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Setting up a Law Firm

Good lord what an absolute racket.  So I currently practice as a one man band "legal consultant" - but fully qualified, longstanding peeker etc.  But considering setting up as a firm - not to do regulated work necessarily (though maybe) but more for the kudos, being able to use the word solicitor, attracting outside investment etc....seems ridiculous but the market demands it.  Anyway...my PI insurance will go from about 700 a year to about 20k just for me.  That seems the start.  Frankly the whole thing is nonsense.  Anyone any experience of this?  Is it worth using a consultant to help with the set up?  Is it worth doing it at all?  Chiz

Having talked to someone not long ago about this very thing, my understanding is that PI insurance premiums have skyrocketed for all firms generally. And that there is increased paranoia about failure to comply with client account regulations (which as a legal consultant you don’t deal with I don’t think)

that % increase is extortionate tho

 

This is why if I wanted to effectively have my own practice I’d go with Keystone or the like so they deal with all that stuff.  If you don’t do that you end up working a chunk of the year just to pay the regulatory overheads.

It's not even the annual PI cost that would put me off so much as the run off if you ever wanted to retire. They'll be asking for three years worth of premiums if you're lucky.

I am qualified and on the roll...I was led to believe you can call yourself a solicitor but can't practice as a solicitor - may have totally made that up.  I could quite easily do what I want to do, at least short term, as a firm of legal consultants but it will create certain issues...attracting talent may be one of those.  But still, £700 to 20k in insurance just on one fee-earner is a joke.  You apparently have to use their mandated brokers.  

The underwriting metrics are very crude

You will be paying v high premiums per fee earner as a sole practitioner

You will be bearing all the risk of high street one-man-band colourers in

I could have bought a small house with my premia since `1994 and not had a single complaint since then never mind a claim - money down the drain.

I do a minor amount of litigation and will stay as I am - a full firm for now.

One of my solicitor children by the way i s the new category of freelance solicitor. That might be an option for the original poster on this thread. I know a reasonable amount about it as she and I chatted about it at the time last year. You cannot take on staff. You have to call your firm your name (I had to do that for founding a real firm in 1994 though too). You cannot take on employees. If you don't do litigation the insurance requirements are very few. If you do do litigation (and other reserved activities) then they are more.

I could do a lot of my work drafting and advising on contracts without either my firm of solicitors nor even being a freelance solicitor really.

OP seems a bit jumbled. Are you acting as a consultant to another firm and advising their clients and billing through their legal entity, or are you directly advising and billing clients but just styling yourself as a consultant ?

PI costs vary enormously, but in my 20 years of running my own practice they never came close to making it less attractive than being a consultant for an existing firm or doing a Keystone.

When I was billing circa £500k the PI premium was about £30k IIRC. In an area of tax with low risk of claims but massive value if they happen.

First year of the open market for PI cover (2000 ?), the cheapest quote I got was under £300. Cheaper to insure a law practice than a car. Those were great times...

Eeyore...I am trading as [my name] Ltd and providing services to a handful of clients on a monthly retainer basis. Kind of freelance part time in houser. I regularly turn work away. I am set up as legal and management consultant. However I have a plan to set up a full corporate service law firm. Not jumbled m8. 

You're going back about 10 years Buzz and that statement is about 10% true but kind of m8

 

Anyway...back to it...is there precedent for any large law "firms" which aren't SRA regulated?  Maybe it's time to be the first if not.

I think law firm premia have skyrocketed because there are appalling standards of risk control as people desperately pursue fees. Most new entrants are walking negligence claims as they don’t do any proper research, take any notes or feel any sense of special responsibility to get things right through a childhood of being told the sun shines out of their arses and most partners are shit managers who don’t have a clue what’s going on on their files. 

You can't hold yourself out as a solicitor if you're not practising as one, even if you're on the roll etc - so you can't, for example, use "Solicitor" on your business card if working via an unregulated firm / company.

