Legal Research

"How Much Money Do You Really Need to Start a Law Practice?"

Posted by Erik Mazzone: "The conventional wisdom on this topic is that you need twelve months.

It's probably as good a place as any to begin the analysis, but it's a little like figuring out how much gas you need in your car: a full tank is nice, but what really need is enough gas to make it to the next gas station.

Capitalizing your new law firm is the same: you need enough to make it to the next infusion of cash.

Getting your practice to a state of positive cash flow depends on a lot factors:

• how many new clients your marketing drives to your door
• how effectively you turn initial consultations into new clients
• how much start up capital (or loans) you amassed
• how much you bill
• how much you collect
• how much you pay in overhead
• how dependably you reinvest revenues into your firm

If you are a gifted marketer or bring a roster of paying clients with you, you may be in positive cash flow long before twelve months goes by. If you are determined cost cutter who pinches a penny until it yelps, you may need very little revenue to get into the black. If you have no clear plan on how to develop new business but a very solid idea of what your firm logo will look like and which smartphone you will use, you may be in for some hard lessons.

Here are a few tips to keep you on track:

Inventory your strengths (and weaknesses) and feed your strengths...

Create a budget...

Analyze the cost-benefit on everything...

A final word of advice: keep a close eye on the fuel indicator. The next gas station may be farther that you estimated."

The full text of this post is available at the source site listed below

Source: Law Practice Matters, 25 April 2009

Full post as published by Stark County Law Library Blawg on May 05, 2009 (boomark / email).