New Law Firm Startup Services

Starting a new law firm is both exciting and scary. The planning required to ensure a successful launch and to position the firm for long term success is time-consuming and difficult.

We help law firms create start up plans , create accurate models that objectively consider the material economic elements, assess the risks, and ensure expectations are clearly defined and communicated to the participants. We help our clients eliminate the surprises.

Clients use our services on a project basis or on a longer-term agreement to support post start up implementation and management. Our role in a start up can include financial analysis, strategic advise, logistical support, technical advice, and as a resource to support a successful post launch management and firm development.

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Benefits

What can you do to improve the chances of a successful new firm start up and what can PerformLaw do for you?

The Process

How does a new firm start up services agreement work?

Resources

Where can I learn more about the topics I might want advice about?

Benefits

The confidence of knowing you will receive objective feedback. Clients who engage PerformLaw for start-up services get objective, experienced, and practical advice about how to best launch your new venture.

The ability to more clearly understand all the steps in the process of starting a new law firm. Use of our tools, templates, processes, market awareness and planning expertise are included in the engagement.

A solution for the long term. All our engagements are designed to raise the level of in-house competence and promote self-sufficiency.

The ability to continue to focus on your daily responsibilities while we manage the start-up process. Successful lawyers are busy and must focus on client priorities. We can help make that possible.

What PerformLaw can do for you:

  • We help clarify and communicate goals and expectations.
  • We provide easy to understand analysis and processes.
  • We help manage the multiple priorities associated with a new firm start up.
  • We ensure our start up services facilitate a smoother launch process.
  • We are available when clients need us; before, during and after an engagement.

THE PROCESS

STRATEGIC GOALS & EXPECTATION SETTING AND INITIAL PLAN DOCUMENT

Often the proposed new firm members will have met previously and discuss their strategic goals and expectations previously. After we are engaged, we can survey the members to document their strategy and expectations. We can use this information to help them make decisions as the process progresses.

Tool: Strategic Planning Questionaire Deliverable: Summary Strategic PLan

Vision

A brief questionnaire of what the firm is doing and why. Determine the preferred culture, attitude toward growth, technology, remote work, marketing and overhead (good and bad)


1:Who are the driving forces of this new venture?

2:What are the most important aspects of the new firm's culture?

3:How will this new venture better serve cpents?

4:How would you best describe the approach will take to technology?


Progressive with a bias toward cloud-based solutions

Progressive with a bias toward on-premises solutions

Don't know and will consider either approach

We need the basics and want to manage the IT costs closely


5:Our attitude toward where work happens is as follows:


We want our people to primarily do their work in our office

We are fine with remote working arrangements for all lawyers

We are fine with remote work arrangements for senior lawyers

We are fine with remote working arrangements for out of town lawyers only

We prefer remote working arrangments in limited instances and by permission only


6: Our attitude toward marketing is:


Aggressive and want everyone involved

Aggressive at the partner level

Marketing is left to individual lawyer preference

Marketing is not important now


7: Our attitude toward overhead is:


Hawkish and we will watch is closely

Moderate and will check periodically

Less of a concern and will only want to manage the big ticket items


8: On a scale of 1-10 How important are the following factors?


Income to the partners

Number of clients

Quality of clients

Number of lawyers

The total size of the firm - lawyers and staff

The ability to provide career opportunities

Standing among peers

Ability to attract the top lawyers

Ability to pay at the top of the market

Visibility in the local community

Visibility in the market for your services

Longevity of lawyers and staff

Making new equity partners

Expectations

Define expectations in terms of Personal Income, Work Ethic (billable hours, collections, originations), Management Contributions, and Capitalization (affects the timing of payments)


Questions:


Equity Partner Compensation Philosophy:


Rate the following factors from 1-10 with 10 being the most important:


Working Attorney Results

Origination Results

Longevity

Experience

Ownership

Managerial Contributions

Reputation

Paying based on gross collections

Paying based on profits generated

Guaranteed compensation

Stability

Objective Formula

Subjective Approach

The ability to separate compensation from ownership


Work Ethic


Rate the following factors from 1-10 with 10 being the most important:


Owners


Billable hours

Minimum billable hours requirement

Business Development

Junior Lawyer Supervision

Case and Client Management

Administrative contributions


Non-Owner Lawyers


Billable hours

Minimum billable hours requirement

Business Development

Junior Lawyer Supervision

Case and Client Management

Administrative contributions

Availablity and presence in the office


Capitialization


Rate the following factors from 1-10 with 10 being the most important:

Monthly draw payments

Quarterly tax payments

No debt

Moderate debt

Not borrowing to make draw payments

Borrowing to finance hard assets (computers and furniture)

Payment of allocated income before tax payments are due

Paid in capital by the Equity Partners

Financing the firm by holding back Equity Partner income

Initial members

Identify the initial equity owners and ownership level


Who are the initial owners of the firm?

