How do I set up my own law firm?
How do I set up my own law firm?
According to The Legal Gazette, significant numbers of law firm partners are seriously considering leaving their current partnerships and setting up their own firms. Of course, you don’t need to be a partner already to set up your own firm. But, how to actually do it? Starting a business from scratch and taking on the responsibilities (both financial and social) that go with it, is not for the faint hearted!
Here are our top tips to help those considering such a move.
- Before you do anything, fully understand your motivation for setting up your own firm. Ask yourself some searching questions about why you want to do this. Are your reasons positive (or are you simply looking for a way out of something else)? Do you have the right personality and temperament to run your own firm (can you manage people and win clients?) Be realistic about whether this is right for you.
- Make sure you have a good personal financial position before you embark on building your own firm as this may make a difference to the type of funding you are able to raise and the level of risk you can accept.
- Understand what your objectives are in setting up your firm (and whether these are realistic?). For example, personal satisfaction, financial rewards, work/life balance or something else.
- What will success look like for you personally and for the firm? Measures of success for the firm might include winning and retaining clients, building a strong reputation and market position and achieving financial targets.
- Invest time in drawing up a really comprehensive business plan. This should include details about how and why the firm will succeed, including: how it will be funded, forecasts for sales and cash flow, how it will be staffed and practical details such as what systems and processes you will need in place.
- Think clearly about your marketing strategy: who are your target clients, why will they want to use your firm, how will you persuade them to instruct you, will you have the right expertise available to service them?
- Be prepared to do things differently and approach everything with an open mind – you may be surprised how much more successfully you can innovate. For example, consider outsourcing support costs rather than recruiting employees directly and finding flexible office solutions.
- Try and keep things amicable with your current firm, particularly if your business plan includes future referrals from them. Make sure you know what your legal and financial obligations to them are, for example, what’s your notice period and what sort of restrictive covenants are you bound by and for how long? If you are a partner, are there any partnership loans you will need to re-pay?
- Take professional advice early on the right business structure for your firm– there are pros and cons to all. Will you use an LLP, limited company, alternative business structure or traditional partnership? You’ll need to decide on your entity before you can get a quote for professional indemnity insurance (PII), and you’ll need the entity and a PII quote before you can apply for SRA authorisation.
Being your own boss and setting up your own law firm can be hugely satisfying, exciting and ultimately lucrative. But realistically, it will also have its frustrations, feelings of exhaustion and despair!
Before you take the leap and sign-up for the lifestyle it brings you need to spend significant amounts of time researching, learning and planning for your new law firm.
What you thought to be the case at the outset may turn out to be wrong. Don’t be afraid to change your mind on your initial ideas, pull back and give yourself more time to work things out. Far better to discover this isn’t the route for you before you commit to real-life obligations that will be far harder to row back from.