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Launch! Lessons Learned by Lawyer Entrepreneurs

by Davis C. Bae, Todd Irwin, Sarah Z. Brown, and Amy R. Novick

tarting a law firm from scratch is a risky move, especially in todays economy. The authors of this article have a wide range of experiences in operating law firms but share a common entrepreneurial spirit and experience. As risky as the venture might seem, the rewards that come from owning your own business can outweigh those concerns. Opening your own law firm is little bit like having a child. If you wait until you can afford it or are ready, you may never do it. But, also like having a child, some soul searching and advance planning is most of what you need, plus nerve and determination. Sometimes, you just have to close your eyes and take the plunge. A law firm is essentially a small business that provides professional service. Both componentspracticing law and running a businessare key to success. Make time for both. Far too many lawyers excel at making legal arguments and representing their clients but are lousy at operating a business. They dont make time for organizing their internal procedures, recording their time, billing their clients, cultivating new business, or marketing their practice. Think twice about opening your own shop if you arent prepared to make time to manage and promote your business. Just like a new baby, your business wont thrive without your constant love and attention.

Getting Started
Before opening your own practice, first determine whether you have the drive, perseverance, and enthusiasm to become a small business owner. Are you
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interested in managing your law firm in addition to practicing immigration law? Second, can you afford to do so? Prepare a basic operating budget of anticipated in- come and expenses. Do you have capital for your first two years of operation? If not, can you get a loan to cover your operating expenses? How much money is the minimum you can afford to make for those two years? Most businesses need at least two years before they break even and are considered financially successful. Crunch the numbers and make sure you are prepared financially. Defining your niche or subspecialty should be part of your analysis. What kind of practice do you want? What kind of clientele? Are you willing to depart from your ideal clientele if finances require it, at least in the beginning? Consider where you would like to obtain clients and develop a strategic plan outlining how you plan to get them. Include a marketing plan, too, so that you allocate sufficient time and funds for business development and opportunities. Rent and salary are the two biggest overhead expenses for an immigration law practice. Both are controllable. Keeping control of your overhead is perhaps the single most important piece of advice for those just getting started. Determine where geographically you want to practice and shop around for suitable office space. Like buying a house, dont overextend. Dont rent more space than you need or can cover initially. You can always expand later. Seriously consider an office sharing arrangement. Many immigration lawyers are solo practitioners and share suite space, reception, conference rooms, paralegal support, and even basic office equipment. An office sharing arrangement with immigration practitioners has the added benefit of sharing resources as well as valuable, ready access to other lawyers who share your professional interests, challenges, and specialty.
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In addition to the physical location and space, you need to form the legal entity called your law firm. Consult your local bar rules. Can you set up a limited liability corporation? A sole proprietorship? What are the risks and limitations of each? Consult a business lawyer and your tax accountant for advice on how to incorporate and when. Alternatively, if you are in a hurry, there are many online companies that specialize in incorporating new businesses. Also consider how you expect to get paid and the tax or other advantages of taking a monthly salary. If you expect to have three or more staff, consider setting up a payroll account (e.g., Paychex) to ensure that you properly manage required withholdings and taxes. Once you have legally formed your law firm, obtain an employer identification number (EIN) from the Internal Revenue Service, open an operating and trust account at your local bank; be sure also to set up online banking for the convenience of monitoring your cash flow. Obtain malpractice insurance. Consider the AILA Lawyers Professional Liability Insurance Program, but also shop around for less expensive options. Make sure the policy covers all kinds of immigration matters. Also, obtain liability insurance to cover theft and accidents on the premises. Consider long-term disability insurance and private life insurance since now you will be on your own.

