Your law firm business plan lays out what you want to accomplish, how you’ll do it, and the people and expenses you’ll need to achieve your goals.
Writing a business plan can feel overwhelming, with all the other pressures of starting your business. But it’s importance cannot be stressed enough in business development for law firms Following a few key steps and exploring some law firm business plan examples will get the creative juices flowing to write your own.
Why Every Law Firm Needs a Business Plan
There are over 439,000 law firms in the U.S. To start off right and stand out, you need to think strategically.
You already know how to practice law, but there’s a whole other side to starting a law firm: the business aspect. Your law firm business plan is your roadmap for how you’ll grow the firm and sustain the elements of operating your business.
A business plan serves multiple purposes when you’re launching a new law firm. It:
- Covers how you’ll fit into the existing market, including what makes you unique
- Sets you up for defining your mission, vision statement, and values
- Establishes your goals for what you want to see out of the firm in the long run
- Creates a firm foundation that allows you to hire others to fit into this structure and work culture
- Sets up a system for the approach you’ll use to find and reach potential clients
For all these reasons, a business plan matters internally, but it may also be important externally if you’re seeking outside funding to launch your law practice.
If you’re turning to loans or other capital, a business plan shows investors or lenders that you’re serious and have put in the time to discover how to get your law firm off on the right foot.
The Key Components of a Law Firm Business Plan
Whether you’re planning to start a small firm right out of law school or grow into a big law firm with multiple lawyers, you need a business plan.
A good law firm business plan has multiple components, including:
- An executive summary
- A firm description
- A market analysis
- Details on organization and management
- Details on services
- A marketing plan
- A financial plan
- A start-up budget
Start with a table of contents for each one of these sections, then fill out each section with the details listed below.
1. Executive Summary
Your executive summary is a broad overview of some of the most important elements of the business plan. Writing this at the end can be easier, even though the finished product will go at the front of your completed business plan.
Your executive summary is designed to capture some critical details you’ll expound on later in the business plan.
Here’s what belongs in your executive summary:
- Core values that define and guide your company now and in the future
- A mission statement about the firm’s purpose
- Primary goals for the law firm
- Your unique selling proposition
These might initially seem less business-focused than other aspects of your plan, like your market analysis or start-up budget but don’t overlook them. There are plenty of law firms for clients to choose from today. Knowing what sets you apart from your competition will help you make key decisions, attract new clients, and learn what’s most important as you grow and need to hire staff.
Without these guiding principles in your firm and business plan, you’re more likely to make mistakes such as coming across as “just another local law firm.”
2. Firm Description
Your firm description explains the core aspects of business operations. In this section, write a summary that includes:
- A high-level overview of the primary services the law firm will offer
- The legal structure of the business, such as an LLC, partnership, or sole proprietorship
- The lawyer or lawyers who will make up the firm at the time of launch
- The location of the firm and the areas it serves
- The general approach the firm takes when representing clients
3. Market Analysis
A competitive analysis is one of the most compelling components of well-written business plans. The truth is that not all law firms are created equal, but as the founding attorney, it’s your job to make sure that your prospective clients know that.
Doing your market research shows that you’ve been realistic about how you’ll earn clients with competition in the local market. This can also open your eyes to new ways to reach the same clients, especially if other law firms rely on methods like referrals and word of mouth alone.
You need to know and document:
- Your target client and any important general details about them
- What motivates your target client and what is most important to them when selecting a lawyer
- The projected size of your market
- Trends in your practice areas
- Your direct and indirect competitors in your local area and what you’ll do differently
- Average fees or client expectations around payment for legal services
4. Organization and Management
In this section of your law firm business plan, you’re naming the key stakeholders in this new law firm and what they bring to the table. This includes:
- The names and educational backgrounds of any founding partners, as well as any unique experiences they have that will set the law firm apart
- The names and brief background bios for any other core staff members, such as an office manager or paralegal
- An organizational chart
Going through this exercise helps you see where you might have gaps in the day-to-day work of the law firm.
For example, you might not launch with full staff in place due to revenue concerns, but it’s still worthwhile to document your intended first few hires. Handling all the responsibilities of running a law firm is a lot of work for anyone, so it’s valuable to start thinking about delegation, even if you’re not ready yet to hire someone.
