It’s a dynamic time to be in the legal industry. Over 63,000 new attorneys have started practicing in the U.S. in the past decade, and they’re joining law firms that are increasingly leveraging new technologies like AI to work more efficiently.
Owning your own law practice offers numerous advantages, from greater control of your caseloads to flexibility in setting billing rates.
But running a successful firm requires more than a deep knowledge of the law.
You need to market yourself, understand potential clients’ motivations and desires, and clearly explain to them why they should hire you over another firm. All of which you can figure out by going through the process of writing a business plan.
Here are a few sections we recommend including in any law firm business plan:
The details of your plan will vary based on factors like the size of your legal practice and whether or not you need funding
If you’re seeking a bank loan or investment, you’re best off following the traditional approach to writing a business plan. Otherwise, don’t feel bound to writing a full plan. You can just focus on the business plan sections that are most relevant to your situation.
The executive summary is your opening pitch to the reader. Although it comes first in a business plan, you should write it last, since it distills your entire plan into a concise, one- to two-page overview.
Start by outlining your law firm’s focus and current status. Are you:
Then, summarize your practice areas and target clientele. Describe the issues you’re solving for potential clients, and why they should choose you over competitors.
Maybe your team has experience that’s relevant to your ideal client, or you offer an appealing fee structure. Anyone who reads the executive summary should be able to understand what makes your law firm unique.
Your executive summary briefly touches on your law firm’s area of focus. But the services section is where you give readers a detailed look at the expertise your legal practice offers, and how you address specific client needs.
What are your core practice areas? Do you represent:
Businesses: Contract disputes, regulatory compliance, employment law issues
Individuals: Personal injury claims, divorce proceedings, estate planning
Simply list all of your legal services. If you run an existing law practice, you can mention your existing client base. Also, specify if your law firm specializes in courtroom litigation, drafting contracts, or legal advisory services.
When writing out your services, consider what sets your firm apart. Maybe you provide free or low-cost initial consultations or specialize in areas underserved by competitors. Any services that might give you a competitive advantage are worth mentioning.
Understanding your potential client base is vital. Do you know the size of your market? What are their characteristics?
To conduct a market analysis, start by profiling your ideal client. Consider basic demographic information, like their:
Take their life circumstances into account as well. Are they navigating events like:
Depending on their circumstances, you’ll need to research relevant trends in your area to determine whether there’s a growing demand for the services you offer.
Document who your competitors are as well. What other law firms might potential clients turn to? Note their strengths and weaknesses and compare them to your own in your market analysis.
This research will help you develop a unique value proposition—something only your firm offers that you can emphasize in your marketing strategy.
The marketing and sales plan is where you describe how you will stand out and attract clients.
Where are your potential clients seeking out legal information? Common channels for law firms to market their services include:
You’ll likely want to consider a combination of these tactics.
But before spending your marketing budget, take some time in your business plan to determine how you’ll position yourself. If you’ve determined your law practice’s unique value proposition, it should be incorporated into all of your messaging.
Say you offer a unique combination of legal services in your market, such as financial compliance services for businesses and high-net-worth individuals. Your marketing plan is where you develop engaging messaging around your services that are tailored to your ideal client and the medium you’re promoting your services on.
Examples could include:
One key point to remember is that the legal profession has specific marketing restrictions, to ensure law firms are promoting their services in an honest, ethical way. Make sure your plans adhere to the bar association’s guidelines.
The company overview isn’t an exhaustive history of your firm’s experience. It’s meant to quickly give the reader an understanding of your background, experience, and the structure of your firm.
Start with the basics:
Founding date: When was the firm established?
Legal structure: Is it a partnership, LLC, corporation, or other structure?
Location(s): List the communities your firm serves
Provide some detail about you and your team as well:
Founding partners: Summarize their legal experience, specializations, and any notable accomplishments.
Key Associates & staff: Briefly outline their roles and credentials
If your legal practice is already established, note any milestones you’ve achieved, such as major cases or community recognition. But even if you’re just starting, listing milestones like securing office space or building an initial client base are worth noting here as well.
Your law firm’s financial plan is crucial to determining if you have a strategy for running a viable business over the long term.
Here’s a breakdown of what you need:
Sales forecast: Project revenue based on billable hours, retainer fees, contingency cases (if applicable), and any other income sources. Be realistic, especially in the early stages.
Expense budget: List all of your costs, including:
Profit & Loss (P&L): Your income minus your expenses, showing if you expect to be profitable.
Cash flow statement: Predicts when cash comes in and goes out of your business. Cash flows are crucial to ensure you can cover bills and payroll.
Balance sheet: An overview of your law practice’s financial health, listing assets (cash, accounts receivable), liabilities (loans), and equity.
If you’re seeking outside financing to start your legal practice, list startup costs like office build-outs, initial marketing, and technology investments separately from your expenses, since these are areas you’ll be looking to fund with lender or investor funds.
Additionally, be clear about assumptions you’re making when forecasting your revenue streams (case volume, hourly rates, etc.). Researching similar law firms can help you ensure your projections are reasonable.
Download our law firm sample business plan for free right now and use it for reference as you write your own plan. You can even copy and paste sections from the sample plan and customize them for your business. Just make sure you’re taking the time to do your own research.
You can also view other legal business plans, or browse the full Bplans library of over 550 sample business plans across numerous industries.
