8 Steps to Opening Up A Legal Services Business of Your Own

Becoming a paralegal says something about a person. No, not just “I like being verbally abused by lawyers all day.” It says you have some ambition, some drive. You like to work independently and you enjoy learning new things and managing projects. You’re not afraid of details and thrive under pressure.

In short, you have all the right qualities to become a small business owner.

And you picked the right field for it, too. Statista estimates that the entire legal services industry in the United States generates more than $250 billion in revenue, expected to increase to $288 billion by the end of 2018.

There’s a catch, of course; paralegals cannot practice law, so the most natural type of business to be in is one you can’t open.

But a law practice isn’t the only sort of firm in legal services, and the alternatives are becoming more and more widespread. The rise of Alternative Legal Service Providers (ALSPs) is a doorway to business ownership for paralegals.

Today, you can start your own firm in a niche such as:

  • Document review
  • Litigation support
  • Discovery and e-discovery
  • IP management

As a contracted specialist, you won’t be practicing law, but you can enjoy the freedom and potential that come with being a business owner… as long as you follow these five important steps.

  1. Find The Niche

    Your niche is going to determine a lot of things about your business: who you market it to, how it operates, what kind of money you will make. But it’s going to depend a lot on your own strengths and what the local market demands.

    Is it going to revolve around things that you have already been doing as an employee, or are you going to strike out in a new direction? Will you jump onto a current trend in legal services, like e-discovery, and try to ride it to riches, or will you invent the next big thing on your own?

    These are big questions and will probably take up most of your planning hours when you are first thinking about your business.

    Don’t waste those hours. Daydreaming is great but do your market research, too. Base your ideas not only on your inspiration, but ground them in where the numbers lead you as well. You’ll find the right combination of lucrative and compelling after you have put enough thought into it.

  1. Network, Network, Network

    It’s great that you’re going out on your own, but don’t think for a minute that means you won’t need other people. You’ll rely on contacts in the legal community for everything—referrals, references, staffing recommendations, you name it.

    So it’s a good idea to get out there early and start making those contacts. It’s never too soon to start. Even while you’re in school, fellow students, instructors, and internship interviewers are all good people to get to know. You never know where they’ll end up, or how you might be able to help one another.

    Networking is a two-way street, so you need to be prepared to offer your own efforts in return. But when it pays off, it pays off for everyone, so think of it as a necessary investment.

  1. Be Smart About Costs

    There is a lot of money floating around out there in the legal services industry. $280 billion goes a long way, and you wouldn’t be starting your own business if you didn’t think you had a good shot at a healthy chunk of that pie.

    But it’s not going to get delivered to you on a silver platter, and it’s probably not going to show up in the first year or two you are in business. It’s great to dream about the big money you’re going to hit when everything is up and running, but too many paralegals may the mistake of counting it before it comes in the door.

    Instead, you need to be smart about how you manage your business costs. The traditional trappings of a business are expensive—office space, front desk staff, phone systems, software. And they are up-front investments, meaning that you are going to start paying for them long before the revenue starts rolling in… if it rolls in at all!

    You should consider alternatives when you are first starting up. Working out of your home doesn’t sound cool, but it can keep your office expenses minimal. Or, you can go with a shared office space, where reception expenses are spread among various businesses, giving you all the trappings of your own office but without the same costs.

  1. Consult With A Lawyer

    Oddly enough, it’s more important for a paralegal business to have a good lawyer than it is for almost any other type of business. Although you know a lot more about the law than most business owners, you’re also going to be in a delicate legal position… you’ll be working in legal services but not as a lawyer. The potential to slip up and accidentally perform some service that can be construed in some way as the practice of law is enormous.

    The dividing line there is always a precarious one and sometimes subjective. Having an expert lawyer to consult with to help you decide where it is and how to stay on the right side of it will offer you great peace of mind down the road.

  1. Consult With An Accountant!

    Although you already know you need to keep costs down, at least to begin with, you probably aren’t an expert on all the other minute details of taxes and accounting that you will be confronted with as a business owner. This isn’t a problem that’s unique to paralegals—most small businesses get tripped up when it comes time to collect and file taxes.

    You’ll have state, local, and federal taxes to deal with, not to mention business structures to decide on and create. A good accountant will save you far more than you spend with them. The earlier in the business creation process you involve them, the more effective their advice can be.

    Owning a business is a completely different experience from working as an employee. In many ways, it’s a more difficult one. But as long as you keep these five steps in mind as you start out, it will start you on a path to independence that you could never follow as an employee.


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