What percentage will each owner have?

How much cash will each owner contribute?

Are all partners guaranteeing the line of credit?

Key personnel

Identify key personnel roles and performance expectations


Please identify the key lawyers and staff, and indicated their roles

Please identify any key position that you will need to recruit

Client considerations

Identify clients assumed to transition to the new venture, client contacts, and new firm contact owner, schedule and method for contacting clients, client file transfer letters, rate and billing agreements


Who are the main clients of the new firm?

Who is going to handle the contacting each client

Will update the client retention or billing agreements

Do you anticipate or need to make changes to existing billing rate agreements?

SELECTION OF LAW FIRM CONSULTANT

Engagement of law firm Management consultant to create start-up plan and manage the execution of the plan

Agree to consultants roles throughout the process Advisory to Execution

Agree to fee and scope

Engage

FINANCIAL PLAN - SUMMARY TYPE

Use the basic model that includes 8 pages: Planned revenue, payroll, income statement summary, income statement detail, balance sheet and cash flow, financing, draw policy, payroll detail breakout,

Income

Capacity Analysis

Operating expenses

Payroll Expenses

A monthly schedule of gross payroll costs, bonus compensation, and partner fixed draws.

  • Equity Owner Base Draws

    The firm must provide these.

  • No Equity or Income Partners - Base Compensation and Bonus Costs

    Provided by the firm

  • Associate Compensation and Bonus Plans

    Provided by the firm

  • Paralegal and Legal Compensation and Bonus

    Provided by the firm

  • Contract Lawyers Costs

    Provided by the firm

  • Other Timekeeper Costs

    Provided by the firm

  • Secretarial Costs

    Provided by the firm

  • Administrative Personnel Costs

    Provided by the firm

Payroll Related Costs

Payroll taxes, health benefits, life insurance, workers compensation, disability costs and 401 K are most common USE PERCENT OF PAYROLL MODEL

  • Calculate Payroll Tax Costs

    We typically use 9% of gross comp for everyone not including equity owners, but here is where you find the actual costs. Here is a good article.

    https://www.surepayroll.com/resources/blog/how-to-calculate-payroll-taxes

    Unless the equity owners are employees (typically they are not), they pay their own payroll taxes and you don't put those amounts into the analysis.

  • 401 K Costs

    If a firm decides to have a 401K cost, a good estimate is 3% of payroll not including equity owners.

  • Disability Insurance

    Estimate at 2 % of payroll not including equity owners

  • Health Insurance

    It depends on how much the firm is willing to pay toward health care. In the draft startup plan, use 8% of payroll not counting equity owner pay.

  • Workman's Compensation and Other Misc Benefit Costs

    Use .25% of payroll not including equity owner draws

  • Employee Parking

    Depends on the policy of the firm. Estimate parking cost per employee by city.

Facilities Costs

  • Rent

    Estimate square footage at the market rate for rent. Use 650 Square Feet Per Lawyer. Google the market rent rate in the city your plan is based on. Be sure to designate the class of space A, B or C

    Here is a good articlehttps://www.attorneyatwork.com/law-office-space-how-much/

    Today it is less than 700 square feet and will be closer to 500 square feet per attorney by 2020.

    SFT per lawyer can also come from our existing base of firms.

  • Repairs and Maintenance

    Estimate repairs and maintenance based on the number of SFT. For example, 1.00 per SFT per year. If you estimate 10,000 feet for the law firm, put in 10,000.

  • Storage

    Storage is difficult to estimate. New firms typically don't have a lot of storage unless they are taking files from their old firm. Use a standard estimate of $750.

  • Property Taxes

    Very difficult to estimate. It is based on the assets they purchase. You will have to look up in the relevant city. In NOLA use Assets purchase *.15 *.17.

  • CGL and Premises Liability Insurance

Practice Support Tools and Technology

Plan on IT costs of 450 Per User (use the data from the strategic technology survey pro forma)

  • Telephone and Internet
    • Basic Internet Service

      Use 20.00 per month per user (employee) -

    • IP Telephone Charges

      Use 31 Per Seat

  • Software Licensing and SAAS Fees
    • Time and Billing and Accounting

      Determine on-premises or cloud

      Also Integrated with practice management

      • Server Based Solutions
      • Cloud Solutions
    • Document Management

      On-premises or cloud

      • On Premises Solution
      • Cloud Solutions
    • Practice Management

      Case management, Doc Management, Integrated Time Billing and Accounting, CRM Calendar and Task

