«The Nuts and Bolts Of The Law Office By: Jim Calloway, Director Oklahoma Bar Association Management Assistance Program © 1998, 2000, 2004, 2005 ...»
GOING SOLO: BIG BUCKS & NO BOSS!?!
The Nuts and Bolts of Opening Your Own Law Office
The Nuts and Bolts Of The Law Office
By: Jim Calloway, Director
Oklahoma Bar Association
Management Assistance Program
© 1998, 2000, 2004, 2005 Oklahoma Bar Association
Visit Jim Calloway’s Law Practice Tips Blog at http://jimcalloway.typepad.com/
The Nuts and Bolts Of The Law Office
By Jim Calloway, Director
Oklahoma Bar Association
Management Assistance Program
(Author’s note: This is a compilation of several papers, some dating back to the late 1990's. They have only been lightly re-edited and so the reader may find some out- dated language and some redundancy. Nevertheless, I wish I had had this document available to me when I first opened my own law practice.) What’s the best thing about being a solo practitioner? Perhaps it is the freedom to do what you want, make decisions for yourself, set the hours you want and take only the cases you want.
That sense of freedom and empowerment will stick with you for several days, maybe even weeks, after opening your solo law practice.
Then reality sets in.
In many ways, the beginning paragraph above is absolutely true. You can docket your child’s Little League game in the early afternoon and attend it with no explanations required to anyone. But, saying that a solo practitioner has no boss is somewhat humorous. In many ways instead of having a single boss, the solo practitioner has a hundred or more bosses. The ‘bosses” include every client and the landlord who expects to be paid rent, along with all of the other providers whose fees for services constitute your overhead. Sure you can set your own hours, unless the judge says a case will be heard on a set day and time. Sure you can do whatever you want with your business time and personal time. But most things you want to do with your personal time cost money, which is only available if you devote an adequate amount of business time to practicing law.
The true solo practitioner, with no employees, wears many hats- all the “hats” there are for the business in fact. They are management and labor. They serve as the Chief Executive Officer, the Chief Financial Officer, the Chief Information Officer. They also serve as the file clerk, the errand runner, the receptionist, the secretary and perhaps even the janitor. When the true solo practitioner is in court or in conference with a client, all other business operations are closed because there is no one else available to handle them.
Many solo practitioners will soon decide that they need to hire a secretary, whether full time or part time. Although the lawyer is technically the “boss” of the secretary, in reality adding staff adds to the lawyer’s responsibilities and duties, chief among these being paying the secretary and making tax deposits timely. Hopefully a
The goal for hiring a secretary should not be just to make the lawyer’s life easier.
The law practice is a business. The goal therefore is making money. Staffing decisions should be made to facilitate that goal. Some lawyers would take umbrage at the statement that a law practice is a business. They would maintain that the practice of law is a profession. In fact, you can, in many quarters, start a rousing debate over whether lawyering is a profession or a business. Most of these discussions focus on the perceived loss of professionalism, congeniality, camaraderie and trustworthiness between members of the bar.
Whether there is in fact a decline in the professionalism of lawyers and whether there are too many lawyers in society today are subjects for discussion in another forum.
The answer to the business versus profession debate appears very clear, at least to this writer. Simply put, today the practice of law is a profession which must be operated like a business.
Operating a law firm like a business does not necessarily mean squeezing every penny out of clients, nor demanding that every billable tenth of an hour be compensated.
In fact, the application of some types of business principles to a lawyer-client relationship may cheapen it and demean it, transforming what used to be a confidential personal relationship of trust into a mere commodity. If one shops for a will like shopping for an automobile or a new pair of shoes, then eventually lawyers are reduced to the role of a vendor instead of a professional advisor. The client perceives all lawyers services as the same and price becomes the only important factor. Whether you have advised them for years or saved the family farm a decade ago could become irrelevant when the new law school graduate down the street markets "Last Will and Testament..now reduced to move quick at 50% off." We must therefore cultivate our client relationships while improving our efficiency. We must utilize new technologies without allowing them to distance us from our clients.
One thing remains certain. To the extent that a lawyer can operate more efficiently, quickly and cheaply in the future, it will benefit both the lawyer and the lawyer's clients. Improving in this area is not an option.
Today, we must focus on creating satisfied clients in an increasingly competitive marketplace. Legal ethics and obligations to protect the client's best interests may prevent us from adopting the old adage - "The Customer is Always Right". But we can strive toward the goal of "The Client is Always Satisfied". This does not mean necessarily satisfied with the outcome of a particular case. It does mean that the 2 client's perception of the lawyer's advice, efforts and reliability should be satisfactory.
For it is the client's perception that will result in either future referrals or bar complaints.
Many lawyers never recognize that the skill of a lawyer or even an outstanding result may not weigh as heavily in a client's positive or negative perception as other matters.
The tone of the receptionist's voice, the amount of time left on hold, the promptness of returned phone calls, the appearance of an attorney's office, copies of pleadings and correspondence being mailed to the client, all may contribute more to your client's attitude than the matters we are trained to consider important.
Traditional means to do these operations involved files in folders, typewriters, manually recorded time sheets and ledgers. Manual systems still work fine. But no one uses a typewriter to prepare documents anymore. There is a difference in ease and accuracy in word processing on a computer versus a typewriter. You will find a similar improvement in automating all of the above functions. The sooner you handle all operations on a computer, the better.
