LINDA TSANG TALKS TO SOLICITORS ABOUT THE EXPERIENCE OF LEAVING LARGER PARTNERSHIPS TO SET UP NICHE PRACTICESThere is no such thing as a partner for life -- even in law.

With US firms wielding their considerable wallets to lure the City's rainmakers to their firms, as well as the recent news that Big Five accountancy firm KPMG is setting up its own stand-alone law firm, KLegal partner mobility has never been so frequent.And for every single partner who switches, whether from one City firm to another, to an accountancy-associated firm, or in order to take the US mega-salary, there are those who virtually go back to square one to set up in a niche practice with other like-minded lawyers, or as a sole practitioner.

The advantages, according to the lawyers canvassed, far outweigh the disadvantages.These include the freedom to conduct the practice without reference to an executive or management committee, which often runs the larger firms, as well as the ability to develop it with the lawyers you want to join the practice.Peter Garry and Stephen Ralph originally set up in practice in 1995 as the Ralph Garry Partnership, a specialist litigation and dispute resolution firm, after both had had considerable experience with established London firms -- Mr Ralph had been with Payne Hicks Beach for 20 years.

They were later joined by a number of other partners including John Hume, who had clocked up more than 20 years with Titmuss Sainer Dechert, and the firm became Ralph Hume Garry.Mr Garry, the managing partner, says both he and Mr Ralph had individually gone through the pros and cons of whether to join another large firm.

With the publication of Lord Woolf's interim report and in view of the market conditions generally in 1995, it was clear to them that there was a need for a firm specialising exclusively in litigation and dispute resolution.

Believing that they were both capable of attracting high-quality commercial litigation in their own right, without having to rely on cross-referrals from other departments, was also a major factor in the decision to set up on their own.Mr Garry says: 'We will forever be in the debt of clients, professional contacts and a large number of other people who have been immensely supportive from the outset.

In many cases there is the element of friendship and loyalty, but also if you have given a good, cost-effective service in the past, people will seek you out and come back to you no matter which firm you are in'.

The practice now has 12 lawyers, including seven partners, with lawyers from City firms such as Lawrence Graham and Titmuss Sainer, and covers all aspects of commercial litigation and dispute resolution.

He adds that the fact that they had all known and dealt with each other as lawyers and friends was also a major factor in the decision to set up the firm, and a factor in how the firm grows -- 'which is a good recipe'.

He adds: 'We cover most of the litigation practice areas, but we are always on the lookout for like-minded specialist litigators who want to develop their own practice areas'.Another City player who made such a move is Jill Andrew, who was the employment partner at Masons and was at Dibb Lupton Broomhead before joining solicitor Dale Langley who had left Ashurst Morris Crisp to set up on his own in 1995.Both are employment specialists, and Ms Andrew says that the timing was opportune, although she already knew Mr Langley from the employment circuit: 'We coincided with our views that there was scope for a niche employment practice, and employment law lends itself particularly well to this type of practice'.

The firm's practice now has three partners and two associates, and the work is 90% employment advice, and 10% general commercial advice.

Mr Langley explains that the plan at the outset was not to continue as a sole practitioner.

He initially set up in a business centre, then took on a paralegal/outdoor clerk , and 'as soon as the opportunity came along, I was talking to a number of people with a view to bringing in a senior litigator.

It is a serious decision to go from one to two, and you have to be fairly cautious about who you choose.

The aim was always to grow the practice to about ten to 12 people'.Generally, says Ms Andrew there is also the 'lifestyle' issue that, 'with your own firm, you can control how your time is spent, with more control and flexibility on the working culture, which need not necessarily be the long hours one, and have more input on how the practice is developed'.There is the risk factor generally of whether the work will necessarily follow the lawyer or stay with the firm.

All the lawyers interviewed say this is a matter of negotiation where there are strong covenants in the partnership agreement.

The common sense view to this issue is that once the client has been informed of the move, he will make up his own mind on who to retain as legal adviser, and will not want to be used as a bargaining chip in the negotiation.

Often a pragmatic view is taken that it is in the interests of good public relations for solicitors that lawyers are seen as being professional in dealing with any client disputes, rather than being seen as legalistic by enforcing lengthy and stringent restrictive covenants, including year-long gardening leave clauses.

Having said this, in many cases, for good commercial reasons, firms do impose and police covenants and other restrictions, and parties to these ignore them at their peril.But there is also an advantage in being a niche practice and getting work.

For example, the larger firms -- even the ones that a lawyer has left -- will often give them any conflict work.

