Specialist lawyers are launching firms to exploit gaps in the market.

Yet such enterprises are fraught with difficulties.

Linda Tsang says their success lies in good business sense

As any entrepreneur will advise, being able to spot a gap in the market and to exploit that gap is the route to success in business.

For lawyers running big law firms, that is easier as they can pile resources into plugging that gap.

But others may see greater challenges in plugging the gap themselves.

For example, Bird & Bird employment partners Corinne Aldridge and Helen Parker and a team of three associates quit the firm last August to form their own niche employment practice, Aldridge Parker.

More recently, there has been a rush of niche firms opening their doors.

In the last month, we have seen Paragon Law in Nottingham, an immigration firm set up by Thalej Vasishta, previously at Berryman Shacklock; Liverpool commercial practice PFK Legal, formed by ex-Weightman Vizards men James Powell, Mark Forman and Neil Kelly; the Trinity Law Partnership in Birmingham, launched by personal injury specialists Rob Bhol, John McDonnel and Gerry O'Brien; and Adrian Wallace & Co, a commercial property practice in London.

But there are even more specialised - and sometimes less obvious - areas where the niche practitioner can make the move into a more challenging area.

That was the case for Daphne Robertson, formerly of London healthcare firm Hempsons.

In October 2003, anticipating the change in general practitioners' (GP) contracts proposed by the government, which come into force in April this year, she set up her own practice, DR Solicitors, to cater for all the business needs of GPs.

The work ranges from drafting partnership deeds to resolving partnership disputes.

The firm, which is based near Canary Wharf in London, has since hired two associates, and Ms Robertson has no regrets about setting up a niche practice.

She says: 'I am delighted that I made the right decision - to concentrate on a core group of people and offer them a specialist NHS legal service as opposed to, for example, specialising in a market sector.'

For others wanting to follow her example, she advises: 'The main issues are to put together a business plan with the help of an accountant and get some sound financial advice.

In my own case, my partner is a management consultant and so I have the benefit of his international business and IT experience.'

The other areas she advises to consider are contract matters such as the possibility of a restrictive covenant - in her case, as she was previously an associate and not a partner, that was not an issue (although it can be in some cases), but she adds: 'You have to be aware of the practice rules in relation to dealings with clients [of your previous employer].'

Having dealt with the practicalities of setting up an office, the next challenge is to find work, and that means marketing to the target audience.

With six months' lead time before the new legislation on GPs comes in, Ms Robertson was able to link up with the medical media, as part of an NHS expert panel, which went on a roadshow to doctors around the country discussing the implications of the changes.

She also does presentations and lectures to groups of doctors and primary care trusts, as well as writing articles for medical magazines.

She says this is more effective than direct marketing: 'If you are a specialist practice, people find you by recommendation - with so much to keep up with and read, the last thing doctors will be reading is an advertisement in the back of a medical magazine.'

Any solicitors setting up in practice have to advise the Law Society of the date of setting up, the date that practice insurance starts, and also the accounting date for the Inland Revenue.

They should also ensure their practising certificates are up to date and registered at the new business.

The details of the practice and any employees also have to be notified to the Society, and kept current.

Ms Robertson stresses the importance of IT: 'If that is not up to speed, then it can hinder the practice and its development.

Doctors, like lawyers, appreciate the benefits of a good Web site and a fast response by e-mail.

By telephone, fax or e-mail, I can advise any client, and I advise doctors across the country, from Cumbria to Sussex.

But a bespoke service is paramount - the challenge, on top of just running and developing a business, is to deliver a quality service.'

That view is shared by others outside London, such as Omer Ghanti, who left Russell Jones & Walker in London in December 2002 to set up Birmingham-based Cromwell Solicitors with Jasvir Singh Sohi, formerly of Hammonds (who is now managing partner).

Cromwell specialises in commercial and corporate work.

The two lawyers chose the name Cromwell after three days of intense deliberation.

He says: 'We wanted a traditional name with history.

He was associated with success and high moral values, with leadership qualities in his time.

We wanted to have a practice based on those values.'

Mr Ghanti, who is senior partner, says: 'In reality, despite a business plan and getting your office space, it all changes as you go along.

You have to think everything costs - which is the change in mindset you have to make from being an employed solicitor, even a partner.

'It is important to have someone managing the practice while I do the marketing; effectively, I have been making a name, branding the firm as a quality legal practice, for over a year.

And that is because people are naturally cautious about a new firm, so it is difficult to recruit - you need quality people to get quality work.'

And Mr Ghanti stresses the challenges of being both a lawyer and a businessman.

He says: 'It costs 10,000 per solicitor to be sitting at a desk, based on all the costs such as rent, office equipment, advertising and support, before they have even started earning fees.

So you have to be aware of how to invest in and build the business, and how to promote it in the market.

'On the infrastructure side, you have to be wary of being taken advantage of - salesmen see lawyers as an easy target.

As a business, cashflow is crucial.

The practice must have someone who knows the firm's exact financial position.'

Cromwell now has 18 fee-earners and the firm has attracted partners from established names such as Shoosmiths and Pinsents.

More recently, Neil Davies joined as head of insolvency, with two corporate recovery and insolvency lawyers, Martin Lord and Nazmeen Yaqub, from Brindley Twist Tafft & James.

The firm is looking to expand further.

Mr Ghanti says: 'The optimum size of the firm has been and gone.

But, as in any business, you need to get recognition from the target audience.

The target audience is not necessarily clients, such as companies and company directors, but our professional colleagues and contacts, such as accountants, insolvency practitioners and banks - and you have to look after them.

'The environment for lawyers has changed so much in the last ten years - service has to be second to none, and the decisions you make now will have a huge impact in five years' time.'

But for anyone with more immediate queries about setting up a niche practice, the advice from David Higgins, director of Glazers Financial Services, is: 'Obviously, see an accountant because the circumstances - and the advice - will differ, depending on the business, and how it is structured, which could be a sole practitioner, a partnership, limited liability partnership or company.

Also, depending on the structure and the capital expenses involved, it can be more advantageous to set up before the end of the tax year, or after 6 April, so that tax payments can be pushed back a year.'

Generally, the practice has to notify the Inland Revenue within three months of starting trading, and that notification will also cover National Insurance contributions.

It needs to acquire capital items, such as IT equipment (and also a digital photocopier or telephone system linked to a PC) before the end of the tax year, so that these can be offset against profits - it is worth noting that self-invested personal pensions can be used to invest in the practice.

Apart from the specifics on the accountancy side, Ms Robertson agrees that a good accountant is needed 'and, as in my case, a supportive partner'.

She adds: 'You have to get the planning and organisation right, and you have to be prepared to take on any and everything.

The problem is that some lawyers tend to be change-resistant.

But I have found that it's the best thing I have ever done.'

Linda Tsang is a freelance journalist