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By Jared Correia, Red Cave Consulting
For real, this could be a really, really, really (really) long list. But it ain’t easy launching a practice if you’re coming from another law firm, where all that ancillary business management stuff was taken care of for you. Leaving the warm embrace of employment as an attorney to found your own business is not for the faint of heart. However, the process is a little easier if you can avoid common mistakes that lots of new founders make on the regular.
So what should you know before you go? Here’s a short list.
Yes, you still have to pay taxes
Paying taxes is easy when you don’t have to think about it. Select a number on an IRS firm and do your taxes at the end of the year. No fuss, no muss. But when you own your own business, the taxes don’t just magically come out. There is no taxation fairy. So you actually have to pay both federal and state taxes, preferably online, usually quarterly — but you can make payments more regularly, and at any time. Now, if you’ve never started your own business before, you might be like, “C’mon, man — this is so obvious, you don’t even have to say it.” Trust me: I do. And even as you pay taxes, make sure you’re keeping track of what you actually owe — because it’s equally unpleasant to get hit with a large, unexpected tax bill at year end/filing time.
A pricing sheet represents a necessary script
The worst mistake you’ll make starting a law firm, with probably the longest-lasting reputational effects, is when you guess on pricing. Again, when you’ve got someone directly telling you what to charge, you don’t even have to think about this. But if, in your own practice, you don’t create and stick to a price sheet, you’re going to have a nightmare on your hands. You will end up juggling all manner of different rate types. You will have new clients seeking discounts, on the advice of former clients, who think you’re a soft touch. You will then have a hard time executing any kind of price rise. So just get it right (set) the first time; that’s the main thing.
A sign of the times
There’s still this notion that opening a law practice is the equivalent of “hanging your shingle” — but that can be a dangerous approach for a founder to take. Hanging your shingle, even “launching your website,” isn’t going to do squat to net you clients. The fact of the matter is that you have to actually drive business to your law firm, because no one else is handing you clients any longer. It also takes about two years for even your strongest connections to regularly associate your work with your new brand, rather than your old one. So just about everything you do when launching a new law firm should be centered on getting new business. Hustle up.•
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Jared D. Correia, esq., is the founder and CEO of Red Cave Law Firm Consulting. A former practicing attorney, Jared has been advising lawyers and law firms for over a decade. He is a regular presenter at local, regional and national events.
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