And the niche practices are often seen as more approachable when an individual is referred in a conflict case, as well as having lower charges.

Also in specialist areas such as litigation, employment and family law, these are seen as one-off cases -- and subconsciously, the referring lawyers consider that the niche firm will not poach the client.

Again, for commercial reasons, it is not in the interests of either for this to happen.And it is not just the City lawyers with the necessary three years of post-qualification practice who are setting up on their own.

Solicitor-advocate Graham Hewitt, with more than 20 years as a solicitor, set up as a sole practitioner in March 1998 as GJ Hewitt & Co in Peterborough.

His work is primarily litigation, medical negligence, personal injury, childcare and aviation law.He says that as a sole practitioner, particularly a solicitor-advocate, it is necessary to plan ahead to make sure that the office is covered.

He has more 400 cases on his books, without, he adds, the aid of any marketing on his part.

He warns that: 'You are the one responsible for your cash-flow.

Bill properly, with the lower overheads of running what is essentially a solicitors' chambers, that is easier, but generally, you should be billing between three to four times income', Mr Hewitt adds.As for any other lawyers who are ready to take a leap for themselves, Ms Andrew advises that in the appropriate circumstances and provided you have built up a good record: 'Do it'.Finally, Mr Garry says he was surprised how easy it was to register the firm with the authorities.

This includes writing a letter to the Law Society to notify it -- there is no pro forma notification -- and a similar letter to the Solicitors Indemnity Fund.

He adds: 'The experience of setting up the firm and running it as a business gives you a practical awareness of issues facing entrepreneurs which you would not otherwise have.

That adds another dimension to the advice that we give to solicitors and other professional clients seeking to set up their own practice'.USEFUL ADVICE:-- Be certain that the firm will generate work both in the short and long term.-- Be risk-averse.

Do not rush into long-term liabilities -- look at serviced office facilities, which provide conference rooms.-- Plan the financial structure and the strategy of the firm around the expectations and requirements of clients, so that it can offer clients the service they want at a cost which is seen as good value for money.-- Before burning bridges, prepare a business plan, the most important part of which is a cash flow prediction for at least one year, and preferably three.

If the cash flow predicts the need for heavy borrowing at the outset, think again.-- Be prepared to work long hours as there is always more than enough to do for clients, let alone the administration.

Computerise everything and be computer-literate.ONCE THE FIRM IS UP AND RUNNING, THE FOUNDING PARTNERS FACE THE TASK OF MARKETING IT, SAYS MATT BARNARDA conventional view of marketing is that it is a bolt-on to the main business of a company.

It might be considered to involve placing a few adverts and sending out mail shots informing potential customers or clients of deals on offer.

Nowadays, many marketing professionals advocate more sophisticated strategic thinking when responding to and helping to form the direction a business is taking.

And that applies as much to the marketing of law firms as any other business.For all businesses, and start-ups in particular, being client-focused and able to differentiate oneself from the competition are the most important factors in determining the success of the enterprise.

One difficulty is that many new businesses fear that marketing can be costly and ineffective which, if misdirected, it certainly can be.

'Advertising and things like that are what take the cash and are not really the answer,' says Kim Tasso, a PR consultant and formerly marketing director at Nabarro Nathanson.

'The real cost is the time it takes to get to know the clients.'But targeting and then getting to know a particular client base is time well spent.

When shipping and off-shore specialist law firm Curtis Davis Garrard was set-up by three former Watson Farley & Williams lawyers in 1996, a large part of the initial work was devoted to networking, one of the most effective forms of marketing.

Founding partner Ian Garrard recalls: 'A significant part of our original budget involved us spending a lot of our time travelling to see all of our c ontacts and ensuring that they were properly advised face-to-face of the new firm and what we were capable of'.Rather than specialise in a particular field of law, Curtis Davis Garrard specialised in a particular set of clients which was internationally based.

The firm decided that one way to differentiate itself from other firms serving those clients, and to offer a better service, was to move out of the City to offices near Heathrow airport.

This meant that the firm was easy for the clients to access, and the reduced rent meant it was able to be more flexible in terms of fees.

Sandra Hewett, who runs a a legal profession PR consultancy, points out that this is the sort of added value that is so important.The other aspect of the marketing strategy put into place by Curtis Davis Garrard was to highlight its expertise.

Mr Garrard continues: 'The emphasis is not on boozy client lunches, the focus is on writing legal articles and contributing to publications such as Lloyds List, which is very much part of our sector'.Writing articles can be an excellent way for a lawyer to raise a firm's profile and demonstrate expertise, as can lecturing and other forms of public speaking.