In the services section of your business plan, you’ll mention your practice areas. Expand beyond this and brainstorm how your law firm will attract clients for these services.
Here’s what to think about as you write the services section of your law firm business plan:
- What primary legal problems will your clients hire you to help with?
- Are there specific services you will or will not offer in your practice? For example, will you take only car and truck accidents in a personal injury firm ,not defective product claims?
- Are you narrowing down your legal practice area by thinking about serving only certain sectors of the market, such as divorce for parents who want to pursue mediation first or elder law services for those who need to qualify quickly for Medicaid?
- What makes your approach to law or client service something that would attract these clients to your door instead of a competitor?
- How do your services solve the legal problems of your clients?
- Why does your local area need a law firm focused on these practice areas?
- How will you structure pricing for your services? Hourly rates, flat fees, or a mix?
6. Marketing Plan
Your marketing plan is crucial to your law firm’s business plan. The phrase “build it and they will come” does not apply to starting your own law firm. You must have a rock-solid plan for finding and converting new clients.
You need a marketing strategy that aligns with your practice area and the needs of your ideal clients.
There are four big questions to use as you write your law firm marketing plan:
- Who is the target client you’re trying to reach? Do they share any demographics?
- How do you position yourself to that target client?
- What are you selling to that audience?
- How will you know when you’ve achieved your goals?
Within your marketing plan section, you will also need:
- A SWOT (strengths, weaknesses, opportunities, and threats) analysis
- Data on your target market’s needs and why you think you’ll be able to sell legal services to them
- Marketing and financial goals for your firm
- A monthly marketing budget.
Consider marketing options like social media, business development, SEO, and PPC advertising.
Your marketing plan will vary based on whether or not the firm is new or you have an existing book of business. Launching a new law firm takes a lot of upfront work and marketing, so be prepared to account for this work in your marketing plan. You can mix creative ideas for law firm marketing with tried and true ways to get your name out there.
7. Financial Plan
If you want to grow your law firm and earn a consistent paycheck for yourself, you need a financial plan for your law firm. Although you might not have answers to every question relating to law firm finances, try to be as detailed as possible. Aim to set up a financial plan for at least the first year in business.
Here are some good numbers to establish in this portion of your business plan:
- Revenue goals
- Financial projections, including what you’ll pay yourself and your actual capacity to manage a caseload
- Your overall budget and expenses for both fixed and variable costs
- A cash flow statement
This aspect of your firm’s business plan does not need to be perfect. You’ll adapt it over time, especially after you’ve been in business for a year or more. Try to come up with reasonable estimates in this portion to be realistic during your first year.
If you’re starting your own law firm and won’t have any new hires in the foreseeable future, a sound financial plan helps you decide when you have enough cash flow to commit to getting help with admin or paralegal work.
Return to your financial plan as your law firm evolves, looking at things like your profit and loss balance sheet, cash flow, and profit margin. Adjust your efforts and pricing based on the data you collect.
8. Start-Up Budget
A new firm should always include a start-up budget in its business plan and the sources of funding that support this budget. While an established firm probably has some of these expenses covered already, a new firm has to consider both the first-year financial expenditures of running the business and a separate set of costs just to get things up and launched.
Your start-up budget should account for:
- Any office space you’ll need to rent
- Basic utilities for that office space
- Tech like printers, scanners, and phone lines
- Malpractice insurance
- Practice management/case management software
- Accounting software
- Salaries for staff
Sample Lawyer Business Plan and Fillable Template
If you’re just getting started with your new business plan, take a look at the example that we put together. If you’d like to download a blank version of our template so that you can use it as the base for your own, on the button below. Make sure to customize your plan to your needs and goals.
Your law firm business plan is vital to understand what you hope to accomplish, how you’ll set goals and recognize when you’ve achieved them, and to decide the core aspects of how your law firm will function. As a roadmap, it helps you break down the big tasks associated with starting a law firm into meaningful action steps.
There’s plenty to think about if you’re just starting with a new law firm. It might seem overwhelming to approach these tasks entirely on your own. One of the best ways to attract new clients when you launch is to invest in a solid SEO strategy. This helps you earn qualified leads from traffic to your website. Rankings.io knows what it takes to get results with law firm SEO, and we’ve built a reputation doing just that. Contact us today to learn more about how SEO can get you marketing wins in your law firm.