January 01, 2018

Young Lawyers Network: Opening Your Own Real Estate Closing Firm: 20 Things You Need to Do

Most attorneys think about what it would take to establish their own law firm. The two questions that tend to come to mind most often are “What do I need to do to open my firm?” and “What will it cost to get my firm off the ground?” This month’s YLN column answers those questions in the context of opening a real estate closing and title law firm.

No. 1. Create the business entity for your law firm. It’s not just good practice; it’s a requirement for you to be able to open a trust account and operating account at your bank. Most attorneys form limited liability companies or professional corporations, depending on the jurisdiction. Assuming you prepare your own documents, the fee for setting up the entity will largely be the filing fees payable to the secretary of state. In Georgia, the fee is $100. In addition, you will also want to apply for an FEIN through the IRS. This can be done on-line quickly and is free.

No. 2. Open your operating account and IOLTA (that is, trust account) at your favorite bank. This is a bar-mandated requirement to open any law firm. Note that your bank will likely charge a small monthly fee for these accounts. Josh Crowfoot pays $10 per month for his IOLTA account, and his operating account is free.

No. 3. Obtain merchant processing services. Most clients want to be able to use a credit card for payment. Costs for accepting credit cards generally are tied to a per-transaction fee. Josh uses his bank’s merchant processing services, and his monthly fee never exceeds $20 per month.

No. 4. Organize your firm’s capital. Obtain a business credit card to fund initial start-up costs.

No. 5. Request on-line wiring services for your business accounts at your bank. Paying for retail pricing can be an expense for your firm over a long period of time. On-line wiring services are cheaper, provided you can convince the bank that the volume of cash moving through your IOLTA justifies better pricing. Again, expect a small monthly bank fee. Josh’s bank charges him $20 per month for on-line wiring services.

No. 6. Use a cloud platform for document management. For ease of access and security reasons, it is better to place your firm documents in the cloud rather than on a single device. Josh uses Google’s G-Suite for $10 per month.

No. 7. Register your web site domain. This is the first step to having your own professional e-mail address ending with a “.com.” (It is best practice for an attorney to also seek out software/platforms that can assist with e-mail encryption and cleaning metadata from documents that you e-mail to other parties.) Web site domain registration costs Josh $12 per year.

No. 8. Subscribe to a law firm management cloud platform. No need to purchase expensive software on your computer that will become obsolete. Josh uses Rocket Matter for $34 per month.

No. 9. Obtain a Microsoft Word comparison service. Josh uses Litera for $99 per year.

No. 10. Rent a post office box. You do not want all your business mail coming to your home address. Josh’s P.O. box costs $45 for six months.

No. 11. Buy a scanner. No need to buy a bulky and expensive copier/printer like larger firms. Products like the Fujitsu Scan Snap iX500 ($400) have everything you need and fit neatly on your desk.

No. 12. Purchase closing software. This is essential for any closing practice. Josh uses LandTech’s cloud-based platform and paid a one-time fee of $550 to use it.

No. 13. Sign a service agreement with an escrow reconciliation company. This is a requirement for most title insurance companies to approve you as a licensed title agent.

No. 14. Become a licensed title agent with your favorite title insurance company. Most of a closing attorney’s revenue comes from title insurance premiums rather than settlement services. Be sure you understand how you (and the title company) will be compensated and any minimum fees that may be payable to the title insurance company.

No. 15. Pay your dues for your state bar association and the ABA.

No. 16. Create a web site for your law firm. This is mainly how potential clients find you in the digital age. Josh uses a company called Rowboat Media, which has been great to work with. Josh paid $2,640 (payable in monthly installments) for the creation of his web site, which Josh gets to keep.

No. 17. Buy a laptop for your law firm. Stay lean and mobile with your practice.

No. 18. Buy a printer. Lawyers, especially those involved in closing transactions, will never be truly free from paper. This is a necessity for any law practice.

No. 19. Buy a cell phone for your business. When starting small, a single business cell phone should suffice. If you scale up, use a service like Ruby Receptionists to have your own virtual receptionist before hiring your own.

No. 20. Rent office space that will suit your initial needs. Your biggest enemy when starting your own firm is overhead. Keep it as low as possible. Depending on the nature of your practice, renting space may be a cost that can be deferred if you have available space to work from home.

No. 21. Optional—Buy state-specific real estate treatises for your practice, and buy a color printer.