To start your own practice, start planning now: are you and your firm headed for a breakup? Do you dream of the freedom to practice law on your own terms? If so, read on for a dose of reality-checking - and encouragement - from someone who recently made the move.

Having your own business is a common American dream. When I started my own practice in January 2006, I was filled with both fear and enthusiasm. I was convinced that having my own shop would allow me to focus on what I loved, practicing law, and free me from the bureaucratic shackles of being a partner in a medium-size firm.

I was confident that my degrees in business and accounting would make management of my own practice a breeze. As with so many events in life, you are only that naive once.

Detailed, proper planning is the cornerstone of practice ownership. As much as I hate to admit it, I have survived despite my failure to plan carefully, not because of it. Here are the lessons I've learned over the past year--most of them the hard way.

Nail down the numbers

Although it sounds obvious, the first step is to determine whether you can actually make money in your dreamed-of practice. Overconfidence and blind faith are no substitute for financial planning--although they do help.

Make a realistic projection of income and expenses before you move out and sign a long-term lease. The best way to start is by meeting with friends and colleagues who have opened their own practices; they can help you check whether your projected numbers are realistic, particularly on the expense side.

Resist the impulse to estimate expenses first and then back into the amount of income necessary to cover them. Make a realistic estimate of your anticipated cash flow, and be conservative on both timing and amount. Take a hard look at what good professional judgment indicates you can earn during the first couple of years.

Next, realistically estimate your expenses--and then double them. Running a law office costs more money than many people imagine. If you are unconvinced, take a tour of your local office supply store before you hang out your shingle, and look at what basic supplies cost. That experience alone should make you a believer.

Once you determine that your practice can be financially viable, get a quote for malpractice insurance and make sure that it is ready to go the same day you are. You cannot afford to have your coverage lapse for even a day. There are many areas where you can be frugal, but malpractice insurance is not one of them. You must have sufficient limits for the type of work that you have been doing and will continue to do.

Most state bar associations have malpractice insurance plans, and they can be a good place to start. Keep copies documenting the date you make your application. Most insurance companies will provide coverage from at least the application date, so hold onto your documentation until you have your policy in hand.

Finding that perfect place to call "home" is one of the more exciting aspects of going solo. When determining your space needs, again, talk to others who have opened their own practices. They will probably tell you that one of the keys to survival is keeping your overhead in check, so be wary of taking on large, fixed expenses like a hefty monthly rent.

Consider office-sharing with other attorneys. (1) The right arrangement can make great economic sense and provide you with other advantages--among them, having other attorneys around to discuss case strategy with. Perhaps more important, the company of other lawyers can help dilute any fear or panic about your decision, and that's a benefit that can't be quantified.

Don't skimp on technology

The first week my practice was open, I realized that I had previously lacked sufficient gratitude for functional computers and telephone systems. Thanks to some good consultants, we were fully functional in a few days, but being out of touch even briefly can be stressful.

One good decision I made was to buy high-quality technology. A light-weight, wireless laptop is essential. In your own practice, you will have more responsibilities and probably less support than you did in a firm with partners--which translates into a lot less time. Given this, effortless connection to your e-mail and computer system at all times is crucial. So are top-notch computer consultants who can ensure that your office is set up to use technology efficiently.

One of the most cost-effective devices you can buy is the personal communications service (PCS) broadband card that inserts into the side of a laptop and allows almost-instant broadband Internet access any place that PCS service is available. The service is available at a flat monthly rate and is quicker and more reliable than any wireless service your laptop will pick up.

Another good idea is a buying a PCS phone that you can synch with your office computer. The two most popular brands are the Treo and the Black-Berry. With these devices, you will always have your calendar, contacts, and e-mail with you.

These days, a fax machine is no longer necessary. Neither is paying for an extra fax-dedicated phone line. On line fax services and software let your laptop function as a fax machine. That said, make sure you invest in at least one high-speed, high-quality printer equipped with a scanner.

Finally, back up your computers at least once weekly, and keep your backup files in a remote location. You can also use backup services available over the Internet. It doesn't matter which option you choose--it just matters that you do it, religiously. (2)

Obviously, you will need a new e-mail address and you should purchase a Web address to go with it, even if you don't plan to get a Web site up and running right off the bat. (3) Certainly, you don't want to find yourself in the position later where the Web address matching your e-mail has been purchased by someone else. The good news is that you don't need to pay a consultant to do these things. For a Web address, just go to a host site such as Network Solutions, select an available address, and follow the directions.

Bring support staff

There are two primary considerations in determining whether you can take members of your support staff with you on your new venture: cost and sanity. If you can afford to take at least one good person with you, do it. Remember, you are assuming the duties of a second career--that of a business owner--when you open your own office. Having at least one staff person on whom you can rely is invaluable.

On the other hand, don't forget the costs--aside from salary--of bringing along other people. These include the costs of Social Security taxes, incremental office supplies, incremental rent, benefits, and additional office equipment and furniture.

You also have to think about health insurance--for yourself and your employees--as well as disability, property, and life insurance. A good insurance broker can be a great help here, and many state bar associations have insurance plans. The COBRA statute will allow you to continue under your former firm's health insurance plan for up to 18 months after you leave. Although this may not be the most economical arrangement, it buys you some time to shop around for your own plan. In fact, if the firm you are leaving is large, it may be able to get better rates than your smaller shop will, especially if anyone in your new practice has significant health issues. Remember, COBRA will cover only those employees who were also employed by your previous practice. If you are starting your firm with new staff, you will most likely have to bite the bullet and get your own group plan.

