There are many reasons why practitioners start their own law firms.
These include wanting more autonomy, a greater slice of the profit, flexibility, ability to work for clients of their own choosing or in certain practice areas, being impacted by a downturn/downsizing at their current practice, or inability to gain paid employment (on suitable terms).
It is really important to be clear on why you want to start your own law firm. This ‘why’ is what propels you forward in your business venture, it provides direction for your marketing and business development, it determines how you relate to your clients (and the quality of those relationships) and how you conduct your file work.
Your ‘why’ is equally important for the moments when you experience a loss of passion or when you are tired and stretched beyond measure.
If you remain unconvinced about the importance of your ‘why’ – we recommend you take a closer look at Simon Sinek’s Golden Circle Theory.
If it’s flexibility that you want – what do you mean by that?
The ability to come and go throughout the day/week as you choose – perhaps running a law firm isn’t necessarily the right choice. You are still required to meet court and client expectations in a diligent manner. You may be a little more flexible with your working hours, but you might end up working longer hours when you factor in the substantive ‘business of law’ tasks you now need to complete.
Is it the ability to work part-time hours so you can juggle family, sporting, political or other commitments?
Did you know many firms now offer part-time roles – some even offer remote work opportunities? This is largely considered one of the positive side effects of the COVID industrial revolution. As mentioned above, the business side of the practice can easily add to those part-time hours.
Is it that you want a greater share of what you are currently billing?
Will you be able to continue to bill at your current rate/velocity if you run your own practice? If recovery of fees billed also falls on your shoulders, how will you go? Have you fully costed how much it might cost to sustainably operate your law firm? This includes the ability to pay yourself. If you do not know this metric, any other benchmark you set (including prices or billing rates) may be meaningless.
Where are your clients coming from? How much will it cost you in time and money to bring in a new client (not just an inquiry)?
Do not underestimate the time, skill and knowledge that has been built up over the years in the law firms in which you have been employed.
Nor should you underestimate the expertise of support personnel, and expect to replicate those processes and precedents in your own practice immediately. It may take quite some time, probably some money, and most certainly much more than simply subscribing to a legal practice management software solution!
How long do you think it will take to learn about your compliance obligations and be able to apply that knowledge?
Many new practice start-ups are highly proficient with their legal skills, but running a law firm requires them to learn basic business skills from the ground up. If you have come out of a mid to large firm, accounting, budgeting, staffing, marketing, PD, billing and chasing up bills are usually all done for you – when you start your own firm, this falls to you.
What do you know about reporting obligations for taxation, GST, and superannuation payments?
How do you go about upgrading and maintaining your practising certificate, professional indemnity insurance, and business insurance? What are your trust account obligations (do you realise that, even if you are not running a trust account, you still have certain obligations?), cost disclosure obligations, Lexon’s Enhanced Management Review program responsibilities, the list goes on.
How do all these obligations fit into your schedule? With all of these business obligations your billing expectations may need to be adjusted – which may affect that greater share of profit you were chasing.
And finally, who is keeping you accountable?
The Practice Advisory Service (PAS) is a complimentary service to members offered by QLS Solicitor Support Pty Ltd (a wholly owned incorporated legal practice of QLS). Our consultants help you reality test your ideas and innovations, provide strategies to anticipate or overcome practice hurdles and help you achieve your goals. Submit an expression of interest for a consultation with a Practice Advisory Service solicitor today.