I was doing some bookkeeping this weekend and pondered what was the true cost of running my law/business. I remember reading this blog a while ago from Lawyerist (http://lawyerist.com/the-cost-of-starting-a-solo-law-practice-and-keeping-it-going-for-at-least-a-year/). Lawyerist is also a great blog for solos and young attorneys if you don't already have it in your blog feed). Actually as I was writing this post I found out that the original blog has been updated with another blog (http://lawyerist.com/how-much-it-really-costs-to-start-a-law-firm/) that discusses the recommended cost of starting a practice. Apparently there was some controversy over the $3000 amount. So I thought it'll be fun to compare my experiences against both the theoretical $3000 vs the updated blog that claims to be more realistic.
I am by no means endorsing this as what I recommend, or claiming that this is the ideal budget. I am just listing this to show what my budget is at the stage that I am in. The budget will also depend on what stage you are in. And to clarify, the stage I am in is still the "experimental" stage, where I am still figuring out what I really
really want to pursue (in
lean startup fashion). This means I may be doing things on a shoe-string budget while I am learning and refining, rather than investing in some big ticket items such as software licenses or expensive furniture.
So, my cost at my current stage:
The can't-get-away-with costs
Physical space- $130/month for virtual office for 8 hours a month.
I agree with the updated blog. In 6 months you WILL need to find an office or some kind of space
to meet clients. Around this point meeting at starbucks or Panera (with my favorite startup clients actually) is just not enough. It is way too hectic, there is no privacy, and you have no way to make copies of important documents (details!). I was sitting outside starbucks on the patio and important papers flew out of my file, and the client had to run after it! (embarrassing?)
But in comparison, I did have an office in the beginning. In month one I just didn't have the traffic to justify the space (and paying the rent was quite a burden on my startup budget). So now I am exploring the concept of something in between- like a virtual office to rent for a few hours a week. But again this will depend heavily on your area of practice. If you are doing all contract work for other attorneys, you probably don't need an office.
Efax
$6/month
I always wonder why in 2013 we are bending over backwards to make an old technology work. Basically with efax we are transforming a "scan" into a "fax". This topic is beyond me. I just accepted the fact that most administrative agencies and courts will ask if you have a fax. I actually felt bad that a judge had to overnight an order to me rather than have the ability to fax it. So I caved in and bought a cheap efax service.
Google Phone
Free BUT cell phone charge =$100/month.
Lexis/Westlaw? Local library = FREE, but consider how many trips you will have to make.
Thankfully the law library is attached to my local courthouse. So I have a running list of books I need to pick up or caselaws or CEB chapters I need to download, and get them all at once when I make a trip down there. May be a bit inefficient, but I did sign up for one of these services at one point. The cost of using these services by the month will add up and it just doesn't justify my practice for now (this may be different if you were a full time researcher or litigator).
Bar Associations
$70 VCBA + varies for local section. Local sections may be important because of the ever important listserves.
I may add LACBA membership, but these fees add up.
MCLE = Varies
Practice guides to buy = varies
Some guides you can get at the library, but for some niche practice areas (like special ed or immigration) it may be pretty tough to find a copy from the library.
Ink cartridge = $12/month
Legal Malpractice insurance = $500 first year
Hosting service for websites = $5/month
Stamps = random
The costs I don't know if they count
Laptop/computer cost- well, I am still using the same one from my 3L year.
*update: may be doing the upgrade to an imac soon ($2000). I find I am more productive on a desktop. Plus it gets too hard to have to copy/paste from 2 windows or reference multiple windows to get some work done on my tiny 15 inch laptop.
Printer/scanner from costco = around 2-300. Should probably add this on your christmas wishlist!
health insurance = $114/month for now. But this is not all inclusive.
Buying domains = $12, but discount codes available. I also buy alot of domains so my budget here may be an outlier.
Hiring someone to modify wordpress= around $300 market rate
Auto insurance/gas - this counts if your job is to drive area to area.
Business cards from Vistaprint = $10 about
If you are doing direct marketing, the cost of envelopes and stationaries may add up substantially. For some reason the envelopes are exponentially more expensive than the letterhead.
marketing in general
Some you can get away with for free like Craigslist or free online yellowpages-type profiles.
If you get into google ads, the cost will go up depending on your practice area and keywords.
Then there's other traditional marketing.
Costs I haven't considered
incorporation- in CA would be $100 plus $25. Update: don't forget the yearly tax bill for a corporation! (I believe it is $800/year) This could make or break your first year budget.
secretary/paralegal. Many people would argue this is the key to a practice- getting help from someone who really knows the system. Also many argue how invaluable it is for someone to answer your phones. Right now, I am compromising by letting google voice filter out the calls.
But overall, even taking out the things I haven't considered, or things that don't really count, it's really still cutting it a bit close to claim you can start up a practice in less than $3k. Remember, everything here varies by the person, the practice, the geographic location, etc.
What's your startup budget??
