Starting Your Practice: Mistakes I Made

June 20, 2021

If you are interested in starting your law firm, you will receive an abundance of advice from others. Often the advice centers around the best practices to keep, but what about the worst practices to keep? To help prevent others from making the same mistakes I made, I’ve compiled a list of things I did wrong when I started my law firm. 

1. I took too many clients. 

Back when I was a law student I took many clerkships. Each law firm I worked for had one thing in common: that a new lawyer should retain about 20 clients at a time. So, when I started my firm, I immediately took several cases right off the bat. It never occurred to me that the number is meant for new attorneys who are in an established law practice and have access to paralegals and legal assistants. The number is not for attorneys who have to make time to run their firm's business, market their practice, and learn everything on her own. That being said, in the beginning I did ask other attorneys for advice on how many clients they retain at a time, but I was never given a straight answer. I really wish someone had been more open with me about how many clients a new solo attorney should take. 

It took a long while, but I finally got my list down to under 10. I hung out there for a while until I was comfortable with all of my business needs, my operating systems, and the practice of law in general. Now I can handle up to 15 clients without feeling overwhelmed. As I grow stronger and become more capable, I'm sure I can even add a few more to that list. 

Something else to really consider when taking clients is how many billable hours you can get on any particular client. If you are able to get a lot of billable hours out of a small batch, then that's where you should stay. But if your practice is not producing billable hours, you may need to take on more clients in order to cover the bills. 

2. I took too many pro bono clients. 

Similar to taking too many clients, I also took too many pro bono clients. I had it in my head that I should initially take on several pro bono cases, so that I can become comfortable with the practice of law before charging clients. This was a grave mistake. I eventually had to withdraw from several pro bono cases, because I just couldn't handle it and my clients deserved an attorney who could dedicate the proper time. Not only was it hard to handle, it was financially irresponsible. I honestly don't know what I was thinking taking on so many pro bono clients and so few paying clients. I guess that I was scared of screwing up a case where the client was paying me to not screw up. I sincerely regret not taking more paying clients up front, because it put me in a really bad financial position. 

3. I did not charge enough.  

Not only did I take on too many clients, I also did not charge enough. I started out at $50 an hour and slowly worked my way up to $200 an hour over the last year and a half. This was a mistake. I wish I had initially charged $100-150 an hour up front, because starting so low left me with financial issues. I also did not charge a high enough retainer. I started out at $500 and slowly worked my way up to $3,000. I didn't realize how important it was to have a higher retainer. If I had started with a higher retainer (and minimum account balances), then I would almost always have money to move into my bank account each billing cycle. With a lower retainer, I had to chase after clients to pay their bills. 

In addition, I took several cases through legal insurance companies, including ARAG and Texas Legal. When you sign up to get clients through legal insurance programs, you can get paid in a variety of ways. First, you can be paid hourly at a 25% discount. Second, the legal insurance company will pay you for a set number of hours, and the client pays the rest at a 25% discount. Third, the insurance company pays you a flat fee at the end of the case. 

For the most part, working with legal insurance companies is a great way to get clients. However, both legal insurance companies offer flat-fee coverage for "uncontested divorces." Let me tell you folks, there is no such thing as an uncontested divorce. I spent countless hours on cases that eventually blew up in my face, and I never received proper payment. Now that I know better, I don't take clients under that umbrella of coverage. Instead, I only take clients under the "contested divorce" hourly coverage. 

4. I paid for too many referral and advertising services. 

Over the last year and a half, I have used a variety of referral services. Some were great, but some were not worth the money. 

The first was Marindale-Nolo which cost about $24 per lead. This service did not benefit me. I got a lot of referrals, but the cost was steep. 

The second was ARAG, a legal insurance company. ARAG is free to sign up, and has sent me a lot of referrals. You do have to agree to take clients under their coverage (i.e., at a $25% discount, etc.), but overall I feel the program is worth it. 

The third is Texas Legal, another legal insurance company. Unfortunately, Texas Legal is not free to sign up, you have to pay about $100 annually. Since working with Texas Legal I have retained only 2 clients. I do not feel that the cost is worth signing up, because I am not getting enough referrals. 

The fourth is the State Bar of Texas Lawyer Referral Information Service (SBOT LRIS). This service costs $150 annually. Since signing up for the program, I have gotten a handful of referrals, but have only retained 1 client. Like with Texas Legal, I do not feel that the cost is worth signing up, because I am not getting enough referrals. 

The fifth is the Dallas Bar Association Lawyer Referral Service (DBA LRS). This service costs $100 annually and it is worth every penny. I get several referrals every week from this program, and I have retained many clients since starting. 

In addition to referral services, I also used a variety of advertising platforms. These included paying for Google and Yelp ads. You pay per click, but you can set limits on how much you pay per month. It can cost $3-5 per click and total about $50-150 per month. I fully believe these ads brought me customers and clicks on my site. Between the two, I have gotten more referrals from Google Ads than Yelp Ads. Even so, there is no need for me to keep paying a monthly rate when I have cheaper avenues available. The great thing about Google and Yelp ads is that you can pause your campaign at any time. If you find yourself at a loss for clients, you can always turn the ads back on.  

Based on my experience I plan on keeping only two avenues moving forward. The first is ARAG. As long as I do not take flat-fee cases, this avenue brings me a lot of revenue. At least half of the clients I've retained are from the ARAG program. The second is the DBA LRS. About one third of my clients come from this referral system. The rest of my clients found me through Google--even without turning on Google Ads. 

5. I paid for too many legal resources. 

I initially paid for a lot of legal resources. Some of them were great, and some haven't helped me much. 