However, this approach is not suitable for everyone.

It is important that the strategy adopted by a firm is something with which its partners are comfortable.

'I think it is something that is often overlooked.

Firms try and do marketing which doesn't really suit them,' Ms Tasso says.However, whichever way a firm chooses to market itself, learning to live and breathe the clients, knowing what they talk about, what is important to them -- and what is not -- remain the key to a successful strategy.

Providing relevant information can be a good way of demonstrating that the firm understands its clients' concerns.

Christopher Davis, chief executive of Davis & Co, wrote a book with some of the firm's other senior lawyers on their speciality -- international mergers and acquisitions (M&A).

He comments: 'We find that is a superb means of gaining credibility.

But at the end of the day, one still has to sell in a face-to-face situation'.Davis & Co was set up in 1993 as a company rather than a partnership, with Mr Davis as the chief executive.

The firm has gained substantial publicity through being a 'virtual firm', with its senior lawyers operating from a variety of locations mainly across the south east of England.

However, Mr Davis does not see this as its main point of differentiation.

Instead, as well as offering legal advice on M&A work, the firm supplies a project management service which co-ordinates a company's advisers including lawyers, accountants and other financial advisers.'Because we are a small firm and we didn't have an established brand name,' Mr Davis explains, 'we had to identify some UPS [unique selling point].

So what we did was to identify a service which we're not aware of any one else providing.'The main tool the firm uses to market this service is its Internet Web site, which allows prospective clients to see how the system works and its benefits (see feature, page 26).Geoff Bignell, who used to run the Law Society's services department, has recently set up a niche employment firm and he is taking advantage of changes in the Law Society's rules to help differentiate the firm.

Instead of using his name, he has called the firm Just Employment.

However, it is the firm's ability to respond to clients' needs which he maintains will really mark it out: 'Clients like to know where they stand.

For example, for a contract of employment that com plies with the working time regulations, I won't hesitate to give them a fixed fee'.Marketing is more fundamentally important to running a successful business than is often recognised, and it is not always given sufficient attention.

Ms Tasso says that 'the Law Society has got a couple of good books and also runs excellent basic courses, so within a couple of days someone can get up to speed.

I don't understand why more solicitors don't take the time and effort to do it, because it is not something they're trained in, and in a start-up situation it is absolutely vital'.ANDREW OTTERBURN TALKS TO TWO FIRMS WITH SOME NUTS AND BOLTS ADVICE FOR THOSE WANTING TO SET UP SHOPSetting up one's firm own is perhaps the most rewarding, yet also one of the most frightening things to do for any professional.

Identifying the markets to be served, creating an identity, choosing a name and bringing together a team are exciting and often extremely good fun -- but practitioners have to get it right financially.Ultimately, the firm will prosper or fail according to how well the cashflow is managed -- a business is about money, not just the law -- and business skills will be as important as legal prowess and reputation.As with most aspects of management, much of the initial preparation that needs to be done is essentially good common sense.

In particular, adopting a realistic view of the potential fees likely to be billed in the critical first two years, how long it will take to get paid, and what expenses and capital expenditure are likely to cost.

A common problem can be that new businesses overestimate the level of fees to be earned and underestimate expenses.

Therefore, it is important to adopt a prudent approach to financial plans.The experience of Rehana Parveen and Bhavna Desai, who formed Broadway Solicitors in south London four months ago, illustrates the need for careful planning.

'We are in our fourth month of trading.

However we cannot really count the first month, as much of it was spent chasing suppliers which failed to meet the deadlines they had quoted us.

In our first month, we learnt that you cannot really rely on anyone and a general tip from us is to learn and do as much as you can yourself, from your own book-keeping to cleaning the offices and choosing the right computer package.

You need to get involved in everything, take the advice that is on offer but actually learn and understand everything you are implementing or introducing as part of your practice.'There are numerous eventualities, which occur, which you cannot anticipate or plan for -- all that you can be sure is that they will happen.

In our first month, the heating system broke down, the new telephone system which was installed late broke down, and the furniture did not turn up.

Fortunately, everything seems to have been sorted now and we can actually carry out some fee earning work,' says Ms Parveen.Five tips from Broadway Solicitors:-- 'Prepare a financial budget and business plan, and do it well in advance of the date your practice is scheduled to open.

It is difficult to set a financial budget for a new practice because you have no previous figures to base your estimates on.