Setting Up Your Office

Office equipment and software programs are the next biggest expense. A reliable computer and fast printer are a must. A nice way to have your office accessible at all times is to purchase a laptop, which you can plug into a docking station at work. Then, take it home with you when needed. A combo printer/copier/fax/scanner is a good investment. Always have a back-up printer available, as your primary one is
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sure to fail when you most need it. A good telephone and voicemail system also are important, and especially if you are foregoing formal receptionist service. Consider, too, whether a personal digital assistant (e.g., Blackberry) is needed. When setting up your computer, take time to find and bookmark key websites for easy access. These should include the Department of State consulates, U.S. Citizenship and Immigration Services processing times, Visa Bulletin, AILA, and your favorite law firm sites. Set up your myAILA account for daily e-mail updates. Make sure you have a trusted system for backing up your files. There are a host of companies, such as Carbonite, who offer online, automatic back-up services for only $5 per month plus a very reasonable initiation fee. Forms software and legal resources must be purchased. One should not practice immigration law without a decent forms software package (Tracker, INSZoom), and many forms packages include a billing and invoicing component that should be explored. While the temptation is great to invest in a separate billing and invoicing system, depending on your volume, you may be able to get byat least initiallywith a good Excel invoicing system coupled with a good filing system. The same is true of online legal research packages such as AILALink, which offers close to 200 immigration forms in a fillable PDF format that works with Adobe Reader. Much legal research can be done online, and aila.org and AILALink provide a hefty immigration law library. Nevertheless, some legal resources should be purchased in print, including an up-to-date copy of the Immigration and Nationality Act, a copy of the Code of Federal Regulations titles 6, 8, 22, 28, and 42, and Kurzbans Immigration Law Sourcebook from AILA Publications. You simply should not practice immigration law without them. (Note: Your clients will notice outdated publications even if you dont.) Consider, too, AILAs Immigration Practice Toolbox, a helpful edition that includes a myriad
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of sample client forms, checklists, intake questionnaires, and sample letters on CD. Depending on your niche, Check out AILA Agora for myriad subject-matter publications. Put aside at least $750 a year for legal resources. Invest in a personal e-mail address and website. Lawyers whose e-mail addresses end in @yahoo.com or @hotmail.com wont appear as professional and established to prospective clients. Make your e-mail address your own and purchase an internet address to go with it. Make sure your website looks professional and is easy to use. Also, Google yourself to find out what websites appear with your name. If your old associations are listed before your new one, prospective clients will have a hard time locating you. Make sure your online presence looks professional and up to date. Another critical system is your case file system. Decide how you plan to tickle your cases and keep on top of filing deadlines and due dates. Two tickle systems are required by most malpractice carriers. Even if you have a small case load at the beginning, treat your practice as if you have 200 cases with 200 filing deadlines. Form good practice management habits at the beginning, while you still have the time. Develop some basic client materials. These should include your client intake questionnaire(s), consultation information, and representation agreement(s). Also, establish your hourly and flat fee rates, or fee schedule, for routine cases and low bono cases. Most potential clients want a fee range when they first contact you about your legal services. While it would be a mistake to quote a firm fee without learning more about the case, ranges give the individual a broad sense of what they can expect financially. Stick to your fees! You dont want to end up working on a very time-consuming case with nominal pay. Especially in the beginning, dont feel compelled to take every case that walks in the door. You dont want to cheat yourself
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or the client from a rewarding experience by taking on work that is completely out of your area of expertise. If you do take a case with a subject matter that you are not experienced in, make sure you seek appropriate advice from mentors and consider co-counseling on some cases with a more experienced attorney. Set up accounts with an office supply company (e.g., Staples, Office Depot); search the internet, too, for mail order companies that are competitive and provide good customer service. One such company is All State Legal, where tabs, files, and other office supplies are reasonable and delivered the next day. Register with Federal Express or UPS and the post office so that you can complete delivery forms online. Stamps.com also provides an easy to use and relatively inexpensive way to print postage on your packages and envelopes in a professional looking and efficient manner. Basic office supplies should be purchased initially in small quantities to help with cash flow and to help gauge your true needs. Youll be shocked to learn how much Post-It notes cost! Be frugal about office sup- plies, but dont be cheap. Make sure, however, that you have the supplies necessary to ensure that your filings look professionally prepared and submitted. At the same time, dont indulge in fancy letterhead, logos, color coded Post-It notes, pads, and pens, unless it furthers a specific, overall goal or law firm look. Electronic letterhead is fine, and client cover letters printed on nicer stationery looks professional. Remember, keep control of your overhead costs. Do invest in a nice business card, as many times it serves as a persons first introduction to your firm. Also note that you practice immigration law on your business card so the person you gave it to will not forget.

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Opening Your Business, Marketing Your Practice

Once you are close to operational, its time to formally open your business. Electronic announcements and a firm website will serve to introduce your practice and your specialty to your friends, family, colleagues, and current, former and potential clients. A website also provides critical presence. Remember to send notification of your new practice to local bar associations, AILA, and alumni associations, as well as to a list of everyone you know. Getting word out of your new practice takes time and considerable effort. Your marketing plan should include complimentary speaking engagements, volunteering time to work with key ethnic, trade or other organizations, preparing an article for publication in niche periodicals. Also answering questions on AILAs Message Center or elsewhere conveys that you are knowledgeable and approachable. Most referrals come from other lawyers, and especially immigration lawyers! Dont be shy about identifying local law firms operating in proximity to you, which may not have an immigration practice. Call some of the partners and offer to take them to lunch to tell them about your practice. Dont be shy about promoting yourself and your accomplishments. Leave your business card whenever and wherever appropriate, dont be caught without it! While marketing and business development may not come natural to you, it is critical for operating a small business. Set aside at least one block of time a week to do something that promotes your business. And remember, just because you are operating as a solo practitioner, you are not alone! Use the wealth of resources available to you in the immigration law community. Establish relationships with other attorneys who you can call for advice on challenging legal questions. Subscribe to a variety of listserves and use AILAs message center and mentor program to seek additional advice on legal issues.
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Building a Client Base, Starting Today

