The Three Main Principles to Consider as You Start Your Own Law Firm
For anyone considering starting up their own law firm or ABS there are three core elements to bear in mind.
- Ensure Compliance
- Create Efficiency
- Reduce Risk
Every decision you make should have those factors in mind.
Let me explain.
More than ever before, the running of a law firm has to be seen as a business. Many existing law firms are seeking to redesign their operating model. They are considering what they should do about premises they already own. They are wondering whether the Practice Management System (PMS) they have is good enough. They are interested in outsourcing elements of their business but don’t know where to start.
Often they have to take half measures and compromise in some way on each of the three core elements I mentioned.
The beauty of a start-up is that you start with the proverbial blank sheet of paper. No need for compromise, so what should you be looking at when you are planning?
You will need to go through a regulatory authorisation process. You will need to have systems and procedures in place that convince, e.g. SRA or CLC, that you will be operating compliantly:
- Get advice from specialist consultants on the authorisation forms and processes – they are complex, and there is definitely a skill to completing them.
- Consider using outsourcers for core areas where compliance is essential, e.g. the firm’s finance function.
- You’ll need a business plan, so get help from an expert legal sector accountant with in-depth relevant knowledge of structures and tax.
You’ll be running a business! Make sure that your new firm will work smart. Have the right technology underpinning an attitude that says, “We are here to do a great job for our clients, while at the same time maximising our profitability.”
Top tips for achieving this:
- Take the time to understand what technology you will need. There are many PMSs out there – consider what you really need them for. Is it workflows? Cloud storage? Will the accounts element give you the reporting capability you’ll need to make business decisions? Watch some demos and, if need be, ask independent experts to help you.
- Optimise your working processes – map those processes, and ensure you have the right level of personnel dealing with the right task. This will not only save you time and effort but will create a better end-user experience for your clients – something that’s vital in these days of Google reviews and Trustpilot.
You’ll face numerous threats to the business – cyber security challenges, internal fraud, negligence, business continuity. Make sure that you consider these in detail from the outset and mitigate the risks. It will help you obtain the best possible PII premium as well as helping you sleep at night:
- Consider going for Cyber Essentials Plus rather than the basic accreditation. Numerous organisations can help you build the best, most cost-effective, and, crucially, resilient IT estate. Use their expertise.
- Ensure that you vet new recruits carefully and build monitoring and supervision processes that keep an eye on things. This isn’t just from a negative point of view – these processes should be part of a framework that supports your employees.
- Consider outsourcing key elements where the expertise required is not within your skill set – give someone else the supervision headache, and increase that business resilience by utilising external and flexible resources.
When setting up a business, there are many elements to consider, but if you keep these three principles in mind, you won’t go far wrong.
Cashroom are freeing lawyers from the complexities of Legal Accounting.
Author: Alex Holt, Cashroom