Businesses benefit from predictability, and a law firm is no different. Sadly, many business law firms have become accustomed to the vicissitudes of the case flow. The firm’s revenues spikes when there are motions to file, trial proceedings to attend, and high-leverage negotiations to oversee. And when things go quiet, so goes the cash flow.
A more mature firm seeks out ways to stabilize its revenues, which can be accomplished by providing clients with ongoing legal maintenance services and communications.
The firm may publish and distribute newsletters or whole volumes of updated case law relevant to their field. They may host corporate retreats to build and deepen client relationships, all while educating them on preventative legal strategies.
While these forms of active and ongoing client engagement are necessary, my question is: Why stop there? Business law firms should maximize their service offerings and plant the seeds for future growth by offering basic entity setup and maintenance, including formation, compliance, and regulation services.
Having your business law firm do things such as set up LLCs and Corporations, obtain EINs, and handle payroll tax registration may seem too far outside the core, especially given the relatively slim profit margins when compared to active case work. I’d invite you to keep an open mind and consider what’s to be gained. It’s all about how you configure and deliver your offerings.
For starters, entity setup and maintenance services can easily be administered by a junior attorney, a paralegal, or even a clerk. Partnership opportunities are available with third-party firms that provide streamlined white-label access to entity setup and maintenance services. Entity setup and maintenance can be a powerful onboarding tool, bringing new clients into your law firm’s ecosystem and setting you up as their go-to resource for subsequent higher-margin services, such as litigation support, contract drafting, corporate restructuring, and so forth.
The cherry on top is that providing these services means your firm now benefits from a consistent, reliable revenue stream. They are perpetually in-demand and subject to perpetual renewal, a set-it-and-forget-it service for you and your clients.
Business Formation Services: Bringing Them into the Fold. It’s only natural that a business law firm would be called upon to help form a new business entity. As long as the price is reasonable, who wouldn’t opt for having their formation work take shape under the watchful eyes of legal professionals?
Don’t limit yourself to only new clients. Existing clients may have a lot to gain here as well. Take, for instance, your restaurateur who’s been doing quite well for herself as a sole proprietor but would be wise to insulate her private assets by setting up an LLC, why should she go anywhere else but to your firm to get this done?
Other formation-adjacent business filings to consider incorporating into your firm include:
- DBA (Doing Business As) registration
- Designating a registered agent (your firm can be the registered agent for clients)
- Filing annual and initial reports
- Filing articles of amendment, conversion, and dissolution
Tax Registration Services: An Added Layer of Support. Though it’s certainly beyond the purview of a business law firm to offer tax preparation services, certain tax-adjacent administrative services could easily be incorporated into your firm’s repertoire, namely tax registration. If your client pays sales or uses tax, then you can offer to register them at the state and local levels. You can also step in on your client’s behalf to assist with state payroll tax registration and state unemployment insurance. This service will only be relevant in the 41 states that collect state income tax.
For clients who operate C Corporations or LLCs, you may offer to assist them in applying for S Corporation tax treatment, allowing them to pass the business’s profits and losses to shareholders for tax purposes.
Ongoing Compliance Services: Keeping Them Current. Many of your clients may struggle to keep up with routine compliance requirements. Some may have already enlisted the help of a third party. To avoid missing out on opportunities like this, you need to position yourself as an expert in the field.
Whenever an important deadline is coming up, use your firm’s mailing list to send notifications of upcoming compliance requirements and include a link directing them to your specific compliance maintenance services. Such services may include:
- Renewal of licenses and permits required for the business to legally operate
- Regular renewal of registered agents
- Filing annual reports (if required)
- Timely remittance of state and federal taxes
From a financial standpoint, the recurring nature of entity setup, maintenance, and compliance services will exert a stabilizing force on your firm’s revenues, granting greater predictability.
In terms of business development, these services provide means to expand your firm’s footprint in the business communities you serve. Your reputation as an active and valuable partner will help you gain clients, as you become the preferred and trusted business law firm you aspire to be.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Author Information
Nellie Akalp is CEO of CorpNet, a resource to help people start a business, register for payroll taxes, and maintain business compliance across the US.
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