Home | Business News | Browse by Publication | T | Trial

To start your own practice, start planning now: are you and your firm headed for a breakup? Do you dream of the freedom to practice law on your own terms? If so, read on for a dose of reality-checking - and encouragement - from someone who recently made the move.

Article Excerpt
Having your own business is a common American dream. When I started my own practice in January 2006, I was filled with both fear and enthusiasm. I was convinced that having my own shop would allow me to focus on what I loved, practicing law, and free me from the bureaucratic shackles of being a partner in a medium-size firm.

I was confident that my degrees in business and accounting would make management of my own practice a breeze. As with so many events in life, you are only that naive once.

Detailed, proper planning is the cornerstone of practice ownership. As much as I hate to admit it, I have survived despite my failure to plan carefully, not because of it. Here are the lessons I've learned over the past year--most of them the hard way.

Nail down the numbers

Although it sounds obvious, the first step is to determine whether you can actually make money in your dreamed-of practice. Overconfidence and blind faith are no substitute for financial planning--although they do help.

Make a realistic projection of income and expenses before you move out and sign a long-term lease. The best way to start is by meeting with friends and colleagues who have opened their own practices; they can help you check whether your projected numbers are realistic, particularly on the expense side.

Resist the impulse to estimate expenses first and then back into the amount of income necessary to cover them. Make a realistic estimate of your anticipated cash flow, and be conservative on both timing and amount. Take a hard look at what good professional judgment indicates you can earn during the first couple of years.

Next, realistically estimate your expenses--and then double them. Running a law office costs more money than many people imagine. If you are unconvinced, take a tour of your local office supply store before you hang out your shingle, and look at what basic supplies cost. That experience alone should make you a believer.

Once you determine that your practice can be financially viable, get a quote for malpractice insurance and make sure that it is ready to go the same day you are. You cannot afford to have your coverage lapse for even a day. There are many areas where you can be frugal, but malpractice insurance is not...