In the first of a four-part series, Andy Poole outlines what your top considerations should be when starting a law firm

There are currently around 9,000 law firms in England and Wales, falling from approximately 10,000 in recent years as consolidation has started to take effect in the profession. However, mergers and closures have reduced the number of practising law firms by more than that figure might suggest. To some extent, the numbers have been replaced by new firms springing from the mergers where firms determine not to continue with all of the people and/or work types that were previously provided. We are also seeing niche specialist spin-offs from existing firms, alongside individuals setting up on their own not too long after qualifying.

Planning is the key to setting up effectively. There is much for any new business to consider; add in the regulatory aspects of the law, and that planning becomes even more important. Right from the outset, we help firms with our top considerations for starting a law firm and include many of them in formal documents – either for the Solicitors Regulation Authority’s (SRA) recognition process, obtaining professional indemnity insurance, or obtaining funding; but most importantly, for the ongoing success of the new business.

Many of the matters noted below are required for SRA recognition, but they should not just be a means to that end. There is a reason the SRA want such matters to be considered – to safeguard the future of the firm and therefore protect the clients. In this case, business planning, continuity planning and financial forecasts are fundamental and should be used as live documents, to help firms achieve their objectives.

Top considerations for starting a law firm

  • structure
  • banking
  • professional indemnity insurance
  • SRA recognition process
  • premises
  • software / IT / website
  • logo / literature / letterheads
  • staff / payroll
  • tax authorities
  • Companies House
  • business plans / continuity plans
  • financial forecasts / cash requirements
  • bookkeeping
  • procedures / manuals
  • compliance support

In the next article, we will address some of the above considerations in more detail.

Andy Poole, Legal Sector Partner, Armstrong Watson

Andy works exclusively in the legal sector, advising law firms throughout the UK on strategic, structural and other business improvement issues. Further information can be found at: www.armstrongwatson.co.uk/legalsector

This article is a general guide to the issues that we see in practice. It is not a substitute for professional advice that takes account of your personal circumstances. No responsibility can be accepted for any loss occasioned by someone acting or refraining from action on the basis of this article.

The legal sector team advises law firms throughout the UK on strategic, structural and other business improvement issues as well as providing efficient accounting, tax and SRA accounts rules services.