critical until you have more than enough work coming in and enough bills out to bridge the gap.
Personal Living Expenses: Expenses to consider:
- Unreimbursed medical
- Auto loans
- Student loans
- Existing unsecured loans or lines of credit.
- Spending money
Business Expenses: Expenses to consider:
- Lawyer’s office
- desk and chair
- guest chairs (at least 2)
- file cabinet
- fire proof cabinet
- Decorative stuff
Tip: Looks aren’t everything. Buy used where you can.
Reception area (if any)
- coffee table
- Telephone(s) with answering machine (or arrange for voice mail service)
- Cell phone
- Computer(s) with appropriate software and printer
- Photocopy machine
- Paper shredder (or commercial service, such as Without a Trace)
- Fax machine – part of photocopy or via e-mail (or use an internet fax)
- Binding machine or binders for estate planning documents (optional)
- Supplies (such as paper, envelopes, pens, pencils, stapler, hole punch, date stamp, file folders, rubber bands, tape, 3-ring binders, staple remover, paper clips, and phone message pads)
Tip: A word on paper. Forget the fancy paper. It really doesn’t impress many folks. You are going to (hopefully) go through reams and reams of paper. Find a basic printer paper to get started with. I still have the 1 ream (unopened) of expensive paper I purchased when I opened.
- Library/ Computer Software (this will likely be the subject of another post but see my previous posts for examples of software I rely on)
Miscellaneous office supplies:
- Business cards (keep it simple, legible and affordable)
- Office signs (if any)
- Town permit fees
- Cleaning supplies
- Fire extinguisher (fires happen, be prepared)
- Premises liability insurance
- Malpractice insurance
- Health insurance
- Life and/or disability
- IT (Sooner or later you will likely need IT help. Figure out now where you will get it and how quickly your IT person can respond. )
- Website design
Do yourself a favor, find an accountant and seek their help early and often during your first couple of years. Meet quarterly to ensure you are on track. Yes, it will be costly but staying on top of your taxes and having someone help you with cash flow projections can be very useful.
Other Expenses to Consider
- External backup or online backup (or both) or multiple hard drives.
- Bar fees
- CLE fees
- US Postal Service or other fees related to mail delivery and service (Postage meters are convenient but an additional expense you may want to avoid. I find going to the post office is a good break, often the only one during the day, and is an opportunity to meet people. I use e-mail and attachments wherever appropriate to save on postage.
- PO Box annual fee (optional)
Next week I will continue to discuss practical issues and will cover office systems or processes that a new attorney might want to consider when starting up a solo office.