How To Start A Solo Practice Law Firm In California
So, you’re a lawyer in California who has decided to extend and open your own law practice, congratulations are in order. The decision to begin with solo law practice is a huge deal, which can possibly lead to a fulfilling and prosperous career.
Whether you are leaving from another law firm, or you’ve just come out of law school, running a business has some challenges that you encountered before.
However, with some guidance and a proper plan, you will be able to hit the ground running, and build a successful practice eventually. This article provides you with a general overview and a quick reference manual for starting your own law firm in California.
Anyway, the given information below isn’t meant to be universal, so you should consult other sources as well, before starting your practice.
Taking that into account, here are some of the key issues that you must consider in advance.
Table of Contents
Decide About Your Solo Practice Law Firm’s Entity Type
When starting your own law firm, the primary issue that you must consider is what kind of entity you want to form. In California, you have two options as a solo attorney for forming a law practice:
- Sole proprietorship, and
- Professional corporation.
You should know that some of the other states also allow legal professionals to form their business as a professional LLC (PLLC). Nevertheless, that kind of entity can’t be formed in California.
Obtain Professional Liability Insurance Coverage
One of the most crucial aspects when starting a business is obtaining a professional liability insurance policy. There are plenty of insurance coverage providers to choose from that offer diverse rates and features.
Many insurance carriers offer relatively cheap insurance coverage packages for new lawyers. That will allow you to get business coverage in California while keeping your expenses low. Bear in mind that you should get your coverage before you start conducting business. If you start performing and obtain your insurance afterward, you may not be covered.
Acquire The Required Business Licenses & Permits
The cities in California mostly require businesses that operate within their jurisdiction to get some form of a business license. That actually allows the local governing institutions to have a file record for the individuals and businesses that operate on their territory.
However, the tricky part is that every county (or city) has its own rules regarding local businesses. Cities may also have different names for their licenses. Some cities can require a business permit, some require a business license, and others business tax certificates. There are some that don’t require any filings at all.
So, depending on where exactly you will conduct business, you may also need to apply for business permits in a couple of different cities. For example, if you primarily conduct business in Del Mar, but frequently meet with clients in the neighboring city of San Diego, you may be required to file for a San Diego business license also.
Open Bank & Trust Account
As a solo practitioner, you will probably receive money on clients’ behalf. Sometimes from your clients directly, and sometimes from third parties in connection with your legal work.
Under California jurisdiction, any money received on the client’s behalf must be held in trust, apart from your business’s finances. The usual banking structure is to hold a trust account, and an operating account (for your company’s finances).
Once the funds have been justified throughout legal work, or otherwise become payable to your company, you may then transfer the funds from your company’s trust account to the operating one. After that transfer, the funds belong to your firm.
Get Software For Task Management
A law practice is a detail-oriented and highly technical business. Law practices, like other businesses, have to keep track of all open cases or projects, a list of tasks, and results. There are various things that should be tracked and organized throughout the daily operating processes.
You will need to keep detailed records of your billing hours, and above that to maintain precise calendars for hearings, client meetings, civil procedure deadlines, and similar case-related stuff. Besides, a company must keep records concerning its finances, costs, and expenses, invoices, client trust accounts, accounts receivable, etc.
Even a small solo law practice can have difficulty maintaining all of those details manually, for example through Excel spreadsheets or Word docs. There are many different SaaS companies in California that provide various types of automation services for all kinds of work tasks.
All the above-given points are crucial when you are thinking of opening your own solo practice law firm in California. So, go through them carefully, and afterward, begin to develop a base of clients and cases. Good luck!