I have two companies - one for unregulated work where people dgaf about the "solicitor" tag - this is actually the vast majority of my clients (including some surprisingly big organisations), and one for where I practise as a solicitor (as a consultant to regulated firms / orgs, where I piggy-back on their insurance.  I think the SRA may have changed the requirement to operate separate entities for regulated and unregulated work, so long as it's clear to the client when you're regulated or not, but may be wrong about that.

Are you sure that the market demands the solicitor tag? My experience has been the exact opposite (and it's not been a barrier to offers of investment either, not that I've accepted those).

As for your current insurance for unregulated work, mine comes in at less than £500 a year for a per claim limit of £1m, which I topped up on a client-specific basis on the single occasion the client has ever had a wobble about the adequacy of that cover level.  Happy to tell you the name of the broker I use if helpful.

In short, it genuinely baffles me why anyone would set up as a regulated firm or sole practitioner for unregulated work - my experience has been that clients really don't care (though it probably helps that I can tell a story about my solicitor background).

Thank you Sissy Fuss that is great feedback, just what I was looking for, I'm grateful.  It amazes me I can't refer to myself as a solicitor (which my practising certificate confirms I am) unless I work for a regulated firm.  Not sure how closely this is enforced though.

To answer the question - no I'm not sure the market demands the solicitor tag - quite probably not.  I am concerned about recruiting talent into a non-regulated provider of legal advice though - I think most solicitors would see this as a bit dirty - though the money I save on insurance could be put towards salaries!  I have an decent story to tell about my experience also so that's not a worry.

What's the view on that - would people move to a non-regulated firm for a decent salary uplift?

 

 

It is pretty ridiculous, I agree - but I guess that, when it comes to unregulated work, the whole "not holding yourself out as a solicitor" is literally the only regulatory ringfence around the profession (or, put another way, is the only thing at a regulatory level which preserves the unregulated market for solicitors.  I was quite astonished when I looked into just how broad the range of things I can do as an unregulated provider actually is (and all the things I would have to be regulated for, I'm shit at and / or bored by anyway).

I have no real feel beyond fairly light anecdotal evidence for what being a non-regulated firm might do to recruitment, but I'd offer these thoughts (which may well have already occurred to you):

  • If the firm still pays for their practising certificate and they stay on the roll, they're still solicitors - you're just not marketing or employing them as such (at least not directly / very expressly).  So they'd keep the same status (and portability if they want to move firms again).
  • To be blunt, the kind of lawyers who might be intrigued by a move like this probably aren't so fussed about this sort of thing, or at least are likely to be more open-minded.
  • Not sure that money is likely to be a huge differentiator here, given the pay packages you'd be competing with.
  • So why not present being unregulated as a virtue rather than a weakness?
  • Similarly, you may find that you're more able to recruit people with complementary skillsets who aren't lawyers, because it will come across as less of a closed shop.

 

Being made to feel "a bit dirty" as an unregulated provider is a hangover of a background in the regulated sector - and one which is fed by solicitors themselves, because the alternative feels too much to them like turkeys voting for Christmas. 

Frankly, the whole thing is a bit of a racket (especially given how crap the profession's regulator is), though arguably less so in those areas of law which one does actually, by law, need to be a solicitor to practise.  I actually feel far more embarrassed that I was, for a longtime, complicit in that racket (or at least guilty of believing that solicitors are somehow special), than I do about offering unregulated services.

 

I think it is closely watched. I certainly look at firms who are on the other side to check their status eg if they can carry out reserved activities (if not they are probably pretending they are about to sue my client for example) and I would not be happy if i found someone using solicitor when they are not allowed to given the huge sums (insurance)  I have paid since 1994 to able to do so.

 

However even back in 1994 it was a question for me and I know solicitors even then setting up on their own often with 1 or 2 large clients they knew well not being a solicitor/firm etc just a limited company providing good legal advice and that was fine then and is fine now. I do tiny amounts of litigation so it would be no loss if I changed my own status as a firm. However I am now hooked in the mire of having to pay insurance for 6 years after I stop even if I convert to freelance solicitor of an amount that could buy today the house my father was brought up in in Bishop Auckland and all this to pay solicitors who steal from their clients when I have never had a single claim and have never handled clients' money.

