Time to strike out on your own? Veteran practitioners help you get off to a good start - and avoid common missteps - with tips on marketing, billing, technology, retainers, client management, and more.
How does an aspiring solo or small firm practitioner set up a law office and its attendant equipment and technology? How do you market yourself to clients - and manage them once they're in the door? How do you handle contracting, billing, and banking?
At the 2013 ISBA Solo and Small Conference, Chicago lawyers Sarah Toney and Juliet Boyd offered tips based on their experience as business managers. As the title of their presentation indicates ("Landmines in Opening Your Own Practice"), their focus was on helping fledgling practice owners avoid rookie mistakes.
And they began at the beginning - the essential task of finding a place for your new shingle to hang.
Setting up an office
Start slowly. The first step for a budding solo practice or small firm is to find office space and equipment. Criminal defense practitioner Toney of The Toney Law Firm, LLC, urged lawyers not to over-commit at the outset because you don't how your business is going to develop.
"Office buildings are more than willing to give you a great rate if you just sign a 10-year lease," she said, warning against committing for too long too early. "There are so many options available now." For example, office sharing allows lawyers to grow as they add staff, she said.
The same concept applies to office equipment, Toney said. "When you start out, you think, 'I need everything: I need a fast printer, I need a copy machine, I need a coffee-maker,'" she said. "One thing I found when I started is I didn't need a copy machine. I didn't do a large volume of paperwork, so I could scan and print it out."
Toney added that letterhead and envelopes bought in bulk will become obsolete if you end up moving after a year or two. And if you buy a firm car, "Don't start out with a Mercedes," she said.
"You don't know how many clients you're going to get. Keeping your overhead low is certainly going to help you," said Boyd of Boyd and Kummer, LLC. "Once you've been in practice for a year or so, you'll have a better idea what you have coming in."
Technology - be a smart shopper. Outfitting your firm with technology is another area where you can't be cheap, but you should be frugal, as Marc Matheny and Abra Siegel advised in last month's IBJ cover story. Boyd and Toney offered their own set of frugal-tech tips.
Toney advised paying close attention to tech security, and especially making sure you know which apps in the "cloud" are secure. She said that well-known apps like Dropbox and Google offer limited security, while other vendors like SpiderOak do offer "100 percent privacy for your clients" because of their thorough encryption techniques.
"Sometimes when you're a solo, you don't go to the office every day," Toney said. "You don't have to practice the way they did 20 years ago, where if you want access to something you have to go to your physical office. But [this freedom is] not without limitations. Lock your devices. Make sure if you've got client information on your cell phone or your iPad that you password-protect it."
Toney uses an Internet-based VOIP phone in her office rather than a traditional landline, which offers additional capabilities. "You can set it so that it rings three numbers at one time, three different phones; you can let it ring one phone for 30 seconds, and then if you don't answer, it can forward to another phone," Toney said. "I [can be] in the woods in Wisconsin on my iPad…and it looks like I'm in my office."
Toney also mentioned signing up for email discussion groups, like those included with an ISBA membership, which provide an antidote to the sometimes isolating nature of solo or small firm practice, as well as immediate answers to your questions. "There are people who are so fantastic at responding to listservs," she said.
Solo and small firm attorneys should have billing software, Toney said, adding that she uses the Clio practice management program, available at a discount from ISBA. A calendaring system is also essential, partly to stopwatch time spent on each client's account. And you need online legal research; Westlaw or Lexis if you want to pay for them, or the Fastcase system included with ISBA membership, Toney said. Boyd added that Fastcase is saving her firm about $600 per month.
Attracting and retaining clients
Facebook. Technology plays a large role in marketing to clients, which starting solos and small firms will need to do as they're getting settled. For example, establishing a public firm page on Facebook provides capabilities that you don't have with a personal page, Toney said. "For instance, when you post on your firm page, you can see how many people see that post," she said. "It will also give you really fantastic demographic information, broken down by gender, age, and cities."
A business page will track how people arrived and how often they come back, Toney said. "You'll know who your audience is, and that'll help gauge what you can post, whether you're posting [case] wins or 'thank-yous' from clients or seminars you're attending," she said. But a new limitation on Facebook business pages is that they will no longer send status updates to people who "like" them. Instead people will need to visit the page as they would a website.
Blogging. Blogging is another way to do online marketing that Toney recommended, which can be connected to your website. "Blog about those things that you think people will search," she said. "If it were you, and you needed to find a lawyer and you didn't have a referral, what [would you] type in as a search term? Blog about that. That's how they're going to find you." Be aware, however, that bloggers may be subject to ethical restrictions on lawyer advertising. For more, see Blogging, Marketing, and the Rules of Professional Conduct in the October 2013 IBJ.
