10 considerations when starting your own law firm
Peter Baverstock, CEO of LEAP Legal Software UK gives ten points to consider when starting your own law firm.
Mobility, simpler and lower cost technology and widespread acceptance of remote working is motivating legal entrepreneurs wanting to start their own practice.
What law to practice
Your brand should be determined by your choice of what area of law to concentrate on. Choosing the area of law that interests you most is one of the keys to future success. It is better to narrow your services and build your expertise. Specialisation is attractive, but risky; for example, conveyancing is notoriously subject to economic cycles.
How to attract clients
Clients will not arrive without effort. Fortunately, technology is aiding the acquisition of new clients. A website with good Search Engine Optimisation will give you a competitive advantage over more established competitors. If you use social media like LinkedIn or Facebook, you can quickly turn your network into a potential source of leads by declaring your new status. Network, network, network - high street firms generally find that the majority of their work comes from people in their local area. It is important to attend business events to meet other local business people. A strong referral network in your local area will help create a regular stream of work.
Where to practice
A few years ago, the obvious answer to this question would have been that you needed a physical office with all the related costs. However, technology has changed everything, in particular cloud software now allows you to practice anywhere at any time and keep initial costs to a minimum. We have become accustomed to working remotely and without spending hours commuting, so becoming more productive. If you decide that your practice needs a bricks and mortar presence, you can reduce risk by using a serviced office to get started, giving you more flexibility than signing an office lease.
Buying a practice
Many small law firms are currently owned by ‘baby boomers', lawyers approaching retirement who have not made a succession plan and have no exit strategy. Often they have a significant clientele and it may cost less to purchase one of these firms than building your own client list from scratch. It can make sense to purchase a practice and keep the seller on in a consultant capacity to gain the maximum goodwill from the purchase.
Making your plan
You need a strategy and a business plan. You need the right person or people to support you. You need to be able to execute your strategy and have the cash-flow to do so. Plan in terms of time. Where do you want to be in three months, two years, five years?
How much investment do you need?
You might have your own money or access to finance. Calculate how much money you need to cover cash-flow. Funding is available, even for start-ups. Keep your start-up costs low by investing in good systems and being organised. What is your costing model? Fixed Fee, Time Based Billing or both?
When starting your firm there is so much to think about. Here is a brief checklist: Law Society requirements, Professional indemnity insurance, bank accounts, website, letterhead, practice management software, email Address, computer infrastructure, pre-printed cheques, a legal cashier. You have to be organised. You need to be able to: communicate with your clients, create documents, record your time, disburse money for your clients, manage client money and designated account money, bill your clients, keep the books without needing the skills of a cashier and keep all the accounting records relating to employment and the general running of a business including your nominal ledger and VAT. A good case management solution is invaluable as it will provide a platform to meet all the above requirements.
Today, cloud software offers the ability to run a successful law firm from anywhere and from any device (even from somebody else's device via a web browser). You could be in your office, at home, on a beach, on a train or even on a plane. Cloud software will provide you with the following advantages: lower infrastructure costs, no need for servers nor costly data storage devices, accessibility from anywhere in the world with a good internet connection, a mobile workforce with staff having more flexible hours and a better work/life balance. External contractors such as legal cashiers can reduce the cost of employing staff and there are now options such as remote assistants. Cloud software will also give you the ability to work while not connected to the internet with full synchronisation when you reconnect.
It is important that you choose a technology supplier that is familiar with the needs of small law firms. It is often also possible for you to lease your IT infrastructure so that you have predictable and affordable monthly payments.
Compliance should not be a burden to you; it should be a natural consequence of running your firm well. You need to be admitted to the Solicitors Regulatory Authority and to have Professional Indemnity Insurance. Once practising you need to comply with your COLP and COFA obligations. To comply with your COLP obligations you need to ensure that you keep your skills up to date.
Hopefully you will now have the confidence to take your first steps to becoming a small law firm owner.
Post Date: February 1st, 2017