We’re all lawyers, here, right? We all took at least one class in law school pertaining to corporate entities. Incorporating a business shouldn’t be too difficult. I mean, we all know someone who owns his or her own business, so we can just ask them how they did it, right? Wrong! Actually, wrong on many levels: I forget if I took a corporations class in law school; I don’t know enough about incorporating a business to know whether it is difficult; and I did ask other lawyers how they incorporated their firms and they all went to a lawyer who knew what the heck he or she was doing.
Remember: know what kind of lawyer you are before deciding to go out on your own. If you are a corporate or small business lawyer, then certainly you should incorporate your own firm; if you can’t incorporate your own firm what business do you have incorporating others? But if you are like me and can’t remember whether you took corporations in law school, or you would rather not spend the time figuring out for yourself how you want to incorporate, where to obtain the forms, what information is needed for the forms, and how to file the forms, then do what I did.
I forget where I first heard this phrase, but it has stuck with me over the years: you wouldn’t hire a plumber to represent you in court, so why do you try to solve your plumbing issues at home? I just searched Google for the origin of that phrase and it appears it’s a favorite among lawyers from all over the U.S. and in many different practice areas. You’ve probably heard it before, too. I’ll try to be more original as this blog series progresses.
So what did I do? I went to a small firm lawyer who has incorporated hundreds of small businesses, including several law firms, over the past five or six years. I answered his questions so we could decide the best corporate form for me. He prepared the paperwork for my signature. He filed the forms with the correct state and federal agencies, and he provided me with all of the official documents, including the Articles of Incorporation, for Austin Legal, LLC. This process should take less than a few hours and cost less than $1000.
With my official, file stamped forms in hand, I had a choice: go open a bank account or get malpractice insurance. Truth be told, I am scared of two things: 1. IOLTA accounts because I’ve never used one and have heard horror stories about lawyers getting in trouble for misusing them; and 2. malpractice claims. I’ve never been accused of malpractice, but just that word evokes fear in me. Some say it is good to be cautious scared of IOLTAs and malpractice when you are your own law firm; I agree. Can you guess whether I went to the bank or to get malpractice insurance first?
Having never bought malpractice insurance, I didn’t know where to go or how much it would cost. I did know that my Columbus Bar Association membership provided a discounted rate if I went with its preferred vendor. And in full disclosure, my Ohio State Bar Association membership provides similar discounts. I also know of other agencies and companies that offer insurance, but I wanted to streamline the start-up process as much as possible, so I didn’t shop around. After asking others how much their insurance cost, I was comfortable with the ranges I heard, between $500 and $1000 per year. I decided my time was better spent doing something other than shopping around for the best deal. Ask me to buy a new television, camera, or printer and I will research the most detailed minutia; ask me to buy malpractice insurance and all I care about is that I’m covered.
I called the CBA’s preferred vendor and set up an appointment to meet with her. I met with her, filled out forms about my practice, and she said she would email a quote to me within the next few days. Did you know that insurance for certain practice areas costs more than others? Neither did I, and I’m glad I don’t work in one of those expensive practice areas!
Setting up my corporate entity was swift and painless. Setting up an appointment to fill out forms for the malpractice insurance company was equally easy. Accepting the quote was as simple as sending an email saying: yep, bind me for that coverage and I’ll pay for a year at a time (you do have the option to pay six months at a time, but paying for a year at a time alleviated the fear that my insurance would lapse mid-year without me knowing about it). Now, if someone would just send me the coverage documents, life would be good.
More than three weeks after binding coverage I still do not have coverage documents. Frankly, it slipped my mind until I tried to sign up for ColumbusLawyerFinder.com and was asked to provide proof of malpractice insurance. I didn’t have any. What?! Was I practicing without insurance? After calling my insurance agent to see what the holdup was, she emailed me a certificate of insurance that identified the vitals of coverage: date it began, limits, etc. Whew, that was closer than I would like – I’m not sure why the certificate of insurance wasn’t sent to me when I bound coverage – but it all worked out in the end. Welcome to running your own firm.
You now know how to get your corporate entity formed and how to get malpractice insurance. Time to hang that shingle! Not quite. You don’t have an operating account or an IOLTA account. Have you decided where your office will be located? What about office supplies? Marketing materials? You at least have business cards, right? And a website with social media profiles? Lots to cover… I hope you stick around!