Monday, January 16, 2006

Estimated Monthly Expenses.....

Well I created my wishlist, which could use some refinement (the consensus is that a color laser printer-all-in-one is probably not really necessary). So, here's my on-the-cheap monthly expenses:

  • Conference room/image office to meet clients. I know some people meet clients in their house, business or Starbucks, but I don't think that would work for me. Especially for a family law practice. Cost ~ $175-275.
  • 2nd phone line into the house: No idea what this would cost - I'll guess ~ $30.
  • Malpractice Insurance: Again, no idea - I'll guess $200-$300 a month.
  • Continuing education/books. I'll try to control myself at about $250 a month. ($199 average cost + gas to Seattle.)
  • Web/Blog costs: ~$20 (8.95 typepad and 8.95 godaddy web site). Why do attorneys NOT have websites? Why does any business not have a websites?
So, the total would be around $700-$900 per month. If I charged ~$100/hr that would be ~10 billable hours to break even. How hard is it to get 10 billable hours out each month? It doesn't seem like much, but I've never really charged anyone by the hour before. Any new family law attorneys reading this have an idea what the average range of an hourly fee charged by a new attorney in Washington?

Course, I realize there will be miscellaneous expenses not accounted for here. But, hopefully these would be the big ones.


At 3:57 PM, Blogger said...

I opened a successful solo practice almost right out of law school before being recruited to be a Practice Management Advisor with the Florida Bar's Law Office Management Assistance Service for over 3 years. In that capacity I helped more hundreds of lawyers plan-for and open their own now-successful law firms than I can count.

Today I operate a private member-only website for solos & lawyers in small firms to help them with the marketing & management of their law firms.

We are currently not accepting any new members but we do offer a free weekly newsletter which I think you might find helpful.

With regards to your proposed budget, there's alot missing. To help you out though, I would suggest you follow this approach to planning & organizing your new law practice:

Location - I gather from your post you intend to work from home. I am assuming you have a space dedicated to your home office where you can close the door at the end of the day. The door is critical to your sanity, especially if there are kids or pets in the household. Of course you will need a separate phone line, and based on the experience of several of my clients who office at home, I would also suggest you plan to either hire a housekeeper or if you have one to increase the frequency. A clean house will make you more productive.

Furniture (let's just say everything that doesn't plug into the wall) - Obvious stuff like a desk, filing cabinet, comfortable chair, etc. Don't spend a penny more than you have to. Scour the classified ads & look for companies going out of business & buy their used but still functional furniture for pennies on the dollar.

Equipment - By far the most important piece of equipment is the computer and the most important thing about the computer is the law office management software installed on it. I happen to like Amicus, but there are others to choose from. A company I have referred hundreds of solos to over the years & never had any complaints is Skimp on furniture & keep your files in cardboard bankers boxes if you have to but don't cut corners on law office management software & training. And be sure whoever is setting up your computer system is qualified to do so, not your neighbor's kid. Back-up your whole system every day & remove the backup media from your home to some other safe place every week. Odds are this is an unecessary precaution but having worked with thousands of lawyers over the years, I have seen a few tears & it's never pretty.

Policies - What are your client policies going to be? If you don't take the time to think about this critical subject ahead of time & inform prospective clients before they become actual clients, you're setting yourself up for Trouble with a capital "T", ESPECIALLY doing family law! Can they call you at home? Howabout over the weekend? Can they visit you at your home office (NO!) What's the definition of an "emergency" vs. something that can wait until Monday?

Procedures - How will you actually handle the business functions? Athletes practice, actors & actresses rehearse and successful business owners anticipate what they are going to have to do for the business and plan how to do it ahead of time. Client intake procedures, conflict of interest checks, opening a new file, status letters, filing schemes, tracking your hours, billing, etc., etc. etc. Trying to build a bicycle while you're riding it is a bad idea.

Marketing plan - Who is your target market? What types of services will you offer vs. which will you refer out? To whom will you refer those services & how? How will you communicate the benefits of what you do to your target market? Who is in a position to refer business to you? These are all very basic questions you should have written answers to. If you just build it, they won't come & it won't be any fun to wait for them all by yourself.

Budget - Ask your accountant to prepare a chart of accounts for your solo practice. Then sit with him or her to customize it to your reality. Then repeat that chart of accounts 12 times and make your best projections for what expenses & revenues will occur in which month. Each month compare your best previous guesses to what really happened & adjust your actions & expectations accordingly.

I hope this helps. We've developed some audio products and workbooks for our own clients & we're considering making them available to non-clients as well. Anyone who would be interested to learn more about effective client relations & Rainmaking skills, should send me an e-mail. Depending on response we'll decide what to do.


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