The approach one takes to building that necessary pool of clients can be varied, interesting, and actually enjoyable as long as the avenues taken to further this goal are ones that you enjoy. Like most things in life, if one feels comfortable engaging in an activity, excelling at that endeavor is far easier. And as you begin the process of building the client base, it is very important to make sure that the type of clients coming through the door are the type that will further your goals, will not be a burden emotionally to you or your staff, and will not cause a blemish on your professional reputation. Finding Clients All attorneys have many possible paths to bringing clients in the door. The focus first needs to be what you feel comfortable doing to find clients and having a plan. One attorney may know with certainty what type of cases he or she plans to take, and others may be willing to let the clients come through the door and develop an area of expertise through time. Finding a unique area of immigration law in which to practice (such as only nurses, J-1 waivers, family, or removal, etc.) may be one way to set oneself apart from the rest of the immigration bar. But once that plan is developed, the opportunities are abundant: Contact law school classmates. (Not everyone wants to be an immigration lawyer, so most of the law school contacts are not competition!) School contacts for a niche law practice can be especially helpful. Meet with the local chamber of commerce for the city and any ethnic chambers that may be operating in close proximity. Notify practicing immigration attorneys of your new law practice requesting that cases not taken because of difficulty, lack of time, etc., could be sent your way. Volunteer time (anywhere!) and network with other persons. Spread the word in a variety of settings.
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Join a gym, be friendly, and network with other professionals. Be active in the community by sitting on boards, PTAs, etc. Speak at local bar groups, churches, mosques, synagogues, business groups, etc. Give multiple business cards to various contacts as you encounter them. Have a good website, and work with a network specialist to make it one that is easily found by potential clients. Send a monthly newsletter to clients and colleagues to remind them that the attorney is available to work on solving certain types of legal problems. How to Keep Clients The best referral base is a collection of happy clients. A caring, sincere, and focused attorney will reap the rewards from the client who will refer his or her family and friends for years to come. Returning phone calls promptly, reviewing facts of cases, carefully preparing for hearings and interviews al- lows you to benefit in the future from a client base that just keeps on giving, over and over and over again. And listen. Being a good listener demonstrates to potential clients your focus and sincerity. An attorney who bargains with clients over fees will gain a reputation in the ethnic communities that such bartering is possible. Setting a fair and reasonable fee is the attorneys right and responsibility, and to make the fee process negotiable cheapens an attorneys reputation. Being honest with potential clients about your skills and not inflating the truth about your abilities will engender good will. Contacting colleagues for input and ideas and then getting back to the client with a recommendation is a good way to not only increase your skills, but to create a good attorney-client relationship. And when that inevitable situation arises where you have made a mistake, admit it. Some of the best clients are ones who have experienced an attorneys honesty
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and willingness to correct an error if possible at the attorneys expense. An honest apology lays a strong foundation for a long-term relationship with a client, as it does with family and friends. What to Do with a Client You Wish You Had Never Met Very simply, some clients will be so emotionally burdensome to you and/or to your staff, that a full refund to the client and a frank conversation that you are no longer willing to continue the attorney-client relationship can be one of the best business decisions. Some clients are just too expensive to keep as clients. The emotional toll and stress they cause are not worth the money they may pay. Every attorney needs to remember that a client may have found the attorney, but the attorney chooses whether to continue the relationship. Be Realistic Building a client base takes years, but a carefully tended client base will grow exponentially year after year. Do not get discouraged. All of us start out with one client and end with too many to remember.

Setting Fees and Getting Paid

Determine how much to charge for work is an important part of an immigration practice. Charging too much might drive away potential clients and certainly limit the referrals that you might otherwise receive from a satisfied client. Charging too little could cause a windfall of clients but then make you unable to meet the legal obligations and client expectations. The outside boundaries defining an attorneys fees are set by the ethics rules within the licensing state. As an example, the Rules of Professional Conduct at Rule 1.5 enjoins an attorney from making an agreement for, charging, or collecting an unreasonable fee or an unreasonable amount for expenses.
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The Rule provides the following nonexclusive factors to be used in determining whether a fee is reasonable: 1. (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; 2. (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; 3. the fee customarily charged in the locality for similar legal services; 4. the amount involved and the results obtained; 5. the time limitations imposed by the client or by the circumstances; 6. the nature and length of the professional relationship with the client; 7. the experience, reputation, and ability of the lawyer or lawyers performing the services; and 8. whether the fee is fixed or contingent. While the practice of law is commonly accepted as a business, it should not be viewed as exclusively a matter of maximizing profit by charging the highest fee that the market will bear within ethical guidelines. As immigration lawyers, we represent a vulnerable clientele who are legally and perhaps culturally disadvantaged. Even the clients of a business immigration attorney are dependent on the knowledge and skill of the attorney to allow him or her to remain in the United States, remain with the employer, and avoid career and family disruptions that will occur if a visa petition is denied. Some clients also will be disadvantaged by language, culture, and experience. Even an American employer or the relative of the foreign national are dependent on the attorney to allow the key employee or relative to remain in the United States. A vulnerable client may agree to a high fee, but even if it is not ethically impermissible, it isnt the best business practice. Many immigration attorneys rely to a great extent on
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word of mouth from satisfied clients to expand their practice. A reasonable fee and a willingness to do the little extras without charging for every phone call or e-mail will go a long way toward creating a satisfied client. This will pay dividends for years to come as you receive referrals. In many areas of immigration law, especially in a business immigration practice, flat fee billing is the majority trend. Clients appreciate knowing exactly what will be charged. A flat fee also can be less of an administrative burden for a law firm that doesnt have to track billable hours and convert this to client invoices. Hourly billing may be the preferred method for practice areas where the time required to do the work is less predictable such as in deportation defense. Additionally, if there is a possibility that a court may award EAJA fees then tracking billable hours, even if a flat fee is charged, is important to provide a lodestar calculation to the court. Whichever method is used, a client needs to get a written fee agreement before the attorney starts work on the case. We all want to provide excellent service to our clients and sending a fee agreement can seem like one more thing on the to do list that stands in the way of actually getting the work done. However, youll be glad you did if you end up sending the client to collections for failure to pay or if there is a malpractice or ethics dispute.

