The first steps of starting your own law firm are crucial. A passion for practicing law is essential, but beyond that, you’ll also need to know how to run the business side of your new firm.
While you may already have many exciting ideas in your head (like what you’ll name your firm), it’s important to take a step back and make sure you have a solid business plan for your law firm so that you know where you’re going.
In this article, we’ll cover how to write up a law firm business plan and what to include in it. We’ll even provide you with a law firm business plan template to help you get started.
And of course, tech is a key part of any business plan. Watch how law firms use Clio in this on-demand webinar to learn how to set up an efficient and organized back office.
A law firm business plan is a document that summarizes what you want to achieve and how you’ll run your business. This summary includes general information about your law firm, why you chose to start it, major goals, the services you offer, a budget, and a strategy for gaining and managing clients.
A business plan is essential to any law firm as it documents, and serves as, a roadmap for the future.
As you think through what it is you want to achieve, what type of clients you want to serve, how much to charge as a lawyer, and what type of matters you want to handle, your business plan may evolve. That’s okay! Your law firm business plan can change as your goals change, so don’t feel pressured to have all the answers upfront.
That being said, the more thought you put into your business plan now, the better you’ll set yourself up for success in the long run.
Before you start writing a law firm business plan, as an attorney and a potential entrepreneur, it’s important to take a step back and reflect on what you want from your practice first. For a more specific, meaningful, and ultimately rewarding business plan, consider these three points:
The first and most critical step in writing an effective plan is to ask yourself, “Why do I want to own a law firm ? What do I want to achieve? What’s my definition of success ?”
Starting your own law firm isn’t just about having a job—it gives you the potential to have more freedom and more fulfillment. In theory, owning your own firm gives you more control over your income.
Consider the following questions to get started:
Answering these questions might be more difficult than you think, but they’ll help you get clear on your goals for why you want to run a law firm.
Now that you have an idea of what success looks like, calculate how much annual revenue you’ll need to achieve those goals—and more.
In 2024, the median pay for lawyers was $176,470 (up from $126,930 in 2023) . While this isn’t a small amount of money, after factoring in living expenses like saving for retirement, rent or mortgage payments, student debt repayment, vehicles, emergencies, office lease etc., that number gets eaten away quickly.
More importantly, there’s no extra room for investment in hiring or marketing to grow your law firm. So, it may just be you and you alone until things pick up.
In that case, be generous when estimating how much revenue you’ll need, and write down a number that scares you. You’ll be much better off planning with that number in mind from the beginning.
After setting your goals and estimating a few rough numbers to start, it’s time to create your fee structure.
Your fee structure should include:
As you might already know, each client is different which means each matter you handle will be different. It could make sense to charge a flat rate for one project but an hourly rate for another.
Understanding what your competitors are charging and how they’re structuring their pricing is a good starting point to then build out your own fee structure.
Luckily, there are so many incredible tools out there such as Clio’s Legal Trends Report , which can help you understand average hourly rates; a benchmark calculator for hourly rates within your jurisdiction ; blog posts about billing; and more, that make it easy for you to do market research and understand what others are charging.
If you are only handling two or three cases per month, the number you came up with above might look outrageous. It’s not.
For example, let’s use the 2024 median pay of $176,470 a year in annual revenue as our goal, with a flat fee of $3,000 per client.
$176,470 per year in revenue = an average case value of $3,000 – $3200 = 55 cases per year = 4 – 5 per month.
$176,470 per year might seem crazy if you’re only working a couple of cases per month, but keep in mind that you’re going to gradually work up to it.
The number of cases you’ll need may differ depending on your location and practice area, so do your research to make sure you come up with a realistic case goal (even if it still feels like a stretch).
This brings us to the next part of developing your business plan—writing it.
Once you’ve got the starting points of your business plan worked out, it’s time to put pen to paper.
While your law firm business plan should be tailored to your unique situation, the following list will walk you step-by-step through all key sections you need to have a comprehensive business plan:
An executive summary is a one-page, high-level overview of all the key information in your business plan.