      • Case Management
      • Document Management
      • Integrated Time Billing and Accounting
      • Calendar and Task Management
      • Document Assembly and Automation
      • Contact Management and CRM
      • Reports and Analytics
      • Full Marketing Automation
    • Productivity Apps
      • Office Apps

        Microsoft office - how many full licenses

        Google - how many licenses

      • PDF and Document Editor

        20 month per user

      • E-mail and Calendaring

        Microsoft

        Googe

        Other

  • IT Support Service
    • Managed Services Provider
    • Infrastructure Maintenance Costs
    • Consulting
    • Web Developers, Support and Hosting Fees
  • Multifunction Devices (printers, copiers., scanners)
    • Monthly Lease or Use Costs
    • Depreciation
  • Database Services
    • Legal Research

      Lexis Westlaw 75 Per month

    • Court and Other Databases
  • Other Office Equipment
    • Furniture and Miscellaneous Equipment (Depreciation)
  • IT Infrastructure Costs
    • Depreciation
  • IT Desktop Appliances
    • Depreciation
  • Mobility Costs (PDA's, Tablets, Chromebooks, Etc.)
    • Firm Paid Cell Phones and Mobility Support (Sim Cards for PDA's Etc.)
  • Cyber Insurance

    Use 100 per user per year $9.00 mo

Practice Development

Typical marketing and practice development costs can range from 2-5% of revenue. Some firm's spend 10% of revenue. We need to come up with a breakdown by percent of revenue or per lawyer.

Use 800 Per Lawyer Per Month

  • Meals and Entertainment
    • Food and Beverage
    • Admission, Tickets and Venue Fees
    • Room Rental - Receptions and Cocktail Parties
    • Gifts and Takeaways
    • Labor and Support
  • Marketing Related Travel
    • Transportation
    • Lodging
    • Mileage
    • Car Rental
    • Taxis and Ride Share
    • Client Transportation (limos busses and vans)
  • Conference and Event Fees
    • Bar and Legal
    • Industry -Other
    • Conference Materials
  • Speeches and Seminars
    • Firm Sponsored Venue Costs
    • Seminar Materials
    • Takeaways and Attendee Gifts
    • Audio and Video Production Costs
    • Promotional Costs
    • Labor and Support
    • Event Planners
  • Inbound Marketing
    • Web Development and Maintenance
    • SEO
    • Social Media Support
    • Production and Distribution Costs
    • Video Production Supports
    • Graphics Support
    • Editorial Support
    • Marketing Automation SAAS Fees
      • Contact Management Only
      • CRM Only
      • Full Marketing Automation
    • Paid Advertising and Promotion
    • Content Development
    • Planning Software
  • Professional Support
    • Marketing Consultants
      • Plan Development Costs
    • Public Relations Consultants
    • Advertising Agencies
    • Research Firms
    • Social Media Agencies
  • Staffing Costs
    • Marketing Director
    • Marketing Support Personnel
    • IT Allocations
  • Other
    • Contact Research Development
    • Contact Outreach
    • Pro Bono Cases
    • Loss Leaders
    • Panel Counsel Submissions
    • Legal Network Fees
    • Professional Organizations
  • Continuing Legal Education
    • Meals
    • Travel
    • Seminar Fees
  • Human Capital Development
    • Recruiting Fees
    • Recruiting Meals and Entertainment
    • Online Recruiting Fees
    • Law School Relationship Fees
    • Recruiting Advertisements

General and Administrative

The typical grouping of GA Costs. 16K Per Lawyer Annually 1300 Mo

    • Travel -Firm Related
    • Parking Firm Related
    • Professional Fees
      • 401 K Fees
      • Payroll Services
      • CPA's and Bookkeeper Services
      • Attorneys
      • Management Consultants
      • Other
    • Kitchen Supplies and Employee Meals
    • Client Cost Write Offs
    • Office Supplies
    • Bank Charges
    • Charitable Contributions
    • Insurance - Malpractice
    • Interest Expense
    • Miscellaneous

Cash flow

Financing needs

Draw requirements

Capital policy and capital contributions

Financing

Create the support documents for the bank application, collecting supporting information and interface with bank officers regarding start-up lines of credit

  • Bank application
  • Personal financial statements
  • Loan negotiation
  • Commitment letter
  • Collateral requirements
  • Temporary operating funds accounts
  • Permanent bank accounts
  • Permanent notes
  • Transfer funds to new firm
  • Regular banking from new firm

ENTITY CREATION

Most often new firms start as LLC's or PLLC's. In some states law firms must use an LLP. We will work with the new entity's CPA's and Attorneys to create the new entity.