Getting Paid
What fee a lawyer charges and the billing method used is an academic exercise if one is not getting paid. This is one of the business functions of the firm that cannot be ignored. At a minimum, monthly bills should be sent to clients and an accounting system must be in place to allow an attorney to identify slow paying clients. This function can be outsourced to companies that collect timesheets or flat fee statements, produce in- voices for attorney review, and then mail them out to clients.
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It can be kept within the firm as well but it must be assigned the highest priority. It is not long after billing becomes erratic that cash flow also becomes erratic. Be consistent in billing practices to avoid gaining a reputation of accepting less than full payment or accepting slow payment. Many of our clients are juggling financial obligations back home with costs associated with living in United States. One technique is to charge interest during any month that a payment is missed. When payments resume, stop charging interest. This must be stated within the fee agreement and consistent with state ethics rules. It also is important for the attorney handling the matter to call the client when a monthly payment is missed to send the message that this is important to the firm. A missed payment can be a signal that the client is having financial difficulties, so future work needs to be considered carefully before being undertaken. It also can be a signal that a dispute with the firm is developing. A timely phone call can be critical to resolving concerns while they are still relatively small. As immigration attorneys, we are privileged to work with some of the most motivated and brightest people from around the world. Setting reasonable fees and communicating to clients that payment of those fees is a priority establishes the strong financial footing upon which an attorney can continue to practice for years to come.

Making a Profit From Ethics

Ethics might seem like a basic element of law practice, but amidst the challenges of a heavy case load, staff management, and administrative decision-making, ethics often can be overlooked. A great command of the Rules of Professional Conduct can be rendered useless in the face of insufficient control within a law practice.
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Establishing processes around ethics allows an attorney to make daily ethical decisions effectively and efficiently, and frees critical time for case processing, management, and marketing. What follows is a list of issues and solutions that can be implemented to grow and safeguard your practice. Conflicts of Interest Legal malpractice insurance companies require an attorney to maintain a conflict of interest system that is designed to predict and prevent conflicts at the beginning of a matter. However, within an immigration practice, conflicts are more difficult to foresee, and typically arise after a case has been ac- cepted and is in process. Such conflicts occur in employment-based cases, when an employer or beneficiary wishes to terminate the relationship; in family-based cases, when a petitioner no longer wishes to support the family member; or during a marriage-based adjustment of status, when a couple suffers marital discord. These conflicts are difficult if not impossible to avoid, thus it is essential to obtain acknowledgment in writing from the client regarding potential conflicts of interest. When in doubt, contact your bar association, which will frequently provide a special liaison where conflict issues can be addressed confidentially. A liaison can provide peace of mind when questions of proper professional conduct arise. Periodic Review of Engagement Agreements and All Client Documents The rules of conduct in a state bar association can change, leaving engagement agreements and other template forms vulnerable to inconsistencies or even invalid. Calendar a review of all client documents at least once per year. Solo practitioners can get together with other solo practitioners and trade client agreements for review. A fresh set of eyes will frequently find solutions or language that will enhance the effectiveness of client agreements.

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Financial Controls Failure to maintain financial control of a business is often the start of ethical difficulty. Review of bar discipline notices reveal that attorneys are frequently admonished for failure to control client trust accounts. As attorneys, we receive only minimal training on financial control. Basic accounting principles such as segregation of duties, dedication to invoicing, payment of accounts receivable, and cash flow analysis are neglected or even ignored by many attorneys. Work with an accountant to review your financial processes. Law firms share many financial management issues with other businesses. A good accountant can clean up your financial records, which can result in increased revenue and a reduction in costs. Ethical Education Outside of Immigration: It is essential to take ethics classes outside your standard AILA seminar. Ethics in marketing, financial control, client management, conflicts of interest, and employment law are all related to an immigration lawyers practice. These types of ethics courses provide different yet important value to the health of your practice. Staff Training on Ethics In a law firm, ethical responsibilities fall to every level of employee, as each employee has the potential to create ethics-related issues. Any employee who has contact with clients should understand confidentiality and conflict of interest issues. Above all, any attorney working with non-attorney staff must clearly define the boundaries of legal interpretation and teach which questions must be answered by an attorney. A simple rule of thumb allows that paralegals and other staff may apply facts to documentation but cannot make any interpretation of the law. Also, any document or legal communication drafted by a staff member should be reviewed by the attorney supervising that staff member until it is clear that the staff member understands the distinction between attorney decisions and non-attorney decisions.

