10 Steps to starting your own law firm

With the extent of technology available to solicitors today and a greater acceptance of running a business remotely, starting your own law firm has never been more achievable.

Cloud technology has transformed how a modern law firm can operate, with simplified IT, reduced overheads and flexible working possibilities.

Over the years, LEAP has helped hundreds of solicitors establish their own practices. Here are 10 steps for legal entrepreneurs to consider when setting up a law firm that will help to build longevity in the market.

Step 1

Be compliant: When starting a law firm, you are legally required to have your practising certificate and professional indemnity insurance in place.

In the UK, every law firm is regulated by the Solicitors Regulatory Authority (SRA). The SRA must also approve your firm and ensure it complies with COLP (Compliance Officers for Legal Practice) and COFA (Compliance Officers for Finance and Administration) obligations.

Step 2

Decide what area of law to practise: Once you have met the legal requirements, the next step is to decide what area(s) of law to specialise in. This will help to define your brand and marketing strategy.

This is probably the most important decision you will need to make. Consider what you enjoy and what you are good at (or can feasibly become good at) by seeking guidance from experienced lawyers. Many lawyers try to run a general practice taking whatever cases come through the door, however, this can be risky and stressful. Look to focus on offering specific services so you can develop your expertise.

Step 3

Make your plan: A business plan is necessary, however, we don’t recommend simply downloading a free template from the first available website. Spend time devising a strategy specifically for your business and think about how you can execute your strategy. Consider who could support you in your strategy, what it will cost to do so and where you might like to be in three months, 12 months and in three years.

Step 4

Consider your billing structure: How do you plan to bill for your work? Will you operate on a fixed fee basis, use time-based billing, or both? Your area of practise will generally dictate your billing structure.

• Time-based billing – If you are planning to sell your time on an hourly rate, you must ensure you capture your hours accurately to ensure a steady cash flow

• Fixed fee billing – Consider whether fixed fee billing might help you to compete with other service providers in your area. This is often the case for legal work that is very process driven, such as a simple conveyancing matter

• Combination billing - Many firms use a combination of fixed fee billing and time-based billing, particularly if they work in multiple areas of law

No matter your billing preference, effective technology is essential. Having the right tools in place will enhance efficiency and boost profitability.

Step 5

Decide where to practise: Five years ago, the immediate and obvious response to this challenge would have been to secure a brick-and-mortar office with all its related costs. However, the pandemic changed working practices indefinitely and cloud technology enables you to literally practise anywhere, at any time. This has fundamentally changed the costs involved of opening a new practice and enables you to keep initial costs to a minimum.

Step 6

Name your practice: It is common in the legal profession to use your own name as the name of your practice. For a sole practitioner, the advantage is instant name recognition. However, when you launch your own firm, you may well be relatively unknown, so you must do the hard work to build up a brand around your own name before you can really reap the benefits.

When choosing a name for your firm you need to think about how clients will find you online. You can make it easier by including keywords such as ‘lawyer’, ‘solicitor’ or ‘conveyancer’. If you are dedicated to an area of law, you might include something related to that, such as ‘family lawyer’ or ‘personal injury lawyer’. This is also helpful when creating a domain name for your website, as it improves your search engine optimisation. The same guidelines apply if you are opting for a brand name that doesn’t include your own.

If you are starting a firm and considering a name that includes the names of multiple partners, be aware that its length can impact how memorable the firm’s name is. Also, bear in mind there may be complications and politics around renaming the firm if new partners join or current partners leave.

Step 7

Start attracting clients: When you start your own law firm you need to consider your marketing approach and how you are going to attract new clients. Fortunately for new law firms, technology has helped to make the acquisition of new clients much easier. Creating a strong online brand presence for your firm through focused search engine optimisation (SEO) provides a solid advantage over competitor firms.

More and more clients turn to the internet when making a purchasing decision and that includes legal services. Social media is a relatively inexpensive and an easy way to market your firm, so create business pages on the likes of Google, Facebook and Linkedin which enable you to connect with prospective clients.

Despite the digital capabilities available, physical networking remains invaluable. High street firms generally find that the majority of their work comes from their local area. New practices often find themselves needing to compete against long established businesses with strong community links, so it’s important to reach out to people in the community in which you work. Here are some ways you can do this:

• Talk to local business leaders

• If you work in conveyancing, talk to estate agents

• Connect with the principals of other law practices - if they don’t practice in the same area of law as you, set up a referral system

• Attend community business events online or in person to meet other local business people

A strong referral network in your local area will help create a regular stream of work. Once you have a regular stream of work, the quality of your service will fuel word-of-mouth referrals and positive online reviews from your own clients.

Step 8

Adopting the right technology: In order to lower infrastructure costs and run a successful law firm from anywhere, it’s important you choose the right cloud software provider for your fledgling practice. Great software will streamline your practice and ensure you spend less time on administration, enabling you to focus your time on billable work. It will also reduce the need to hire support staff as it will automate many administrative processes.

A good practice management system helps you record time efficiently and invoice accurately to improve cash flow and drive standards in service. A cloud-based system can automate updates that enhance functionality, features and back-end content within the system, ensuring continued access to the latest technology and future-proofing your practice.

Step 9

Understand how much money you need to start your business: The overall cost of starting a new law firm varies greatly depending on your financial position. Some simple calculations on a spreadsheet will probably suffice as a tool for you to work this out because initially your law firm and personal circumstances will be very closely linked. Write down and calculate the expected minimum monthly expenses, as well as any one-off payments or additional costs necessary to run your practice (download our full guide for examples of potential expense costs).

Once you have an idea of what is required financially to start your firm, you can explore routes to funding. Encouragingly, funding is available – even for start-ups.

If you intend to finance your firm using your own money, then you will need enough money to maintain your income for at least six months, or ideally enough for one year to provide a reasonable buffer.

Step 10

Keep a checklist: Before launching your firm, there is a lot to think about. To stay on track and ensure no delays in the early stages, here is a basic checklist to keep you on track:

• Gain your Practising Certificate

• Arrange Professional Indemnity Insurance

• Check Law Society requirements

• Gain SRA approval

• Choose your area of law to practise

• Choose your firm name

• Choose location where to practise

• Register your business

• Calculate start up costs

• Calculate monthly costs

• Set up bank accounts

• Set up trust accounts

• Choose billing structure

• Source funding if necessary

• Get setup with cloud practice management software

• Decide payment system for clients

• Set up web domain and email address

• Organise branded stationery such as business cards

• Buy basic office supplies and furniture

Starting your own law firm will have its challenges but technology has made it easier than ever to run your own law firm and intelligent marketing plays a pivotal role in attracting potential clients. Whatever your idea of success, having your own law firm gives you the control. Good planning will take you far and belief in your own capacity to succeed will take you further.

Download the full guide and take the first steps to becoming a law firm owner.