To start a solo law practice, you register a business entity with your state, obtain a federal Employer Identification Number, buy malpractice and general liability insurance, open a client trust account alongside a separate operating account, and register the new firm with your state bar. The formation paperwork itself usually clears in a few weeks. The compliance obligations that attach to it are permanent, and the order you handle them in matters.
Pick a Business Structure
The entity you choose sets your personal liability exposure, your tax treatment, and what you file to form the firm. Solo attorneys generally pick among three options.
- A sole proprietorship requires no formation filing. You and the firm are the same legal entity, and your personal assets are fully exposed to the firm’s debts.
- A professional corporation is formed by filing Articles of Incorporation with the Secretary of State. It separates business debts from your personal assets, with limits.
- A professional limited liability company is formed by filing Articles of Organization. It offers similar separation to a PC with more flexible management and tax options.
The liability shield from a PC or PLLC covers business debts like an office lease or an unpaid vendor. It does not cover your own professional negligence. A malpractice claim can reach your personal assets no matter what entity you form, which is why insurance is non-negotiable.
Maintaining the shield also takes work. Courts can disregard the corporate structure if you blur the line between yourself and the entity, so keep business funds in a separate account, sign contracts in the entity’s name, and follow your state’s corporate formalities. If you form a PLLC, most states either require or strongly recommend an operating agreement. Even as a single member, having one on file strengthens the separation between you and the business.
Choose a Compliant Firm Name
Your firm’s name has to clear two hurdles. First, it can’t duplicate an existing registered business name in your state. Search the Secretary of State’s business name database before you file. Second, it can’t violate professional conduct rules.
ABA Model Rule 7.1 prohibits any communication about a lawyer’s services that is “false or misleading,” including one that “contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading.”1American Bar Association. Model Rules of Professional Conduct – Rule 7.1: Communications Concerning a Lawyer’s Services Rule 7.5 carries that standard to firm names: you cannot use a name that implies a connection with a government agency or that violates Rule 7.1.2American Bar Association. Rule 7.5 – Firm Names and Letterheads
In practice, a solo attorney cannot use a name suggesting a partnership or a team when none exists. “Smith & Associates” with no associates is misleading. Most solos use a surname with a descriptor like “Law” or “Legal Services.” Trade names are allowed in most states but have to pass the same honesty test.
File Formation Documents
Once you have a structure and a cleared name, file the formation documents with your Secretary of State. For a PLLC that means Articles of Organization. For a PC, Articles of Incorporation.3Wolters Kluwer. What Is a Professional Corporation or PLLC Most states accept electronic filing.
The documents require you to state the firm’s purpose, and for a professional entity, that purpose must be limited to the practice of law. You’ll also list the principal office address, a registered agent, and the names of all owners or managers. Filing fees generally fall between $40 and $500. Expedited processing costs extra.
When the state processes your filing, you’ll receive a certificate confirming the entity’s existence. Keep it accessible. You’ll need it to open bank accounts, register with the bar, and prove the firm’s standing to landlords, insurers, and courts.
Get an EIN and Designate a Registered Agent
After the state forms your entity, apply for a federal Employer Identification Number from the IRS. The IRS instructs legal entities to complete state formation before applying for an EIN, and filing out of order can delay the application.4Internal Revenue Service. Get an Employer Identification Number The online application is free, takes about ten minutes, and issues your EIN immediately. You’ll use it to open bank accounts, file tax returns, and hire contractors or employees.
Every LLC and corporation must also designate a registered agent in the state of formation. The agent accepts legal documents and official notices on the firm’s behalf, must have a physical street address in the state, and must be available during business hours. You can serve as your own agent, but many solos use a professional service so they’re not tied to a single address during business hours. Missing a served complaint because nobody was at the registered address can be devastating.
Open a Trust Account and an Operating Account
Every attorney who handles client funds has to maintain a trust account separate from firm money. ABA Model Rule 1.15 requires that funds belonging to clients or third parties be kept “separate from the lawyer’s own property” in a dedicated account.5American Bar Association. Model Rules of Professional Conduct – Rule 1.15 – Safekeeping Property For most solos, that means opening an Interest on Lawyer Trust Account (IOLTA) at a bank approved by your state bar. Client retainers, settlement proceeds, and any other funds held on behalf of a client go into this account. Interest earned on IOLTA deposits is directed to state bar programs that fund legal aid.
Commingling personal or business funds with client money is one of the most common grounds for discipline, and it’s easy to do if you’re careless. Rule 1.15 permits depositing a small amount of your own money to cover bank service charges, but nothing beyond that.6American Bar Association. Rule 1.15 – Safekeeping Property
You also need a separate operating account for business income and expenses. Rent, software, office supplies, and your own draws run through this account. Money moves from trust to operating only after fees are earned and a proper invoice has been sent. Transferring unearned fees out of trust is an ethical violation regardless of your cash flow.
Flat fees need extra care. Under ABA Formal Opinion 505, fees paid in advance must be deposited into the client trust account and withdrawn only as earned, whether or not your fee agreement labels them “nonrefundable” or “earned on receipt.”7American Bar Association. Obligations When Receiving Flat Fees and Other Fees Paid in Advance A narrow exception exists for a true “availability retainer” paid solely for your commitment to be available. Some jurisdictions treat certain flat fees as earned on receipt with proper disclosure, but trust-accounting everything and withdrawing as you go is the safer default.
Rule 1.15 also requires you to keep complete records of all trust account activity and preserve them for at least five years after the representation ends.6American Bar Association. Rule 1.15 – Safekeeping Property The ABA’s Model Rule on Financial Recordkeeping recommends the same period.8American Bar Association. Model Rule on Financial Recordkeeping – Preface Some states extend it to six or seven years, so check yours.
