Overhead Expenses Associated with Starting Your Own Law Practice

Q: I am contemplating leaving my firm where I make $50,000 annually. I am interested in starting my own practice, but I know that to get started I will have to take a cut in pay. What is the best way to set up a practice with minimum overhead and still financially survive?

A: The biggest expense for any lawyer is staffing. The more clerical work you can handle yourself, the lower your overhead will be. That means becoming computer-proficient, and familiar with the administrative aspects of your work, e.g., notice requirements, document formatting, and billing. Starting out with fewer staff also means that you will have a better sense of how your business should be functioning, meaning that once you can afford to bring on staff to handle these tasks you understand how their jobs might best be done. This will ensure that you get the best efficiency out of the workers you do acquire. When you start to add staff do so on a contract basis, which will allow you to increase your firm's capacity without dramatically increasing expenses. As you become profitable you can start to retain permanent staff.

The next largest recurring expense may be office space. You can cut costs here in three ways: (1) work out of your home; (2) rent an extra office from a law firm; or (3) rent an office, perhaps part-time, in an executive suite or business office center. Depending on the type of practice you want to start, you might want to work predominantly out of your home, but buy conference room or office space from an office center or executive suite on a limited basis. I know lawyers who receive 10 hours of office time in a suite that caters to lawyers, as well as full-time telephone reception services, for as little as $150 a month. Services of this sort may also provide you with a phone number, a shared receptionist, a fax line, copiers, and other amenities that help reduce your expenses while allowing you to present a polished professional appearance.

One note on cost-saving office spaces, when working from a space that is either temporary (shares and space at a firm) or private (home) it can be wise to secure a PO Box. Many of these services will forward your mail to any address you provide them and this can simplify a future move by allowing you to continue your practice without sending address change notices for dozens of cases or missing payments sent by clients to your former address.

You can reduce your initial cash outlay by outfitting your office with used equipment and furnishings. Ask others in your legal community for referrals to firms that are dissolving, downsizing or refurbishing. I've worked with several firms that have donated nearly new computers and furniture to charity because they didn't have the time to find buyers. Situations like this mean that you can outfit your office with the desks, conference tables, and chairs that you need to host your clients without paying the retail premiums.

In summary, you can cut office overhead by 1) doing it yourself, 2) swallowing your pride, and 3) buying used!