Retainer agreements. Once clients are sold on your services, it's time to draw up a retainer agreement, which Boyd said lawyers tell their business clients to do but don't necessarily do for themselves.
Boyd went over the three types of retainer agreements: (1) the general or classic retainer where the client is paying for the lawyer to be available for a specific matter or time frame and money goes into the attorney's operating account when it is received; (2) the security retainer in which the client's money goes into a separate trust account and the attorney bills against that every month; and (3) the advance payment retainer in which the client's money goes directly into the lawyer's operating account upfront.
Security retainers, probably the most common, should be established as "evergreen" retainers that the client must replenish once they are getting low on funds. "Why is that helpful?" Boyd said. "Because when you're calling up the client, you're saying, 'Hey, I'm following up just to remind you that the contract you signed says you need to replenish your retainer.'"
Advance payment retainers are rare and used mainly to protect funds paid to attorneys against clients' creditors, in a bankruptcy or collection proceeding, who would be able to access them from a trust account as established in the security retainer, Boyd said. In Dowling v. Chicago Options Associates, Inc. 226 Ill. 2d 277 (2007), the Illinois Supreme Court established several necessary conditions to establish such a retainer, without which the courts can construe it as a security retainer whether or not that's what the client and attorney had in mind.
In all types of retainer agreements, attorneys must enumerate customary fees and out-of-pocket expenses, Boyd said. That can include anything from cab fare to computer research to court reporter charges. Otherwise, those expenses might not get paid. The Illinois Appellate Court ruled as such in Guerrant v. Roth, 334 Ill. App. 3d 259. "List all these things out," she said. "Because the court has said, 'If it's in there, and the client expressly agrees to it, we'll support that, but if it's not in there, you're not going to get it.'"
Such specificity helps with client relations as well, she said. "Down the line, when [clients have] had a little case of amnesia, and they've forgotten all the facts because they're now paying your bills, and they're mad about that, you don't have a problem because everything is set out in your retainer agreement."
Managing client expectations. Once the agreement is signed, attorneys must handle perhaps their biggest challenge: managing client expectations. Boyd said this applies in particular to starting lawyers anxious to sign up anyone - or young associates looking to impress - who overstate either their qualifications or the worthiness of a client's case.
"We once had a young associate tell this client, 'Oh, you've got a million-dollar case, buddy,'" Boyd recalled. Problem is, "At that first meeting, you know [only] what the client is telling you; you haven't seen the discovery, you haven't seen anything else. Needless to say, down the line, the client didn't have a million-dollar case. He said, 'But you told me I had a million-dollar case.' He was a nightmare to deal with."
Managing expectations sometimes means not taking cases in the first place, Boyd said. If someone wants to sue a roofing contractor for $5,000 because the new roof didn't hold, "I say '[Forget about suing and] go fix your house.' They say, 'Why?' [I say 'Because] litigation is expensive, and a year from now, you're not going to be angry [at the roofer] anymore, but you're going to be mad when you get my bill, and I've got those five depositions, and you have to pay me $10,000."
Even when a client's case is worth pursuing, it's important to ensure they know the costs and timeline upfront, Boyd said. "They have no idea how long these cases can take and how expensive they can be," she said. "Spending that little bit of time is great because…[when things get costly later in the case] they say, 'I know, I know, you told me.'"
Failure to realistically set client expectations at the outset is often what leads to trouble with the ARDC, Boyd said. "The lack of communication is the No. 1 reason people get upset with you and then report you," she said. "Even if it's unfounded, you have to report that to your malpractice insurance…."
But certain clients will never be happy, and it's important to learn how to detect that at the outset, Boyd said. For example, "If the client tells you, 'I've had three prior lawyers,' beware. Beware!" she said.
"That initial interview is as much you checking out whether you want this client," Boyd added. "First of all, can you help the client? Is it in your area of practice? If it isn't, send them somewhere else. Second, is this client someone you want to have as a client?"
Billing and banking
Bill monthly. As clients come on board, solos and small firms need to make sure they're treating their business like a business, part of which means sending out your bills every month, Boyd said. "As lawyers, we like to focus on the cases and the depositions," she said. "It's very easy to push [billing] off on the office manager.… But remember, you are in charge of your law firm."