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Ethical Ceilings in Case Acceptance As business owners know, there are rarely any guarantees of future income. This has led many an attorney to take any case he or she can, regardless of case load or difficulty. To avoid acquiring an overwhelming case load, have a rough idea of the number of cases that you can handle at any given time. Do not be afraid to tell an uncooperative client that you must withdraw or to refer a matter to another trusted law firm. It is never acceptable to use case overload as an excuse. To avoid overwhelming yourself with complex cases, consider using AILA mentors or finding another attorney who can co-counsel you on matters. Attorneys must know their limitations within the day-to-day practice of law. By understanding your limitations, you avoid making fatal errors, which can be disastrous to your practice and reputation.
Davis C. Bae is the founder and managing attorney of the Bae Law Group. His practice focuses on comprehensive immigration planning for multinational and fast-growth corporations. Todd Irwin is based in Colorado and focuses on business immigration matters for employers including those involved in public education, oilfield services, publishing, entertainment, and more. Sarah Z. Brown practices in Dallas with the law firm of Miley & Brown with practice areas primarily in family, employment and naturalization areas. Amy R. Novick practices in Washington, D.C., as of counsel with The Haynes Immigration Law Firm. She focuses primarily on obtaining visas for highly skilled professionals, J-1 waivers, issues of concern to G-4 international workers, foreign adoptions, investors, naturalization and citizenship, waivers of inadmissibility, and familybased immigration matters.

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Sometimes It Is All About the Money

How to Finance Your Practice, Set Up Your Books, and Stay on Top of Your Firms Financials
by Natalie R. Kelly and Jim Calloway Lawyers are not accountants by trade, generally speaking. And, while you may often run across individuals who are both lawyers and accountants, many new lawyers seek basic answers to their financial questions. This is especially true with those without any accounting background or experience. Sometimes the questions are really about how to deal with the money. Outlined below are basic concepts and practical steps for not only getting money for operating a law practice, but how to managing the accounting aspects of the practice, too.

Financing Your Law Practice

Short of being independently wealthy or having a generous close friend or family member who is, most beginning lawyers need to seek workable ways to finance their practice. The most common ways are: 1. 2. 3. 4. 5. Bank Loans Bank Lines of Credit Small Business Loans Credit Cards Personal Savings

Below will be a discussion regarding each of these forms of financing a law practice, but a more basic question to answer is, exactly how much does it cost to finance a practice? And in typical law school fashion, the real answer is it depends.
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Considerations for the amount needed to start the practice include what type of practice is being financed; what office equipment and physical needs are there; what is the amount needed to carry out a realistic marketing/business development venture; what cost of doing business costs are to be covered; what location costs are involved; what professional fees need to be paid; what personal cash needs are to be covered; and what other financial necessities are at play with office start up. In working with various solo and small firm practice startups in the past, a general rule of thumb for start up costs is necessary expenses to begin the practice and run it for 4 to 6 months, and personal savings for 6 to 9 months. However, in reality, most practitioners often proceed with much less than this amount. The financing of the practice becomes the next part of the equation as lawyers find they need to seek out such means. When financing through means other than direct capitalization, lawyers deal with the following: Bank Loans Loans are hard to come by where personal credit ratings and stricter lending guidelines are utilized. With the depressed economy has come even tighter purse strings at the local bank. This is true even where previous personalized banking relationships had existed. If you are adamant about seeking this form of financing for your practice, be sure to prepare a detailed budget showing operational costs for at least a year. This budget should be accompanied by a detailed, written business plan, and personal credit and financial information. Many loans are not approved due to the lack of any real collateral in terms of accounts receivable and the like. (Its hard to show what you dont have yet, and convince someone to take a chance without collateral.)