However, there are many accountants who will give you a consultation for an hour or so free of charge and help you prepare a financial budget in the hope you will become one of their clients;-- Your budget should allow for unexpected contingencies and it is a good idea to have a separate amount of capital in reserve to draw on should the need arise;-- Start as you mean to go on , and compare your financial budget with your actual results on a monthly basis.

Put in place good financial procedures from the outset;-- When you are in the hands of outside suppliers there is little you can do to force deadlines to be met, however, you can negotiate on the payment of a bill.

If they have failed to meet the deadlines then simply insist you want the bill reduced;-- You should check in your locality for any grants or subsidies that may be available.

Contact your local Business Link or Training & Enterprise Council and other business organisations.'We are still learning about our practice and how to run it.

There has been no manual we could go to, and no easy answers for anything.

At the moment every day has a new challenge, but we have not lost our enthusiasm -- well not yet anyway,' adds Ms Parveen.Two years down the line, niche north London mental health practice Burke Niazi, formed by Sarah Burke and her partner Roxanne Niazi, has found that careful financial control in the early days helped lay the foundation for a successful firm.

Ms Burke identified ten rules she and her partner have learned:-- 'Spend time preparing your initial business plan and budget.

As well as identifying the areas of work we wished to specialise in and where our clients would come from, this also helped us to establish our initial capital expenditure, our monthly outgoings and our prospective income.

Preparing the business plan forced us to sit down and plan properly.

It made us think about when and how we would have to spend our money.

As it happened, we exceeded our original budget -- which was cautious -- and we prepared a new one six months after starting the business.

Nevertheless, drawing up the plan was a useful exercise and is necessary to borrow money from the bank;-- Work out from the start how much each of the partners are going to contribute to the business and how income is to be divided.

We decided from the beginning that both partners would put in an equal amount of money and share the profits equally.

It is important that these things are clarified right from the start or no doubt there could be problems later.

We also drew up our partnership agreement before we started trading;-- We both agreed to contribute the same lump sum from the beginning and agreed not to take any drawings for six months.

When preparing our initial budget we calculated this would tide us over until the income started coming in.

You should therefore save-up, have a partner or parent you can rely on or alternatively make arrangements with a bank.

In our case, whilst we negotiated an overdraft, we never found it necessary to use it -- luckily we were also able to take drawings before our six-month deadline;-- Shop around when choosing your bank -- we went to several and compared them against each other to get the best rate of interest.

We were also able to negotiate free banking for our first year, which some but not all of the banks offered;-- Think about how quickly you will get paid.

We were lucky in that mental health work has a quick turnover, whereas child care and family work is much slower.

It is important to consider how quickly your work can be turned over and how quickly you are likely to receive payment from the Legal Aid Board (LAB).

It is only now that we are beginning to reap the benefits of our child care work, some two years after our business started;-- We started with just the two of us.

We painted the office ourselves, typed our own letters and generally did everything ourselves with the help of a part-time bookk eeper who works from home.

This meant we kept our overheads to a minimum until we started to receive payment.

When we started receiving payment from the LAB we were able to take on a secretary and a trainee solicitor to help us.

We have gone from two members of staff to 14 in two years;-- Keep a book and list your expenses.

This was useful in the early stages prior to opening a bank account because we were each spending money on different things -- one of us might have paid for insurance while the other bought stationery.

We listed our various expenses in a book so that we could keep a tally on what we had each spent;-- Rent rather than buy.

Initially we leased or rented most of our equipment save for a couple of computers we bought.

This meant we were conserving our capital wherever possible.

We bought our furniture second hand;-- We were able to negotiate a three-month, rent-free period which obviously helped tide us over the initial period.

It is also important to negotiate a break clause.

In our case, our premises were ample for us when we first started but two years down the line it was crucial that we were able to break our tenancy since the premises had become far too small.'Another important early step is finding a good accountant who will be able to advise on a range of issues from VAT registration and PAYE through to bookkeeping and management accounts.The Institute of Chartered Accountants has recently launched a special interest group for its members who act for solicitors.

A good starting point to find an accountant who understands legal practices could be to contact the institute (fax: Heather Dunlop; tel: 0171 920 8547 or e-mail: hadunlop@icaew.co.uk).The Office for the Supervision of Solicitors has recently launched a new firms initiative aimed at sole practitioners and two-partner firms set up by young solicitors who have not previously been partners.The initiative provides a free one-day visit that can cover a wide range of issues including accounting systems, accounts and business management.

Around 40 to 50 firms can be visited a year.

For more details, contact Mike Calvert; tel: 01926 822119.