This week, Lawyers of Tomorrow are pleased to have Ilina Rejeva, a thought leader at Legal Trek, suppliers of highly-rated billing and legal practice management software, share her thoughts on what you need to know before starting a boutique law firm.
Ilina gives a rare and fascinating insight into the business model operating behind this particular type of firm and covers such issues as ‘Value Proposition’, Revenue Model’, ‘Cost Structure’ and ‘Organisational Structure’ and how legal technology is vital for a boutique law firm’s successful operation of their business model.
Click here to visit the original full article on the Legal Trek blog.
Boutique Law Firm: How to Start Your New Commercial Practice
By Ilina Rejeva, of Legal Trek
Without doubt, the legal industry is undergoing a major systemic change. Lawyers, nowadays, feel more ready to start a new law firm. In 2005, as few as 5% of lawyers surveyed said they would like to open their own office. Fast-forward to 2016, and 23% of respondents felt ready for this. Let’s see what do you need to know before starting your new boutique law firm!
First and most important: you need the right mindset!
Your way of thinking is THE principal component for the success of your business. When starting your firm, some people won’t support the idea. Keep in mind, many of these people are just ‘naysayers’. They may tell you now is not the best moment to launch your firm. The more you procrastinate, the less likely you would ever start. Use your enthusiasm, knowledge, and energy today, as a fuel that will help you achieve the utmost.
Choose the practice areas, industry, and stage.
Clients now expect their attorneys to focus their practice on one, or several related areas. Specializing will also make it easier for you to build a reputation for your law firm. Think about the stage of the companies you want to serve – well-established players, or early stage businesses.
Select a meaningful and distinctive law firm name
The name is among the first things your potential clients hear. Your firm’s name will be inevitably associated with your brand. Find a name that people will recognize and pronounce easily. A common way to name your firm after the founders. Another oft-used method is to include your practice area/industry. A title based on your location or region can be beneficial too.
Don’t worry too much about your office location
You’ll probably hear from friends and colleagues that a good location is a key consideration. The phrase “go where your clients are” used to be a guiding mantra for lawyers building a firm. In our opinion, location is no longer so crucial. Today, virtual law offices are common, thanks to legal technology solutions.
Take care of the permits and licenses
Local permits and licenses, on the other hand, are an essential matter, so that your new firm can operate legally. Not having important permits can lead to unexpected and expensive penalties. Contact the local authorities. They should be able to explain what permits you need.
Prepare the Supplies and Office Inventory
Before you get to the strategy and business planning, there’s one other thing you should solve. Namely, the office inventory, supplies, and interior of your boutique law firm. This includes: furniture, the telephone system, payment options, etc.
Choose a business model and define business plan
Over the past decade, the traditional business model has come in for criticism. The best analysis on the topic is definitely the report by BCG and Bucerius Law School. The authors describe two main business models. The first one is the traditional model with a ‘pyramid organizational structure”. The model includes a few partners at the top, senior lawyers in the middle, and many junior lawyers at the bottom.
The other model is the alternative “rocket structure”. With this model, you’ll be focused more on long-term gains, like creating greater value for clients. Once you’ve chosen a model, it’s time to write the business plan that will help you set milestones and create a vision of a successful law practice.
Setting your pricing strategy
The “Law Firms in Transition” survey reveals almost 97% of the interviewed firms use some kind of non-hourly based fee. This statistic shows the Billable Hour is no longer a sustainable pricing model.
We strongly recommend value-pricing because it creates transparency for clients. Up-front pricing increases your firm’s efficiency because it eliminates the incentive to procrastinate and delay tasks.
Work on your legal marketing
The first thing on the list is to build an informative and professional website. Ensure you include a well-written biography, as well as easy-to-find contact information. Devote a separate page to your value proposition. Remember to add links to your professional social media channels. If you have interesting stories to tell consider writing a blog. Leverage it by sharing your content on social media and distribute a regular newsletter.
Be active in networking and try to get referrals
Marketing is an effective way to get qualified leads. Another method is to ask for referrals. Your close colleagues will be happy to help you get clients. Build relationships by joining different organizations like BAR associations and NGOs. Conferences and speaking engagements are great ways to build reputation and credibility.
Legal technology is a must for your new boutique law firm
A comprehensive legal billing and project management solution will make a big difference to your firm. From the moment you get a new client, you can use legal project management to start planning activities, resources, budget, and delivery deadlines.
By tracking activities on a project basis, you will actually make sure you deliver on time, and in the frame of the agreed budget. Additionally, you may opt to give your clients access to their legal project via a client portal. This is a secured space for your client, where they can access all materials related to their legal matters.
As you start your boutique law firm, don’t skimp on these steps. They will help you be better organized, increase revenue, build strong connections with clients, and grow your business.