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Bank Lines of Credit A long-time favorite for many smaller businesses in local community situations, even lines of credit are starting to shrink as an option for covering start-up costs. The traditional loan process has similar steps, and individuals looking to obtain lines of credit should not only prepare as they would if seeking a bank loan, but should also pay close attention to outlining their assets for use as business collateral. Small Business Loans Loans backed by the Federal Government to spur the development of small businesses are often mistakenly thought to be one of the better ways of getting finance for a solo or small law practice. However, it should be understood that the Small Business Administration is simply a clearinghouse with resources and information for getting small business loan seekers in touch with appropriate lenders. The process then becomes more like that of securing bank loans and lines of credit. For some banking institutions, having the loans guaranteed or backed by the Federal Government is a major plus that could lead to easier approval. Credit Cards Personal and business credit cards are often used by small firm owners to get their businesses started. This practical reality leads to understanding that better management of this form of financing should mirror that of good consumer handling of credit cards. Shopping for lower interest rate cards; paying off balances monthly; always paying more than the minimum required monthly payment are all things you should do to make the best use of this form of financing. Personal Savings Using your personal savings will mean that you do not have to repay any of the
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funds you are using to finance your practice. However, it also means that you will most likely not have access to that cash flow for other purposes. This can easily lead to issues with balancing finances in your practice and at home, if this approach is not well-planned and executed.

Setting Up Your Books

After landing the cash you need to get your practice established, you will need to make sure you have the tools to both manage and track your finances. This is done by properly setting up the books for your practice. The main tool for this is the general ledger which tracks all income, expenses, assets and liabilities for the practice. Each line item in the ledger is allocated as a debit or credit meaning it either adds to or takes away from the balance in any respective line. The balancing of the books occurs when each side of the ledger (debits and the credit) equal. So, if one line is increased another must be equally decreased to create balance. As this leads to some more advanced accounting concerns and discussions, for the purposes of this paper, just know that most of the software applications used for maintaining books will handle all of this for you automatically. The general ledger is tracked across accounts that are found in a chart of accounts. The chart below demonstrates a sample chart for a solo or small firm practice. This chart should be reviewed with your accountant to ensure that you are tracking in a way that makes it easier for your books to be dealt with by the accountant during the year and at year end for tax and financial reporting purposes. Again, most general ledger accounting software programs will have a built in chart. The advantage of using a legal- specific program is that the chart is set up to track typical charges and revenue items encountered in a law practice, like legal research and lawyer fee income.

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Using the chart of accounts or the chart that comes with a legal accounting program, you have, in essence, set up your books. The creation of entries for the general ledger in a software program is what tracks the transactions that build the balances for each of the line items in your chart of accounts/ledger. Special attention should be given to the specifics of your practice so that you are accurately tracking all financial transactions and also building information in a way that it can be easily extracted to give you a true picture of your firms finances.
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Knowing exactly which accounts should be set up and tracked may also need some attention. So here is a basic financial setup (finance procedures and account needs) for a new solo or small firm practice: 1. Maintain an operating account. (This is also referred to as the business or firm account.) 2. Maintain a trust account. 3. Track time on all matters. (Yes, even if you are only charging a flat fee! Do it generally if you have to!) 4. Generate bills. (Do this at least monthly or as soon as youre done with a matter.) 5. Process payments. 6. Pay firm bills. 7. Reconcile firms operating and trust accounts. (Do this every month, and dont skip any reporting requirements as it relates to trust!) 8. Process payroll. 9. Send financial information to accountant for tax purposes. To help with these, a firm can utilize legal specific software for not only billing (believe me, you at least need this), but general ledger accounting as well. Here is a run-down on the software systems you are likely most in need of in your law practice.

Time and Billing Software

You should use an automated time and billing system. Period. The basic feature sets for time and billing programs are quite user friendly and allow for easy time tracking and bill generation. The programs have a place to input time entries or time slips. The programs usually require you to identify the person tracking the time (timekeeper), the matter/case for which the time is being tracked (client), the amount of time or the amount of the expense being incurred on behalf of the client,
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and a description of the work or expense item. At the time of billing, the program collects the appropriate slips and allows you to generate a billing statement for your clients based on the settings you have entered regarding the format of the bill and the billing arrangement. When payments are received, they are entered into the program to offset existing, and even future, invoices so that you have an up to the minute account of what clients owe. Most systems allow flexibility in setting up clients payment arrangements, charging interest on past due amounts, and the formatting of the bill. You can also account for all of the funds that are held in trust for your clients, and even generate bank deposit slips. Writing checks is not available in every time and billing program, but rather is a standard feature for the integrated time and billing and accounting systems that are discussed below. Reports can be generated for virtually everything that is input into the system. Below also is a list of the basic reports you should be using to help properly manage your firms finances. Note: An automated time and billing system is NOT one where the attorney goes back through a file and recalls what was done, and then has the staff prepare the bill by typing these entries out and manually calculating what the client owes. Automated systems DO replace manual client ledger card systems.

