Setting up shop: building a new family practice

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Lawyers need to be more like entrepreneurs – that was the message legal business guru Professor Stephen Mayson gave during his speech at the Law London 2008 event. And there cannot be anything much more entrepreneurial for a solicitor to do than setting up their own firm.

Creating a new law firm was not something I had always wanted to do. The idea only came about because of my circumstances. I had run a profitable family law team in a 26-partner commercial firm, Boyes Turner, for just short of ten years, but my partners decided that they wanted the firm to concentrate on business law.

I have always thought that family lawyers working in a commercial environment have a certain paranoia. Their work is transactional, while a blue-chip client can provide a flow of instructions for the property, corporate and litigation teams. But a family law client does not exist in a vacuum. Matrimonial problems and a need for commercial advice are hardly mutually exclusive. After all, company directors get divorced. While some clients might want to keep their matters separate, others offer the opportunity to cross-refer work. Family law work is pretty much recession-proof. Indeed, there is arguably more of it about during times of financial hardship because of the increased pressure on relationships.

There have been several instances of law firms casting adrift their matrimonial teams in recent months. Addleshaw Goddard lost its family law team in January, which gave the opportunity to Mills & Reeve to have a private client presence in Leeds and Manchester. Cobbetts’ loss of a 14-strong family law team the previous year had been DWF’s gain. I was in good company.

Once you get the news, it does take a little time to sink in. All sorts of issues crowd the mind, including the question of how you are going to pay the mortgage. However, the focus has to be on what you are going to do about your predicament.

Initially, I spent a lot of time talking to various firms, both locally and in London, exploring the possibility of a bolt-on. This sort of process takes an awful lot of time and effort – weeks and months began flowing by.

I realised that I needed to bounce ideas around and was thankful for an extensive and patient support network. I recall the first suggestion of setting up my own practice. I was catching up with a former Trainee Solicitors Group colleague from more than 20 years ago and, over a large gin and tonic, he pointed out that if my firm was pulling out of family law work, someone would have to look after the clients. The concept of starting one’s own firm had always conjured up the idea of sitting by the telephone – waiting for it to ring. Having a ready-made client base was another ball game.

A number of my partners suggested I start my own practice. It moved from a vaguely envisioned fall-back position to my main focus. But how was I going to do it? One option was to get consultancy advice, but I felt that I wanted to ‘own’ the process. Probably the best thing I did was to buy a book. Martin Smith had the foresight to write about his experiences in Setting Up and Managing a Small Practice. This became my bible and was probably the best £34 I have ever spent. I then set about writing a plan.

Master plan

So back to entrepreneurs. Our business clients plan their ventures carefully so I took a leaf from their book. As I discovered, a business plan is as much a way of clarifying your own ideas as it is a document designed to help you extract money from potential funders. At its core was knowing not just how much it would cost to set up, but also the cost of getting out of it if the business failed. I wrote it and rewrote it many times. When I could not stand the sight of it any more, I knew I was ready to move to the next stage. It was then a question of working out what that was.

I had originally considered creating a virtual family law practice. There are plenty of people who have gone down the route of a laptop law office. If I wasn’t going to emulate them, I needed to know how much a real office might cost and where it ought to be located. Although my clients were based across the UK and even abroad, in theory, particularly with modern communications technology, I could have set up anywhere in England and Wales. However, I knew the Thames Valley area and people knew me. So the geography box got ticked.

As an experienced solicitor, you are familiar with your job and your area of work. Of course, by being in partnership and leading a team you are running a business, but when you are intent on setting one up from scratch you realise that there is so much you don’t know. No one can know all they need to know about the business property market, IT or HR issues. One simply needs to ask a person who does. Pretty soon you surround yourself with a cabal of sages. I made it clear that I didn’t want to ask for favours or free advice. After all, how many solicitors like being tapped for their view by someone after a ‘freebie’?

While wondering who to talk to about premises, it dawned on me that I knew a well-thought-of commercial surveyor whose band I had occasionally fronted. He felt that there were certain issues in working from one’s own front room, and an office also added credibility. It occurred to me that my clients who were used to me working from an office would probably expect me to continue to do so. Of course, plenty of solicitors run very good businesses without the need for a separate office, perhaps occasionally renting a consulting room by the hour. With the work being as sensitive as it is, the idea of a divorce lawyer turning up at their home or office can understandably put many clients off.

Ironing out the lease

The office says so much about the lawyer. Location, I was told, was vital, just as with domestic property. But should it be a lease and for how long would that tie in a fledgling business? What about serviced offices, where you can move in and use their desks, reception and telephone lines?

I took the view that, even with some hard bargaining, I was not prepared to pay the premium rates for serviced premises. Besides, I had a vision and wanted to create my own personalised practice.

I am not a property lawyer and wasn’t about to become one. Fortunately, my old firm helped me with the finer points of the lease. The full extent of the commitment dawned on me when I was asked to sign it. Until then I had not committed myself – now there would be no turning back.

Once you have premises, you have that extra dimension. The plan is made flesh. Within it, though, you have to know your fit-out cost, cabling, upgrading any lighting, partitioning and furniture, not to mention a telephone system and IT. I spoke to friends who had set up their own firms, and they were encouraging and made suggestions, even giving me details of contractors who could talk me through my requirements. Most importantly, I tried to avoid reinventing the wheel.

Back to basics

When it came to professional indemnity insurance, I had no record as a new firm, but the insurers of my former partnership knew me and were able to give me a sensible deal.

In principle, professional indemnity insurance and registration with the Solicitors Regulation Authority (SRA) are the two fundamental things needed for any new practice, but don’t be fooled that this is all you need even though that is what the SRA might say. There are plenty of traps out there if you don’t do your homework. A number of solicitors have been prosecuted for failure to notify the Information Commissioner’s Office under the Data Protection Act. One was fined £3,150 and ordered to pay £3,500 costs. A payment of £35 a year is all it takes – then simply arrange a direct debit so you don’t fall foul of next year’s requirements.

Paragraph 4(4) of the Employers Liability (Compulsory Insurance) Regulations 1998 requires an insurance certificate issued under the regulations to be retained for a period of 40 years, so it is important not to throw away your occupiers’ liability insurance certificate. That was certainly news to me.

I was lucky that my old firm was not doing family law any more so I could take clients with me. Not everyone is so fortunate.

My firm has now been up and running for several months and I am already looking for a full-time junior assistant solicitor. The setting up of a new firm does not finish, it just changes. I can contemplate the future from the comfort of an office eight minutes drive from home, situated within a listed former brewery. Yes there have been one or two teething problems, but on the whole, the business plan stood me in good stead. I am optimistic about the future and have to pinch myself when I realise I have become one of those entrepreneurs Stephen Mayson was talking about.

Tony Roe is founder of Tony Roe Solicitors in Berkshire. www.tonyroesolicitors.com

To read Martin Smith’s two-part In Business special on setting up your own firm, see:

  • www.lawgazette.co.uk/in-business/going-it-alone-getting-it-right
  • www.lawgazette.co.uk/in-business/coping-growing-pains

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