To send out regular bills, you need to keep regular, detailed track of your time, Boyd said, recalling an attorney fee petition she advocated for recently. As the experts and judge went through the records, "If there was an entry for e-mail or telephone calls, but they didn't have the substance of it, they put a red pen through it," she said. "The other thing the expert wanted to see, every time it said 'e-mail,' he said, 'Show me the e-mail.'…If you're not keeping track of your time, you're losing money."
Follow up about payment. Once bills go out, solos and small firms need to track them and follow up with those who haven't paid, Boyd said. "Do you know who owes you money?" she said. "Are you looking at those clients who should have replenished their retainers and haven't? If you haven't, what would you tell your business client at this point? Pay attention to your finances. Just have your people give you a print out at the end of the month." That way, you can avoid a situation where you're advancing time and effort for a client who isn't paying you.
Banking accounts. The money you collect needs a bank account or two to go into, usually a separate operating account and a trust account for client funds, Toney said, suggesting that solos and small firms produce checks for each that look very different from one another to avoid confusion. (For more about trust accounts, see Illinois Rule of Professional Conduct 1.15 and visit the Lawyers Trust Fund of Illinois website at www.ltf.org.)
Accepting credit cards. Solos and small firms also need to figure out how to handle credit cards, and it's sometimes helpful to set up a regular withdrawal for a client from their credit card, say on the first of the month, Toney said. You need to figure out whether you want a credit card terminal in your office, or one that connects to your phone or your iPad.
"I couldn't have a terminal in my office because I don't have a land line," she said. "That quickly decided for me, 'I'm going to keep this mobile, I'm going to have a swiper on my phone or my iPad,' and now I don't even swipe, I just input it right in." (See sidebar for info about credit card service LawPay.)
Bookkeeping and phone answering
Solos and small firms will help to ensure they run their business well by surrounding themselves with good support from an accountant, a bookkeeper, and a secretary or answering service on whom they can lean, Toney said.
"There are a lot of accountants who are, just like solo lawyers, looking for work, who won't be expensive but are very, very good," she said. "That's one way to save money while not spending a lot of your valuable time and not adding stress to your life because there's enough of it as it is, trying to be a solo or small firm lawyer."
Boyd recommended adding a bookkeeper to your stable, an exception to the idea of keeping your overhead low, especially since you can find one part-time. "How do lawyers lose their licenses? When they mess up with…the client's money," she said. "You don't want to mess up and take chances with that.…We didn't go to law school to become accountants."
Another one of Toney's "good people" is an answering service. "They pretend that they're this sweet Southern secretary of mine - they're located in Georgia - and I get an automatic e-mail and text immediately with the message and the phone number," she said. "Clients are happy they haven't gotten my voice mail." (See sidebar for info about another such service, Ruby Receptionists.)
Toney cited statistics that clients searching for an attorney online will wait about seven seconds before calling someone else. "If you're lucky enough to have kept their interest, and they go through the process of calling you, I find that clients who get answering machines are going to hang up," she said.
Small firms and solos need to keep clients who found them online, Toney said. "When they feel they've talked to somebody who listened, asked them about their case, got their information, and they feel like you're going to call them back at any minute - and you are, as soon as you get out of court, or whatever - you're going to get that client."
Ed Finkel is an Evanston-based freelance writer.
Sarah Toney and Juliet Boyd of Chicago shared practice-launching tips during the 2013 ISBA Solo and Small Firm Conference at a seminar entitled "Landmines in Opening Your Practice." That and other great programs will be available soon at http://isba.fastcle.com (search under 2013 Solo and Small Firm Conference).
Veteran sole practitioners Sarah Toney and Juliet Boyd recommend the following services or ones like them. All are available free or at a discount to ISBA members.
Fastcase for legal research. The ISBA Fastcase plan, free to members, includes opinions of the US Supreme Court; federal circuit, district, and bankruptcy courts; and the supreme and appellate courts for Illinois and all other states. The library also includes access to statutes, regulations, constitutions, and court rules for Illinois and all 50 states. Find out more at www.isba.org/fastcase.
Clio for practice management. Clio is a web-based practice management system specifically designed for sole practitioners and small firms. It costs $49 per month, and ISBA members get a 10 percent discount. Find out more at www.goclio.com/landing/ilsba.
LawPay for credit-card processing. LawPay tailors its service to the legal community. Among other lawyer-friendly features, it separates client funds into trust and operating accounts. ISBA members get up to 25 percent off credit card processing fees. Find out more at www.lawpay.com/isba.
Coming soon - Ruby Receptionists phone-answering service. Ruby Receptionists connects callers to you when you're available, wherever you are. When you're not able to take calls, you'll receive detailed messages via email or text. Watch isba.org for details.