General Ledger Accounting Software

Beyond tracking transactions and work done on behalf of clients, the law firm also needs to be aware of the firms bottom line. In order to get this information, the firm will need to utilize a general ledger accounting system. And, is this an automated system, too? Yes, it is. Well, it should be. The integrated system will give the firm information on all financial transactions (both for the client and for the firm) in one place and provide a breakout of income and expenses categorized
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with a chart of accounts. (Fun stuff!) How much money does the firm have on hand? How much money did the firm make? How much does the firm spend in office supplies? All of these firm money questions are answered with the help of the general ledger accounting system. Integrated Time and Billing and General Ledger Accounting Software General ledger accounting features are found in integrated time and billing/ accounting packages. These integrated programs combine what the automated time and billing and general ledger accounting programs do into one program. As mentioned above, check writing is a standard feature of these programs. Checks can be written and then charged (allocated) back to the appropriate client or firm expense account. Payroll and tax reporting are also standard parts of these programs. When all is said and done, the money in the bank, what clients owe you (accounts receivable), and what you owe everyone else (accounts payable) is put into the system. These programs, when used properly, give you the firms bottom line. Some legal-specific financial management products covering time billing and accounting for solo and small firms are: Amicus Accounting (Integrated system) Timeslips (Time and billing only) PC Law (Integrated system) TABS3 (Integrated system) There are also a number of cloud practice management systems that include time billing and basic accounting functionality. However, they tend to still lag a bit behind the functionality of the programs listed here, especially with the accounting aspects of the programs.

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Staying on Top of Firm Financials

With the proper set up and usage of the firms books, you prepare yourself to receive accurate financial reports that show you exactly how your firm is doing financially. The key reports that are used to determine the financial health of your practice typically include the following, and you should be able to easily generate these reports yourself with accounting software, or work with your accountant to have these reports generated (in an audited form from the accountant) for you. Accounts Receivablelist of past due accounts by client. Use this report to determine how much is owed to the firm and for your collections process. Productivitylist of how much has been billed by timekeeper. This report is sometimes used to track firm goals for billable hours, and even for compensation when used with the profitability report. Profitabilitylist of what amounts have actually been collected by the firm vs. what has been billed. This is gives a true picture of firm revenue by timekeepers, and is often the basis of compensation systems for attorneys. Fee Allocationlist of what portion of a collected fee is attributable to a timekeeper. This report is also used to determine attorney compensation. Originating and responsible attorneys may sometimes receive certain percentages of collected fee amounts based on their work on cases. Financial Statements (Profit/Loss)list of income vs. expenses. This report gives a picture of how much money the firm is making or losing over a certain period. Detailed journals show what is coming in and what is going out of the firm.

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A good system for analyzing the data from these reports is to set up at least three meetings per month (even if you are a solo) to review the findings in each. This dedicated time to see how your firm is doing will help you not only stay on top of pressing issues, but give you time to address and even forecast your financial plans for the firm going forward. Creating a firm budget allows you to easily deal with future plans, whether its for the firm overall or specifically tracks money in a pending matter. By taking the total for projected income and subtracting the expected expenses over a period of time, a simple budget for the firm is created. Also, by tracking the same figures as they are actually incurred, you create the necessary data for a profit and loss (income vs. expenses) statement. Armed with the appropriate financial set up, a new firm should be well on its way to financial success. After all, sometimes it IS all about the money!
Natalie R. Kelly is the Director of the State Bar of Georgias Law Practice Management Program in Atlanta. Jim Calloway is the Director of the Oklahoma Bar Association Management Assistance Program. He publishes the blog Jim Calloways Law Practice Tips.

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50 Web Resources for the Suddenly Solo Lawyer

By Jim Calloway and Allison C. Shields

o youre suddenly solo. Do you look for a new job immediately, consider starting a new solo or small firm law practice, take on some legal work from acquaintances in the meantime or make an entire new master plan for your life and career? Only you can answer these questions for yourself. But we think spending a day or more reading and reviewing these free resources will give you a lot of inspiration and ideas. (You may even find more than 50 links in this articlewere lawyers, not accountants!)

