Do you want to know exactly how much it costs to start a law firm? If yes, here is a detailed cost analysis for starting a law firm and obtaining financing.
According to statistics, the United States of America has about 165,000 law firms and generates about $ 180 billion in annual revenue.
This shows that starting a law firm is a thriving business in the US because there is a large market for this type of business, and the industry offers many job opportunities for lawyers and other professionals. Moreover, annually about 10,000 students per year pass the bar exam, and many of them, over time, will want to open their own company. On their path, the first expenses will be on the bar exam: recent graduates pay somewhere between $100-1300 to register for the bar exam, depending on the state. For example, to sit for the Kentucky bar examination they need to pay the Application Fee of $875, while in Utah the Application Fee is just $550. All fees are paid directly to the state’s Board of Law Examiners.
How much does it cost to start a law firm?
This industry has a low level of capital intensity, which is similar to other service industries. It can be said that the cost analysis when it comes to starting a standard law firm business in the United States of America, Canada, United Kingdom, and Australia is almost the same except for a few variations.
For example, the cost of setting up a fully functioning law firm with the necessary furniture and appliances (telephone, printers, computers, tables and chairs, bookshelves, booths, standard library, photocopier, fax, etc) is the same as starting any other industry firm.
Other factors that may be slightly different in terms of costs when it comes to starting a standard law firm business are the cost of labor, cost of transportation and logistics, local taxes, the company incorporation fee, and rent/lease among other factors.
Also, when it comes to starting a mid-size law firm, you should be prepared to rent or lease a standard, centralized facility in a business district; This will be one of the areas where you are expected to spend most of your startup capital.
How much does it cost to start a law firm in the United States?
These are the key expenses that you are expected to incur when starting a standard but medium scale legal business in the United States of America;
- The total fee to register the company in the United States of America: $ 750.
- The amount required to obtain licenses and permits, as well as accounting services (software, POS machines, and other software): $ 3,300.
- Marketing promotion expenses for the grand opening of the law firm in the amount of $ 3,500 and as well as the printing of flyers (2,000 flyers at $ 0.04 per copy) for a total amount of $ 3,580.
- The cost of hiring a business consultant (including writing the business plan): $ 2,500.
- The cost of insurance coverage (general liability, workers’ compensation, and property accident) with a total premium: $ 2,400.
- The cost of renting a standard office in a good location/business district: $ 150,000
- The cost of remodeling the facility – $ 5,000.
- Other start-up expenses including office supplies ( $ 500 ) and telephone and utility deposits ( $ 2,500 ).
- The operating cost for the first 3 months (employee salaries, bill payments, etc.) – $ 60,000
- The cost of starting inventory (printing papers, inks/print cartridges, pen, and stencil, etc.): $ 2,500
- The cost of the cash register, security, ventilation, signage: $ 3,750
- The cost for the purchase of furniture and gadgets (Telephone, printers, computers, tables and chairs, bookshelves, cabins, standard library, photocopier, fax, among others): $ 4,000.
- The cost to build and host a website: $ 600. If you’ve budgeted low for building a website it would be best to use one of the most popular platforms like Shopify or WordPress.
- The cost of the opening party: $ 2,000
- Miscellaneous: $ 5,000
You will need an estimate of two hundred and fifty thousand dollars ( $ 250,000 ) to successfully establish a standard but medium-scale law firm in the United States of America. Please note that this amount includes the salaries of all staff for the first 3 months of operation and applies to a law firm offering a variety of services within the legal industry.
Standard start a law firm but on a small scale that can only provide basic legal services in the United States cost between twenty thousand and fifty thousand dollars ( between 20,000 and 50,000 US dollars ). Keep in mind that, like most service-based businesses, it is profitable to start a small-scale law firm, and you can afford to operate your law firm’s office from home.
When it comes to starting a standard and large scale law firm with several attorneys and offices in key cities in the United States of America, a law firm offering services in various niche areas in the legal industry; services such as Civil Litigation (complex civil litigation, commercial litigation, insurance defense, collective, labor and labor actions, personal injury lawsuits and regulatory actions), Environmental Law (Green Law), Bankruptcy Law, Labor and Labor Law, Law of Foreclosure, Intellectual Property Law, and electronic discovery practice, then you should think about budgeting one million five hundred thousand dollars ( $ 1.5 million ).