Starting a law firm: The Dream vs The Reality
The dream of starting a law firm
The idea of starting a law firm is one that crosses the mind of many solicitors at some point in their careers. Whether still at law school and dreaming of the future or working at a firm and thinking of going it alone, starting a law firm is always a tempting thought.
For many solicitors, they want the freedom to choose their own practices, set their own priorities, and decide their own working hours. They see starting their own firm as the route to achieving the work life balance they’ve always wanted, and it’s this core idea that fuels their dream.
The reality of running a legal practice
Unfortunately, the dream often overshadows the reality, which is that starting a law firm is the same as starting any other kind of business. Whilst it will bring more flexibility, it will also bring more responsibilities.
1. Choosing operating systems
One of the first steps you will need to take when starting a law firm is choosing reliable operating systems to use. From finance and invoicing applications and phone systems to data storage services and timekeeping software, your IT systems will effectively form the foundation of your company. Once chosen, you will also need to ensure regular maintenance is carried out to keep your firm operating efficiently.
2. Managing finances, invoicing, and credit control
When you start a law firm, it’s vital you establish a credit control policy with clear payment terms. Otherwise, you will likely find that a huge amount of your time will be taken up with preparing invoices and processing payments, which will only be made worse if you have to chase down clients. Communicating your payment terms at the start of each client relationship is key to a healthy cashflow for your business. You will also need to decide if you will hold client money and deal with the rules that cover this when running your firm’s finances compliantly.
3. Hiring compliance officers
In order to start a law firm, the SRA requires that you have a Compliance Officer for Legal Practice (COLP) and a Compliance Officer for Finance and Administration (COFA). Whilst you can take responsibility for these positions yourself, without hiring additional employees, both of these roles have a large list of responsibilities, which can require significant time and attention to maintain compliance with SRA regulations.
4. Arranging PI insurance
Professional Indemnity Insurance is a requirement for all law firms and must be regularly renewed, depending on the length of your coverage. It’s recommended that you start preparing for your next renewal two months before your policy ends. This is because the process of preparing a proposal, approaching a broker, and obtaining an insurer can be time-consuming, especially in the current ‘hard market’.
5. Handling annual audits
When running a law firm, it’s required that you undertake an annual audit to ensure your firm continues to comply with the SRA’s Solicitor Accounts Rules. The purpose of completing an annual audit is to assure the SRA that your firm is safely and appropriately handling client money. To ensure this process runs smoothly, you will need to regularly reconcile client accounts and ensure all withdrawals and payments are handled following SRA rules.
The alternative light at the end of the tunnel
As you can see, starting and running a law firm yourself will require you to take on a lot of responsibilities. However, what if there was a way for you to start a law firm, without having to handle the day-to-day operations, instead focusing on delivering great client service?
The Bamboo Platform is a law firm operating system, which enables solicitors to start and run their dream legal practice. We understand you don’t want the responsibilities that come with starting a law firm, such as maintaining SRA compliance or chasing client payments. That’s why, we provide a complete law firm framework, with all back-office operations included. In doing so, we leave you free to choose your practices, manage client relationships and establish a company culture. If that wasn’t enough, we even offer additional marketing services, to ensure your law brand gets off to a flying start.
If the idea of starting a law firm has crossed your mind on more than one occasion, get in touch with the Bamboo Platform. We’re here to turn your dream of starting a law firm, into a reality.