Great Articles to Read

Weather the Storm, by Gerry Riskin and Robert Millard The National, Canadian Bar Association, April/May 2008 issue What Should You Do Now? A Roundtable Discussion on Law Practice in a Time of Great Economic Turmoil Moderated and Edited By Dennis Kennedy Law Practice Today, November 2008 Going Solo on a Budget by Dennis Kennedy ABA Journal, April 2009 Teaming Up, Starting Anew by Dennis Kennedy ABA Journal, May 2009 Law Office Start-up: Law Office on a Shoestring, by Sheila Blackford Oregon State Bar Bulletin - Managing Your Practice, October 2008
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Weather the Storm: Law Firm Risk Management in Hard Times, by Mark J.Fucile Oregon State Bar Bulletin - Managing Your Practice, May 2009 Managing Anxiety in Uncertain Times Oregon Attorney Assistance Program In Sight Newsletter, March 2009 Choices: Law Firm Billing and Accounting Software, by Dee Crocker Oregon State Bar Bulletin - Managing Your Practice, December 2008 How to Take Control of Your Practice by Creating Vision and Mission Statement By Allison Shields Practicing Law in Tough Economic Times By Jim Calloway Oklahoma Bar Journal, January 2009 More Thoughts on Practicing Law in Tough Economic Times By Jim Calloway Oklahoma Bar Journal, February 2009 In a Tough Economy, the Importance of Effective Client Screening By Deborah E. Gillis Law Practice Today, November 2008 LawPRO Magazine Surviving the Slide: Dealing with the Tough Economy (Winter 2008/2009) Lawyers Concerned for Lawyers (Massachusetts), Spring 2009 newsletter Theme issue on Responding to Trying Times
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Blogs
Robert Ambrogis Law Sites keeps lawyers up to date on websites for lawyers. David Bilinskys Thoughtful Legal Management discusses law firm finance, profitability and the use of technology in law practice. JD Bliss helps lawyers balance work and life. Jim Calloways Law Practice Tips blog talks about practice management, the Internet and technology. Look to Counsel to Counsel for all things related to legal careers. Ellen Freedmans Law Practice Management blog helps lawyers manage the business side of their practice. Dont miss What About Clients? 12 Rules of Client Service. Tom Kanes Legal Marketing blog is dedicated to lawyer marketing in any size firm. Dennis Kennedys Dennis Kennedy.com focuses mostly on legal technology. Erik Mazzones Law Practice Matters Blog shows lawyers how to practice smart. Tom Mighells Inter-Alia blog is among other things, an internet legal research weblog. Home office lawyering is the focus at Chuck Newtons Rides the Third Wave. Another blog focusing on the home office phenomenon include: Home Office Warrior. AttorneyatWork. You should subscribe to AttorneyatWork to receive one really good idea every day by email. Ed Polls Law Biz Blog is a practical guide for lawyers. Gerry Riskins Amazing Firms, Amazing Practices covers legal practices from all angles. Allison Shields Legal Ease Blog helps lawyers create more productive, profitable and enjoyable law practices. (Additional articles from Allison can be found at: Lawyer Meltdown).
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Small Firm Innovation is a blog emphasizing practical solutions for solo and small firm lawyers written by various contributors that bills itself as a resource by, for and about solo and small-firm lawyers. iPhone J.D. is a must visit site for lawyers to learn more about apps and ways to use their iPhones and iPads more effectively. It is packed with product reviews. The Droid Lawyer is the go-to place online for lawyers who want to learn more about their Droid phones and tablets.

Guides, Checklists and Other Sets of Resources

Carolyn Elefants MyShingle blog has long been recognized as a premiere resource for solo and small firm lawyers. See her resources and information for solos (includes forms and checklists for solos or those starting a law practice) and her online guide to starting a law practice. Economic Resource Guide (Maryland State Bar Association) Starting Your Own Practice (Florida Bar) Starting a Law Practice Web Directory (Oklahoma Bar Association) Checklist for Starting a Law Practice (Missouri Bar) practicePros Managing series of booklets: Eight great downloadable booklets on managing your law practice. Your attention is directed to #6 Managing the finances of your practice where their sample law firm budget (in PDF or Excel) is their most popular download. Unlock Your Potential: Hanging Out Your Shingle: A 79 page e-book in PDF format from the ABA Young Lawyers Division on setting up a law practice. JDSupra: Attorneys post forms, motions and other documents here, and you can post your profile and get known as well. IRS Starting a Business Resources Small Business Administration (see Small Business Planner, Tools and Local Resources)
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Legal Discussion Groups

SolosezAn ABA listserv for solo and small firm lawyers Solomarketingformed as a splinter group from Solosez, Solomarketing discusses all aspects of marketing for your law practice. For information, go to Solomarketing and search for Sololawyermarketing. LawtechInformal e-mail discussion list focused on legal technology. Get tech help and find out about the latest technology trends. (There are also many legal discussion groups on LinkedIn and other social networking sites)

Resources from the American Bar Association

ABA Law Practice Management Section Website provides news, tips, great CLE programs and more. Law Practice Magazine. Law Practice Today Free ezine from the ABA Law Practice Management Section. A must subscribe. ABA General Practice, Solo & Small Firm Division GPSolo Magazine Start with the Small theme issue, April/May 2009 Then look through all of the other issues, online and free to non-members. ABA Legal Technology Resource Center a collection of technology resources and information Current articles (Articles are free but access to certain archives require ABA membership) Site-tation: Law Technology Resource Centers blog Whether youre suddenly solo by choice or by design, there are a wealth of sites and
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resources available to help you plan your new practice and get it off the ground. Although this list is by no means exhaustive, we hope that it will help you get started.
Jim Calloway is the Director of the Oklahoma Bar Association Management Assistance Program. He publishes the blog Jim Calloways Law Practice Tips and was the co-author of the book Winning Alternatives to the Billable Hour (2nd ed.) (2002 ABA.) Allison C. Shields, Esq., President of Legal Ease Consulting, Inc. is a former practicing attorney and law firm manager who helps lawyers create more productive, profitable and enjoyable law practices. Visit her blog at www.LegalEaseConsulting.com or her website at www. LawyerMeltdown.com. Originally published in Law Practice Today in July 2009 and updated and republished in April 2012. Reprinted by permission of the authors.

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