Setting up on your own as a solicitor

[eyesbiggerthanstomach]

Has anyone here taken the plunge and left a traditional firm to go it alone?

I am a family solicitor and have been put on furlough. I'm at senior associate level at a regional firm and partnership was always the plan. Now I find I am worrying I will be at risk of redundancy.

In the 2008 recession I was made redundant and this current situation has had me thinking I want to work for myself. I have always felt some of the working practice is archaic and can be streamlined.

I think now there will be a change with fewer traditional offices and so working from home premises won't be unusual.

I don't imagine the start up cost will be much but it's the monthly income I worry about. I am a single mum to a toddler. If I don't get paid I am in financial trouble. But at the same time I think this could have the potential to make me a lot of money.

Would be interested to hear if anyone has done this before. Is this just a silly dream?

I have kind of done it. I haven’t set up on my own (although still fully intending to) but instead have joined as a consultant where I pay a percentage of any fees to the principal and keep the rest. Not keystone, a much smaller company with about 10 solicitors. For that I get an office and office support to use as well as insurance.

I would suggest looking at that first: that way you keep your outgoings extremely low. I am still intending to set up on my own but keep finding excuses not to: fear of the unknown maybe? But I would say do it regardless.. I’ve been self employed for 4 years now and love it. I work from home, choose my own hours, and despite working about half the hours I did in London I earn about the same, once my reduction in commuting costs is taken into account.

Thanks that's helpful.

Do you need a following for that? I don't have a following but I think it's hard with family work anyway.

You could consider writing a few blogs or local newspaper articles on legal topics while in furlough and promote them via social media. Use something like 'Sarah Eyes is a local solicitor' as your byline, but don't link it to the name of your firm. Then once you go independent a few people will already know your name.

Hth.

My boss did. Welcome to PM me.

As a halfway house you could look for a consultant position. You typically get to keep around half of your billables but you’re not liable for insurance/rent etc.

I have. I've now been doing it for 7.5 years. The very first thing you need to look at is insurance. I do employment, am 20 years PQE, never had any claims against me and don't hold client monies at all and so I don't need a client account. As such my insurance can be kept below £10k. If you have a high insurance cost then you're working for a big chunk of the years before you actually earn anything at all, particularly when you add in SRA fees etc.

It isn't easy getting insurance as a small player and if you don't have a following I think you could find it tricky. They basically told me that unless I was going to be billing £150k + then its not worth their while insuring.

Time recording systems are also often pricey plus you have to have good IT and IT support, particularly with SRA rules and GDPR.

Plus if you're a limited company then the SRA insists you carry £3million of insurance even if you don't need that.

Thanks very interesting. Lots to think about.

I rather naively thought insurance could be a percentage of turnover. In year 1 there would be absolutely no guarantee that billing would be in excess of £150k.

I was also hoping to run it without a client account initially to keep the insurance cost low.

My plan would be to get some sort of system like Leap cloud practice management but outsource the cashiering side. My biggest fear is falling foul of the accounting rules.

My theory would be that even if I made very little with low costs I would still be making money given the hourly rate but that may be a little naive.

Realistically you would need a minimum of £20k plus a few months salary to see you through as a start up pot of cash. So I'd plan on circa 40kish depending on your insurance costs. I'm not sure how family matters work but will you be able to do it without a client account? I would have thought that would be difficult. Remember the time lag in between doing the work and being paid by clients. You will also find that lots of clients decide that since you're only small they will get away without paying quickly or without paying at all. Plus people will expect lower hourly rates since you're a small unknown firm.

I managed it since I had a really good following of large and loyal clients and ongoing work that I knew would come to me immediately since I'd formed really good relationships/friendships with those clients over a long period of time. I also had no restrictive covenants so could take the ongoing work (unusual since I was at a large international firm).

For all the reasons mentioned above I think it's worth checking out a consultancy route. You don't need to worry about insurance, bank accounts, the SRA stuff - all taken care for you, which allows you to concentrate on the actual work. Even if you start that way, and then build up a practice giving you the confidence to set up on your own later. Plus with some consultancies you are likely to get referrals from the other lawyers.

I had a small following (I left a big city firm so was never going to be able to take that many clients) but have been able to build up a nice base of clients since I left.