If you do have employees, do not--repeat, do not--attempt to calculate your payroll on your own unless you have gobs of time to burn (and you won't). Some accounting software will do this for you, but in the grand scheme of things, the monthly fee you pay a payroll company to calculate your payroll taxes and issue your checks is well worth it, providing valuable peace of mind.

Leave like a pro

In dealing with your current (soon to be former) firm, address the issues of your departure head-on, even if this may cause tension with your colleagues. Suffering tension in the short term is much better than enduring long-term, relationship-ending strife.

First, find out what ethical restraints your jurisdiction places on your continuing contact with the firm's clients. In most states, you'll have to take the big plunge and leave the firm first; then you may talk to clients about coming over to your new practice. This is a scary proposition. An even scarier one is starting a new practice with an ethics complaint pending against you.

Once you have left the firm, you are typically at liberty to contact the clients you had there. If they want to follow you into your new practice, you will need letters or other written authorizations from each client requesting a transfer of their files from the former firm to your new office.

Your clients' written file requests should state that they wish for both paper and electronic copies of all file materials to be released to your new practice. I would suggest preparation of a boilerplate file transfer letter that your clients can use to expedite file transfer and consistently define the scope of the transfer request. Then, once file transfer is made, have each of your clients sign new fee agreements with your new practice. Remember, there is troubling case law in some jurisdictions that indicates that if your firm is not specifically listed on the fee agreement, you are not entitled to any fee.

Finally, you must attempt to resolve all outstanding financial issues with your former firm, if such a resolution is at all possible. If there are hard feelings and you and your former partners can't work out the financial aspects of your departure, consider hiring an outside attorney to negotiate your separation agreement. But don't put off dealing with these issues now in hopes that they will somehow disappear in the future. They won't disappear. Instead, over time, they will merely intensify.

Even if you have to give up a little more than you would like, I personally believe it is worth such a compromise to have these issues settled. At least with a separation agreement, you have some sense of certainty with regard to financial issues on each of your pending cases. Finally, whatever arrangement you reach with your former firm, get it in writing.

Consider financing and referrals

If possible, establish a commercial relationship with a local bank right away. You need not only a separate bank account in the name of your new firm but also--in almost every state--a separate Interest on Lawyers' Trust Account (IOLTA).

Make sure you get a credit card for your new practice and run all credit-card-type expenditures through one business card only. Using just one business credit card--keeping your office spending completely separate from your own personal expenditures--will make bookkeeping much easier.

To finance your practice, you have three main options. First, you can look to a traditional line of credit with a local bank. Unfortunately, if you don't already have an established relationship with a bank, this option can be difficult to secure. Second, you can talk to one of the many companies that specialize in financing plaintiff litigation.

Third, you can attempt to negotiate a partnering relationship with established plaintiff lawyers who may have an interest in becoming involved in your more expensive litigation by both sharing some of the workload and financing all or some of your expenses. Of course, always review your state's ethics rules before entering into any such agreement, to make sure that fee-sharing is allowed in exchange for financing litigation. It may not be in all places.

Networking with other attorneys is not only important for establishing your referral base, but also essential for getting practical advice. Look for other lawyers who are in the same position you are, and see if you can establish at least an informal coverage arrangement for times where you are overextended, double-booked, or in trial for an extended period of time. You need someone you know and trust to help out in case of an emergency. Planning in advance can give you peace of mind later.

Avoid taking on more work than you can handle, especially when you're just starting out. It is tempting, when you have bills to pay, to accept cases that aren't in your area of expertise. Don't do it. In the long run, it will cost you more time and money than it will generate.

Instead, stick to what you know. Refer other work to another lawyer who knows your area of interest, and use this opportunity to establish a good, mutual referral source.

Attend to the details

Before moving into your new practice, get organized. It is difficult to take the time for this, but it's best to do it before you leave your current practice, while you have support. Set up working files that will be readily available in your new office, to avoid having to repeatedly dig information out of your file cabinets.

As soon as you're on your own, get new business cards printed and choose a letterhead for your practice. If you want to save some money, you can always print letterhead from your computer, but don't skimp on quality stationery. These days, e-mail is quickly beginning to replace the formal letter, so your expenses in this area shouldn't be high.

Send out announcements. Remember, no one can send you business if they can't find you. And you can't always count on your former practice to refer clients to you. Make sure that everyone knows how to find you.

Also, check in with your state bar. Make sure they have your new address and will send notice of your bar dues there. Obviously, staying licensed is of utmost importance.

Notify Martindale-Hubbell and your state and national trial lawyer associations of your address change. Send notices to your opposing counsel and reenter your appearance in your cases. Make sure you walk out of the office you're leaving with at least a printout of your contact list, your current and future calendar, and your past calendars for the period that you were at your previous practice.

Don't forget to set up a new account with the online legal research service you use. Talk to vendors about what kinds of deals they can get you on this and similar resources.

Ralph Waldo Emerson said, "Enthusiasm is the mother of effort, and without it nothing great was ever achieved." Going it alone as a lawyer can be stressful and scary, and you'll never succeed unless you are fully committed to the idea of your own practice. But if practicing solo is something you feel passionate about, then the last step is a leap of faith. Plan carefully, take a deep breath, and jump.

Notes

(1.) See Ruth E. Bernstein, Yours, Mine--Not Ours, TRIAL 66 (May 2003).

(2.) See Jeff White, What's Your Backup Plan?, on page 46 of this issue.

(3.) See Daniel J. Siegel, Weave a Web Site That Attracts Clients, on page 39 of this issue.

DIANE BRENEMAN practices law in Kansas City, Missouri. She can be reached at [e-mail].