First, I purchased all of the resources available on the State Bar of Texas Family Law Section's website. These included a family law toolkit, videos for clients, family law summaries, a predicates manual, and checklists. I use all of these resources and I feel they were a great investment. Here's the link: https://sbotfam.org/shop/. 

Second, I purchased softbound books from WestLaw. These included four books: The Family Law Handbook, The Texas Family Code Plus, The Evidence Handbook, and The Texas Rules of Civil Trials. I also feel like this was a great investment. I pay about $50/month for these four books. With this subscription I get sent the updated versions at no additional cost. 

Third, I purchased the State Bar of Texas Family Law Practice Manual. This Manual is a must for family lawyers. It's about $35 per month for the online subscription, and it's worth every penny. It includes practice notes, and forms for everything you can think of. Here's the link in case you are interested in purchasing: https://www.texasbarpractice.com/product/texas-family-law-practice-manual-online/. 

Fourth, I purchased WestLaw's Form Builder. I did a trial and initially liked it, so I jumped the gun and purchased a year's subscription (the minimum subscription time available) at $250/month. This system came so highly recommended I thought it was a great investment. I thought wrong. The more I used it, the more I found it difficult to use. I was having to make too many changes to the automated documents. Plus, I was getting essentially the same thing through the Practice Manual at a much lower cost. I was eventually able to switch my subscription from Form Builder to WestLaw's family law engine. I got more use out of this than the form builder option. However, once this subscription lapses in July, I will not be purchasing it again. 

6. I started with the wrong case management system.  

As a part of the DBA's ECL Program, I was given the ability to use Clio free for a year. I am very fortunate to have been given this opportunity. However, I found Clio to be confusing to use. Maybe it was just me, but I was never able to use it the way it was meant to be used. I found that out when I switched to MyCase. When my subscription for Clio came to an end, I decided to do a trial run of MyCase. I loved it so much that I didn't even finish the trial before I purchased the product. MyCase is laid out in a way that makes sense to me, and includes additional features that the basic Clio account does not. I'll get into the details in a later blog post. 

Unfortunately, switching my case management system a year in came at a cost. I had to hand key in all the data from Clio into MyCase to make sure that I had accurate records. In addition, it created problems in QuickBooks. Both Clio and MyCase sync with QuickBooks, but changing from one product to the other seriously messed up my books. Looking back, I could have keyed in the trust account information differently and prevented this mess but I didn't know any better at the time. I wish I had chosen to pay for MyCase instead of using the free year of Clio. Despite the added cost, it is better suited to my needs. As soon as I started using MyCase I was able to become more organized and more productive with my cases. I highly recommend that you take the time to do free trials of several case management systems before making your first purchase (i.e., Clio, MyCase, Practice Panther, etc.) 

 7. I acted as my own bookkeeper. 

When I started my law firm, I did not have the funds to afford a bookkeeper. Instead, I did my accounting myself with the help of QuickBooks. Initially there was no issue, but law firm trust accounting is unique. It also didn't help that I switched case management software a year in. My QuickBooks account got so messed up that I had to hand key my expenses and income in order to do my 2020 tax returns. I just recently hired a CPA who works with law firms, understands trust accounting, knows how to sync with case management systems, and also works with QuickBooks software. She does monthly bookkeeping and helps me prepare my tax returns every year. I'm only a month in and I am so relieved. I really wish I had hired a CPA initially. 

8. I didn't invest in proper equipment. 

The final mistake I made was not purchasing proper equipment for my office. I did not have the funds to do so when I started my law firm, but I wish I had budgeted the money earlier. 

I initially used my laptop as my main computer with two additional screens. This gave my laptop a ton of issues. I spent a good amount of money having to repair my laptop and pay for the additional screens. Last summer I finally had the money to purchase a desktop, and it was so worth it. I purchased the HP 27" Pavilion All-in-one PC for $1,300. Everything is built into the monitor, so there are not additional pieces. As soon as I started using this, my life changed. It was so much easier to toggle screens, the Wi-Fi connectivity improved, and I became more productive. It was so helpful, that I purchased a second desktop for my Dallas office as soon as I was able. That way, I could move between my home and Dallas offices seamlessly.   

The next purchase I made was the Brother MFC-L8900CDW Business Color Laser All-in-one Printer for about $600. Oh my goodness, I cannot tell you what a relief it is to have this printer. With my old printer, I could only print one sided and 10 pages at a time or it would freak out on me. With a laser printer, I can wirelessly print hundreds of documents, scan wirelessly to DropBox, and make as many copies as I need. Plus, the toner cartridges last 6 months rather whereas the ink cartridges only lasted me 1 month. If you don't print a lot you may not need this fancy of a printer, but for me this was a necessary investment. Unfortunately, I only have this printer in my home office. I am still saving up the money to purchase one for my Dallas office. I have to save up about $1,200 in order to purchase both the printer and toner. 

Another purchase I decided to make was for a desktop scanner. Scanning from either of my printers can take a long time, so I wanted to invest in a desktop scanner that scanned documents quickly. I tried purchasing one of the cheaper options, but it did not work properly. It connected to my computer with a cord, but I was constantly having to redownload the software. Recently, I was able to purchase the Fujitsu ScanSnap iX 1600 wireless desktop scanner $400. I love having this desktop scanner. It easily scans documents with a snap of your finger and uploads the scans to DropBox. It took a while for me to figure out how to set it up, but once I did I was amazed. No more having to redownload the software, because everything is done wirelessly. Once I am able to purchase the new printer for my Dallas office, my next purchase will be this scanner. That way, I can have proper scanning and printing technology at both offices. 

So there you have it folks, my personal list of mistakes I made when starting a law firm. I hope you enjoyed this post, and I hope it can help you in your journeys!