As a lawyer, you need access to the law. The better your access the more you will spend (in money and training). It is very important to shop around among the various legal information providers. Internet access is an absolute must.
Someone must pay you for your services, usually either clients or other lawyers, with a rare situation where a government entity or the other side will pay you.
The best source of business is a referral from a satisfied client. Client satisfaction depends more on the client’s perception of his treatment than on the lawyer’s skills or the results obtained.
Every dollar you do not pay out in overhead is an extra dollar you take home.
Your greatest successes are often cases that you turn down.
Excellent employees are the greatest of prizes. Praise them, listen to them and compensate them well. Schedule some regular time each month (perhaps a luncheon) to listen to your assistant’s concerns and ideas. Continuing training for employees is an investment you will never regret.
Your receptionist is often the lowest paid, least experienced and least trained employee. Your receptionist gives all of your clients their first impression of you and sets the tone for every dealing between you and the world. Make sure you are giving the impression you desire The successful lawyer MUST BE a law Firm Manager.
Most lawyers just want to practice law. A few, perhaps, came from a business background or attended business school and really are excited about the prospect of running their own business. But for most, the business concerns are not what drove them to law school.
Well, obviously, law firm management means different things depending on the size of the firm and the type of practice. The managing partner of a two hundred attorney firm has a vastly different view of management than a solo practitioner with one employee.
But, the general tasks of law office management are similar no matter what the size of the firm.
The primary management style difference between smaller and larger firms is the delegation of management duties. The larger the firm the greater share of those duties are handled by staff, who specialize in administration and management. The smaller the firm, the less likely it is that resources are available to hire full time managers and, therefore, the duties fall on the lawyers (or secretaries.) For convenience, let us refer to two broad sets of management issues, the Administrative Services, which are generally applicable to most businesses and Delivery of Legal Services, those which apply only to a law firm.
Administrative issues are crucial for the existence of the law firm. They may be done poorly, which will decrease success and profitability of the firm, but they will generally be done. For example, if the electricity keeps getting shut off, eventually there 4 will be a system in place to pay the electric bill. Penalties for late payment or non-payment of employees withholding will eventually be remedied if the practice is to survive. Administrative issues which do not directly relate to the delivery of legal services are often referred to as the "business side" of the practice of law.
Some of these types of administrative issues include:
As you can see, these lists could go on and on and it is almost impossible to draw a "bright line" separating one set of areas from another.
The key is to determine whether lawyers are doing tasks that are mostly on the "business side" of the firm and are more properly done by non-lawyer employees or consultants. Even the solo practitioner who has no staff will probably make arrangements for outside help for computer applications, heavy typing and other nonlegal matters. More than one solo practitioner’s spouse has found themselves pressed into service for tasks as shopping for office supplies, typing or otherwise serving as a temporary receptionist or secretary.
(In fact this is one of the key differences between a solo practitioner and a lawyer practicing in a large firm. A lawyer in a larger firm has the luxury of allowing the lawyer’s spouse to be totally oblivious to what goes on in the law practice. A solo’s spouse will have to know much more and will have much more direct interest since the disposable income in the household may vary from month to month depending on the success of the practice. Suppose someone calls for the lawyer at home in when the lawyer is out.
With a personal injury practice, for example, the spouse will need to know that a minor 5 accident with no hospitalization may just need some reassurance and instructions to contact the lawyer in the morning and not discuss the matter with anyone further until then. A case involving death or catastrophic injury may mean tracking down the lawyer immediately for client consultation and evidence preservation issues.) The inherent problem of the lawyer as administrator or manager is that all of the time that lawyers spend managing, they are not producing legal services at all. As a solo and small firm lawyer, one may be surprised that over one-third of office time may be devoted to non-billable tasks. The lawyer has to handle these matters (or delegate them to someone) but should do so as efficiently as possible. Efficiency in management always results in more time for compensated client services.
Office Space — Just Where Are You Going to Work?
As the real estate agent saying goes, there are three important things about real estate; location, location and location. If you wish to establish a new practice with consumer clients, renting an office on the thirtieth floor of a downtown Tulsa office building may not be a wise decision. On the other hand, if you are going to have a litigation based practice with clients not limited to the local area, getting as close to the courthouse as possible maybe the most important consideration.
For the solo practitioner lawyer who is just starting out in business, there are
essentially three alternatives:
(A) you can decline to rent office space and work out of your home, (B) you can sublet or office share space with other attorneys, or (C) you can lease space independently to establish your own law firm separate from any others.
A. The Home Office - The obvious benefit to working from your home is that you save a tremendous amount of office overhead expenses. It is doubtful your utility bills will be any higher at home due to having your office there and you are already paying your house payment or rent. Plus the Internal Revenue Service has loosened some restrictions on deducting home office expenses.
Nevertheless there are significant disadvantages to operating from a home office.
Perhaps the major disadvantage is possibility of an aura of lack of success or professionalism on the part of the attorney who does so. Clients want to be represented by competent, successful professionals. If you office from your home, you may find yourself not getting certain business because clients will have the perception that you cannot be that skilled an attorney if you cannot even afford to have a “real office.” You may also find that clients will entrust you with minor matters, but would go to another attorney with a more impressive office environment when a significant or complicated matter presents itself.