Sissy Fuss and Lydia...thank you greatly...much food for thought.  My current position is 2 large clients and I only work for them but clearly if I take a different route and expand and take on more people/work it is a harder dilemma.  

BTW when I witness documents I put "solicitor" as occupation - perhaps I shouldn't even be doing that.  What a silly situation all round.

Pretty sure you can do this (assuming you are still a solicitor, which I think you said you are), so long as you're not witnessing as a service / as part of a paid activity.  So: doing it for my neighbour as a favour = fine; doing it for a client = naughty (and I'd steer clear of doing it for a client in their personal / private capacity too, even though that's probably OK - too blurry a line).

If I witness docs at work in a professional capacity I *may* put "solicitor" as occupation yes (I have an active practising certificate and have had for 24 years)...sounds like this is treading on thin ice.  I might just put part time pr0n star.

Back to the OP I wonder whether buying a small/clean/break-even type law firm off an old boy ready for retirement is a better way to at least circumvent the red tape (though will still have the PII but possibly cheaper with decent no claims?).  Anyone ready for retirement?  Lyds?

 

some of these old boys are incredibly diligent and do real low risk work, writing a will for Mrs Miggins who leaves 5k to the cats home...but, agree, it does come with a degree of extra risk.

Oofer, that is quite right - selling the practice avoids that issue and with two solicitor and 2 LPC student children one of them might want it too.

The rules are not that simple. I remember discussing with one solicitor child when she became a freelance solicitor the complications over that and just finding out what the rules are in a clear fashion was not easy.

Ego, I want to work until I die so as I just turned 60 I might have 20 or 30 years to go..... Probably 20.

I bet there are lots of older solicitors around happy to do deals particularly if it means they can avoid payig 6 years of run off cover. It seems a bit mean I would have to pay for 6 years of insurance if I wanted just to move from my one person firm to "freelance solicitor" (which is virtually the same in many ways -one person firm)

Actually if you want to be using "solicitor" then the obvious thing would be to be that new category of "freelance solicitor" which does not have the same insurance requirements if you don't do reserved activities like court work.

So you’d retire or become a consultant to your own firm, assuming it’s registered as a separate entity. No idea how the firm deals with freelance solicitors but presumably it would still need a principal or sole director. I wonder if there’s anything stopping umbrella places like keystone running subsid wholly owned firms under different brand names. So at the point of sale they acquire your PII responsibilities under a central policy. Obvs they might do different deal with different brands but it keeps the firm’s name alive and its value as a separate brand. Which is basically how large brand based businesses like in FMCG work. 

“Aren't you the Midlands based Barret Home swinger chap who inadvertently posted a pic of his chubby body balls deep in a low res fox middle aged housewife?”

“Ego Brainiac21 Jan 22 09:29

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You're going back about 10 years Buzz and that statement is about 10% true but kind of m8”
 

If you want this to tun, tell us more about the 10% that’s true. I’m intrigued!

Artoo set one up. He publicised it widely on here at the time, a few offices in the north. Mainly employment law I think.

Then he decided he'd rather run animal sanctuaries instead. They are probably easier to deal with than employment law clients.

Last Q pls m8s...there's a number of consultants who will take care of the whole set up process for me, including dealing with the insurance brokers...filling out application etc...charge about 8k...worth it to save all the running around or money for old rope?  Any reccos if so?  Chiz

Absolutely shocking what EBD has become.

Last time he was talking about how he needed a little bit more va va voom, and birds just weren't doing it for him. And now this.

How the mighty have fallen.  

I've almost gone full circle Force me jaw...having found the va va voom and taken my sechsual activites to another level (11) I'm struggling to find anything new these days.  I have literally and metaphorically shot my entire load one might conclude.

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