Law firm business plans can cover a lot, so it’s worth having a succinct high-level overview to keep things simple (hint: While this section should come first in your plan, it’s actually easier to write this section last, after you’ve laid out your plan).
Your executive summary should include:
Next, write a company summary for your firm, something concise that provides a general overview of your firm, while providing important details describing your practice and clients, including:
A little bit of preliminary market research goes a long way.
Look at bar association listings to see how many other firms in your area offer similar services. Is there a high demand for what you’re offering? If not, how can you ensure you stand out to potential clients? This will greatly inform the message you choose to use in your marketing efforts.
Create a market analysis for your firm, including the following:
You know that you’re the best person to lead the firm, but does everyone else know it too? This section is your opportunity to provide important details about yourself—and the key players in your firm.
Outline the types of legal services your firm provides.
For example, if you practice family law, what will you provide in your portfolio of legal services—cohabitation agreements? Wills/estates? Pre-nups?
You also want to include who your services are for. For example, you might offer legal tech services to start-up companies and high-tech clients.
When writing about your services it’s important to consider:
Everything you need to start a law firm—in one checklist
Marketing is a critical part of your law firm , and your business plan. It helps you understand how to make your firm stand out from others, how much you need to charge, and how you’ll get the word out and attract new clients. Learn more about how to get new clients for law firms .
Consider including the following in your law firm marketing strategy:
It’s also important to consider that your marketing needs will be different depending on the current stage of your law firm.
When starting your own law firm, then marketing for you might mean a lot of hustle—working referral relationships , identifying groups that you can get in front of for speaking engagements, blogging, and using social media to get your name in front of potential clients.
As you grow (or if you have existing marketing in place) you should be able to estimate the number of cases you will bring in through each channel. Then, you can quantify your marketing cost per client by dividing the total cost of that marketing effort by the number of cases you got from each marketing channel. For example, if you’re the only corporate lawyer in a small town, you’ll need to spend less on advertising than a family lawyer in a larger city.
Once you have an idea of the cost and effectiveness of your marketing efforts, implement a marketing tax on yourself—a percentage that comes out of every single case fee you collect, and that gets invested straight back into marketing efforts.
This is a simple way to think about how much you need to be charging to fuel your revenue goals. It’s also an easy way to scale and grow your marketing budget.
Once you start mapping out this information, you’ll notice that a system starts to form, which connects your goals, the number of cases you need to bring in, the profit you need to make on each case, the money you need to re-invest in marketing, and the number of people or contract resources you will need to employ to keep growing.
The heart of your law firm business plan is the financial plan. After all, when it comes to your business, there may not be a more important question than, “How much does it cost to run your law firm?”
The key is to include as much specific financial information as possible—particularly if you’re seeking funding like taking out a bank loan. As you start out, this financial plan should include numbers for your first year.
This could include:
As you start it’s reasonable to make assumptions based on your goals. You should also review and update this document for your second year, third year, and so on as time goes on.
If you’re creating a business plan for a new law firm, you need a realistic start-up budget. To do this, you’ll need to consider a number of up-front and day-to-day costs, and account for these in your revenue goals.
Here are a few examples of costs to include in your budget:
Once you’ve laid out all of these costs, take a second look. Are there places where you could reduce your operating costs, and in turn, increase your profit margins? There are also plenty of tools you can look at to help streamline non-billable tasks and leave yourself more time to practice law. Be sure to look at these options and work them into your operating budget.
Here are some links where you can find examples of business plans and business plan templates for law firms:
Having a goal and understanding how to get there is essential for any lawyer deciding to hang their own shingle. Having a written business plan does a few key things:
To learn more about how to start a law firm, be sure to check out our complete guide .
And again, remember that technology is a key part of any business plan. Watch how law firms use Clio in this on-demand webinar to learn how to set up an efficient and organized back office.
Written by: Lisa Dimyadi
Last updated: August 12, 2024