Legal & Tax Support (Selection of CPAs)

Formation documents

Tax ID numbers

Operating agreement

Compensation agreements

Management structure

Legal and Tax support

PURCHASE SUPPORT - OFFICE SPACE & EQUIPMENT

Our role is to coordinate with the firm's lease broker/consultant to find office space and assist with the economic lease terms. We also coordinate with office furniture and supply vendors to ensure that the office is functional day one. We also provide major purchase cost analysis and comparison.

Select lease consultant/broker

Office Space

Identify and interface with key vendors

  • Space requirements
  • Build out
  • Location
  • Timing
  • Temporary space if needed

Office Equipment & Furniture

Identify and interface with key vendors

Copier/print/scanners

Office furniture

File cabinets

Virtual office allowances

Office Supplies

Identify and interface with key vendors

Business cards

Letterhead templates

Office supplies

Kitchen supplies

PROCUREMENT SUPPORT - IT & SOFTWARE

We will interface with IT providers, phone and internet providers, IT consultants and new entity IT staff to ensure that the IT aspects of the new firm are appropriately selected and implemented prior to start up. We will support the selection of key productivity applications, management software. and document management applications. We will arrange product demonstrations, recommend applications, negotiate terms, arrange for implementation.

Hardware and network requirements

Technology Assessment

    • Identify Apps

      The typical firm will have an email and calendaring app (overwhelmingly Outlook/Exchange). Smaller firms may use Gmail or an Apple product. Usually, these applications are on site, but an increasing number are moving to the cloud using Office 365. Word processing and document management typically round out the attorney use of technology. All firms have some time of time and billing system, which are mostly on-site and server based. Most of the time, but not always, the time and billing systems also include an integrated financial accounting and financial reporting module. Other apps differ by firm and it is not usual to encounter lesser applications. We need a complete listing of all applications in use by the firm.

      • Identify Strategic Importance
      • Identify Key Benefits
      • Deliverables: Chart for each app to accompany the top level analysis, recommendations report, cost summary
    • Identify Hardware
    • Identify Vendors
    • Cost Per Seat Analysis
    • Cost Per Vendor Analysis
    • Cost Per Function Analysis
    • IT Plan

Technology Procurement

Select IT Partner

  • Network Design and Infrastructure
  • Phone and internet
  • IT support and consulting
  • Data transfer requirements from former firms
  • Document management
  • Time, billing and accounting

Staff and lawyer training for new systems

PROCUREMENT SUPPORT - WEBSITE DEVELOPMENT

Our role is to coordinate the web development process including web developer selection. web content gathering process, content writers, assist with the domain selection, selection of hosting platform and CMS. and interface marketing consultants.

Web Designer

Domain name

Logo development

Hosting

Basic site plan

Content generation

PROCUREMENT SUPPORT - INSURANCE AND RELATED

Assist with the selection of insurance agents and coverages, application completion, cost analysis, and effective date selection. We will help the new firm build and staff in the initial HR management system.

Select Insurance Broker

E&O

Health, life and disability

Contact insurance agents and directs to arrange for the purchase of insurance coverages. We will assist with the completion of applications and submit for pricing and coverage binding.

CGL, Non owned auto, EPL, Cyber

Key man

Fiduciary

401 K /Pension

CONSULTATION AND ADVICE - HR POLICIES & PROCEDURES

Assist with the creation of the initial employee handbook the major human resource management policies.

Payroll services

HR manual

Leave and holiday policies

New employee packets

HR responsibility

HR consulting support

Selection of HR consultant (if necessary)

STAFFING AND RECRUITING SUPPORT - ATTORNEYS & STAFF

Support the hiring of attorneys and staff for the new entity. We can act as a resource for the selection of management personnel and support staff.

Timing and offers

Bonus plans

Hours Bonus

Profitability Bonus

Origination Bonus

Seniority in new firm

Existing employees

Laterals

Staff assignments

ADVICE - CLIENT COMMUNICATIONS

Our role in the client communication process is limited. We can help organize that client communication process and provide templates for notifying clients. Typically, however, this is an area reserved to the lawyers.

Selection of Client Representative

Designated attorney from the new venture

Ethics considerations

Selection Ethics Counsel

Method and timing

Client letters

Paper and digital file authorizations

Motions to substitute counsel

Time and billing

LOGISTICS - ADVICE AND SUPPORT

We can assist with the selection of movers, provide support if needed to meet support professionals who need access to the firm's office space, and coordinate delivery times.

Selection of movers

Delivery coordination

Occupational license

Announcements

File moving and intake

POST LAUNCH SUPPORT

In many instances, clients appreciate our willingness to ensure that the critical business plan assumptions materialize. We can act as a contract CFO, business advisor, and provide post-launch implementation support.

Implementation of remaining plan items

Advanced financial systems set up

Financial Reporting Package

KPI's

Punch list items from each area

Management support

Systems implementation support

Moving firm from start up mode to normal operations

Resources

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