Buy the Right Insurance
Malpractice insurance covers claims arising from errors, omissions, or negligence in your legal work. Very few states mandate the coverage, but a growing number require you to disclose your insurance status to clients or during annual bar registration. Going without it as a solo is a serious gamble: one missed deadline or drafting error can produce a claim that exhausts personal savings. Annual premiums for a new solo attorney with $1 million per-claim coverage typically run from about $500 to $6,500 depending on practice area, jurisdiction, and claims history.
Malpractice coverage does not cover someone slipping in your office or a data breach. A commercial general liability policy, often bundled into a Business Owners Policy, covers premises liability and property damage. If you lease office space, your landlord will likely require proof of general liability coverage.
Cyber liability insurance matters increasingly for firms of any size. A single data breach can trigger notification obligations in every state where affected clients reside, and the costs of forensic investigation, credit monitoring, and business interruption add up fast. If you store client documents in the cloud or communicate sensitive information electronically, a cyber policy fills gaps the other two don’t.
Register the Firm With Your State Bar
Forming the entity with the Secretary of State is only half the job. You also have to register the firm with your state bar or the state’s highest court as a professional entity authorized to practice law. This typically requires submitting a copy of your approved formation documents and your EIN, and paying a separate registration fee. Until this registration is complete, the entity exists as a business but cannot hold itself out as a law firm.
Set Up Your Tax Obligations
As a solo practitioner, you owe both halves of Social Security and Medicare taxes that an employer and employee would otherwise split. The self-employment tax rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. You owe it on net earnings of $400 or more.9Internal Revenue Service. Self-employment tax (Social Security and Medicare taxes) The Social Security portion applies only to earnings up to $184,500 in 2026.10Social Security Administration. Contribution and Benefit Base Medicare tax has no cap.
Without an employer withholding, you make quarterly estimated payments covering income tax and self-employment tax. The 2026 deadlines are April 15, June 15, and September 15 of 2026, and January 15, 2027. You can skip the January payment if you file your annual return and pay the full balance by February 1, 2027.11Internal Revenue Service. 2026 Form 1040-ES Estimated Tax for Individuals You generally avoid the underpayment penalty if you owe less than $1,000 after withholdings and credits, or if you’ve paid at least 90% of the current year’s liability or 100% of the prior year’s.12Internal Revenue Service. Estimated taxes New solos routinely underestimate the first year’s tax because they’re used to employer withholding. Setting aside 25% to 30% of every fee you collect usually keeps you ahead.
If you pay independent contractors like court reporters, paralegals, or IT consultants, you may need to file Form 1099-NEC. Starting with the 2026 tax year, the reporting threshold is $2,000 in total payments per contractor per year, up from the previous $600. The threshold is subject to annual inflation adjustments beginning in 2027.13Internal Revenue Service. General Instructions for Certain Information Returns (Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, and W-2G)
Keep the Firm in Good Standing
Most states require LLCs and corporations to file an annual or biennial report with the Secretary of State updating the firm’s address, registered agent, and ownership. Missing the deadline triggers late fees, and continued noncompliance can lead to administrative dissolution. Dissolution isn’t just a paperwork headache. It can strip your liability protection retroactively. Put the annual report deadline on your calendar the day your formation certificate arrives.
Separately, you’ll owe annual bar membership dues and licensing fees to maintain your active law license. These vary by state but typically range from under $100 to roughly $600 per year.
Almost every state requires attorneys to complete a minimum number of continuing legal education hours each year, with a portion often devoted to ethics or professional responsibility. Requirements range widely by state, and a handful of jurisdictions have no mandatory CLE requirement at all. Falling behind can place your license on inactive or suspended status until you catch up.
Know the Advertising Rules Before You Market
Getting clients requires marketing, but attorney advertising is more regulated than advertising for most other businesses. ABA Model Rule 7.2 requires every advertisement or marketing communication to include the name and contact information of at least one lawyer responsible for its content.14American Bar Association. Model Rules of Professional Conduct: Rule 7.2: Communications Concerning a Lawyer’s Services This covers your website, social profiles, print ads, and digital campaigns.
Paying for referrals is where many solos stumble. The general rule prohibits compensating anyone for recommending your services. You can pay reasonable advertising costs, pay the usual charges of a lawyer referral service, and buy internet leads, but the lead generator cannot recommend you specifically or imply it has evaluated the prospect’s legal problem before sending them your way. Reciprocal referral arrangements with other lawyers are permitted if they’re not exclusive and you disclose the arrangement to the client. The common thread is Rule 7.1: nothing about how you get clients can be misleading.1American Bar Association. Model Rules of Professional Conduct – Rule 7.1: Communications Concerning a Lawyer’s Services
Protect Client Data From Day One
A modern solo practice runs on cloud-based practice management software, email, and electronic document storage. ABA Formal Opinion 477R makes clear that attorneys have an ethical obligation to take reasonable steps to prevent unauthorized access to client information, including information held by third-party cloud vendors. The standard is reasonableness, measured against the sensitivity of the information, the cost and difficulty of additional safeguards, and the likelihood of disclosure without them.
In practice, that means using encrypted email for sensitive communications, enabling two-factor authentication on cloud accounts, keeping software updated, and training any staff on basic information security. Before signing up for any cloud service that will hold client data, evaluate the vendor’s security practices and data handling policies. Model Rules 5.1 and 5.3 extend your supervisory obligations to vendors and staff, so their security failures can become your ethical violations.
Discuss security expectations with clients at the start of each engagement. Some matters involve information sensitive enough to warrant precautions beyond your standard setup, like password-protected file transfers or avoiding certain communication channels. Documenting those conversations protects both you and the client.