By: Brandon E. Tate
December 21, 2016
There are many factors that should go in to determining how much initial capital you need to start a law firm or office. First and foremost, what funds do you actually have available to invest as initial capital (i.e., personal savings funds). Next, you will want to look at what it is your firm or office will be doing and what the expenses are associated with that. Expenses range anywhere from office rent, paper, and toner, to computers, staff, furniture, etc. If you are starting an office with a base of clients to service (i.e., you leave a firm as a partner to start your own firm), your initial expenses will likely be higher then those of someone starting a solo-office straight out of law school who still needs to build a base of clients and likely won’t have any staff members starting out. They will also have a better idea of the initial capital needed based on their experience in their previous position.
For the purpose of this article, we will focus on those that are starting a small law firm or office without the security of a consistent client base to start. A small law firm or office does not take an exorbitant amount of capital to start, as I can attest to for someone that did it straight out of law school in 2013, as long as you breakdown what you estimate your initial startup and monthly expenses to be and get creative in ways to decrease them. For example, starting out, instead of going to a box store and paying retail value for office supplies or furniture, find office supply and furniture auctions. As well, don’t be bashful; ask around to family and friends to see what furniture they have that they may want to part with. Even other law firms may be in the process of getting rid of furniture to bring new furniture in or they may have furniture in storage that they have no need for anymore. Do I really need a staff member to start? Can I use my laptop to start and avoid the cost of purchasing a computer for the office? Do I need permanent office space or can I go the virtual office route? Can I use Google Voice in lieu of paying for a phone line? The key to minimizing expenses at the onset is getting creative and finding ways to avoid them.
In addition to estimating expenses, you will want to conservatively estimate income that will come into the firm or office based on your advertising and marketing plan. Once you determine those estimates, keeping in mind that they are just that, estimates, it is about what you are comfortable with. Do you want to have enough capital to cover the first three (3) months of operation if the income hits below your estimate? More/less? Do you want to or need to take out a loan to provide initial capital?
There is no set rule on how much initial capital you need to start a small law firm or office. It is not an easy decision to make, and is not one that should be made lightly. Whether you start with $1,500.00 or $20,000.00, you can be successful, as is evidenced by the many solo and small firm attorneys throughout the state of Indiana.
All information included in the above blog is solely for informational purposes. The information above does not create an attorney/client relationship and should not be interpreted as legal advice. Seek legal advice on the topic before relying on any information contained herein, as laws change and the information may be out-of-date. The author of this blog is licensed to practice law in the state of Indiana.