In this article we will try to answer the main questions that concern those who are just about to start their own business. We know how difficult and risky this is, and we present to your attention step-by-step algorithm, following which you will hit fewer bumps at the beginning of your entrepreneurial journey:
Step 1. Market analysis and determination of specialization
Choosing a practice profile, i.e. The choice of specialization is a question that is best decided on at the preliminary planning stage. Business specifics professional services The point is that only narrow specialists are valued here, and the “general profile” inspires less confidence in a potential client. Based on this, at the very beginning of your practice, we recommend deciding on a specialization.
What types of specializations are there?
Based on our experience, as well as the experience of our Partners, you can take 2 main paths in order to decide on your specialization.
- By type of clients- servicing physical or legal entities. The simplest type of specialization that allows you to split clients into 2 large groups and abandon one in favor of the other.
- By area of law- criminal, civil, tax, customs, etc. A narrower division, from a professional point of view. You can also combine and deal with, for example, bankruptcy only individuals.
How to choose a specialization and not make a mistake?
There is no universal answer to the question of how to choose an activity profile. But there are at least three approaches to this problem, each of which is effective in its own way. Decide which parameter will be the main one for you:
- Competition.
Choose a niche with the lowest competition. To do this, of course, you will first have to evaluate the supply market in your region. - Practical experience.
Has already practical experience conducting business in court? Choose an area of law in which you can show a potential client a case study of successful cases today. - Personal preferences.
Focus on the area of law that interests you most. Yes, you can simply choose an area that is close to you, interesting, and in which you really want to develop and work. Personal attitude towards work - important indicator for client.
The main difficulty in choosing a specialization in the field of professional services is that it is impossible to fully “probe” the audience by offering them a tasting or test drive of services in order to understand which area is most in demand. You must understand that, one way or another, you will have to take a risk, and time will tell how justified it will be.
For those who have a legal education and experience in the field of law, over time it becomes crowded in the enterprise. Having grown to a certain level of qualifications, a lawyer thinks about how to open law firm from scratch and work for yourself. This means prestige, freedom of action, greater income, but also greater responsibility.
The success of such a business idea directly depends on the experience of the staff, and the owner of the company does not necessarily have to be a lawyer. A law firm is not subject to licensing, so there are no difficulties in matters of registration.
Legal business must combine professionalism in the legal field and commercial spirit. These can be the qualities of one or two people: a business manager and an experienced lawyer. The manager’s task is to find and attract clientele, as well as select personnel.
Choosing a field of activity
There are many areas for a law firm to operate, the most popular being services for registration and liquidation of legal entities. This simplest option to start, does not require special qualifications from employees. But there is a lot of competition in this area and large players who offer low prices.
List of promising branches for a law firm:
- Consulting and assistance to individuals on all legal issues: civil, administrative, as well as banking, which arise quite often. To defend yourself in criminal proceedings, you need a lawyer's status.
- Consulting small businesses in the field of legal disputes and other issues. Large enterprises, as a rule, resort to the services of foreign agencies.
- Registration and liquidation of legal entities is assistance in opening, re-registration and liquidation. Registrar services mean a low barrier to entry into the market, ease of operation, and a regular clientele.
- Outsourcing or subscription services for legal entities, which involves concluding an agreement for servicing corporate clients on issues of law, contractual relations, documentation management, personnel registration, contact with government agencies, representation in court, etc. The advantages of such work include a stable income, however, a wide range of issues need to be addressed.
The smart choice is to provide a wide range of services to maximize your target audience.
Registration of a law firm
State registration for a law firm it is not only legal activity, but also prestige. Step by step description opening a law firm from scratch:
- registration as an individual entrepreneur or LLC;
- registration in tax office, OKVED code 74.11;
- choice of taxation system – 6% of income or 15% of income minus expenses;
- opening a bank account;
- registration with the Pension Fund.
The cost of registering an LLC includes 10-15 thousand rubles for registering a legal address, as well as authorized capital from 10 thousand rubles in the form of money in a bank account (one of the options). However, this form of ownership is preferable if you are going to work with reputable clients. The entire registration process will require 25 thousand rubles.
According to the law, a law office must obtain a special status, and the person creating such an organization must pass an exam and take an oath.
Office
A law firm needs an office, which does not necessarily have to be located in the central part of the city. It all depends on your capabilities and the scale of future activities. For small company you need a room of 25 square meters good repair. An office center or a residential building renting out the first floors for offices would be suitable. It’s better to start with an inexpensive space to rent (7-8 thousand rubles), and then change the location as it develops.
Advertising
The main task of a new entrepreneur is to attract clients who will become regular or bring other clients. How to promote a law firm from scratch? In addition to standard methods such as online advertising and outdoor advertising, personal meetings are needed. This is a lot of work on communicating with company owners - potential clients.
Think over a company name that evokes respect, trust and a sense of stability. The use of the founders' surnames is also practiced. Name options: “Advisor”, “Guarantor”, “Agency of Fomin and Govorov”, etc.
The most successful promotion methods:
- Contextual advertising on Google and Yandex.
- Providing your services through free online consulting services. This allows you to answer people's questions, thereby showing your abilities and providing contract data.
- Distribution of proposals for cooperation in the form of a complete package indicating the cost and service options.
- Calls, personal meetings with managers and company executives.
- Conducting trainings and seminars as a way to earn extra money and make your presence known.
To give the impression of a reputable company, you need to take care of business cards, as well as creating your own website. The minimum cost of such a business kit is 15,000 rubles.
Furniture and equipment
The main costs go to equipping the law office office. To do this you need to purchase:
- Furniture – 20 thousand rubles;
- Computer, printer, fax, telephone, etc. – 40 thousand rubles;
- Air conditioning – 15 thousand rubles;
Total: 75 thousand rubles.
Personnel
A legal business from scratch can be started with one professional who is also the owner, but perfect option is a partnership of two lawyers. A company must gain momentum and clientele before it can afford to hire professionals.
The agency will need an assistant secretary. His tasks: take calls, do routine work, send emails, print and sort documents (salary from 14 thousand rubles).
The accounting of a law firm using a simplified taxation system has simple accounting. The easiest way is to turn to a freelance accountant (outsourcing), paying 3 thousand rubles monthly for his services.
Law firm business plan: investments, profitability and payback
Opening a law firm will not require significant capital investments How much does it cost to open a law firm from scratch (capital investment):
- registration of an LLC – 25 thousand rubles;
- office renovation – 30 thousand rubles;
- furniture and equipment – 75 thousand rubles
- creating a website, printing business cards – 15 thousand rubles;
- advertising costs – 10 thousand rubles;
- Software, Internet, security – 20 thousand rubles;
- purchase of office supplies – 5 thousand rubles.
Total: 180 thousand rubles
The income of a law firm is the fee for its services, which constitutes monthly revenue.
Table. Cost and income received from services provided
Table. Calculation of company profitability
Table. Calculation of investment attractiveness
Obviously, the payback will not be 4 months, but more than six months, since the first 2-3 months are spent reaching the break-even point.
Choosing a Strategy
The answer to the question of how to open a law firm is multifaceted, as is the possible range of services. A successful strategy is to enter into partnership agreements with lawyers, auditing and similar agencies during the work. At the same time, there is no need for a staff of expensive specialists, a large office and the cost of its maintenance. You focus on your specialty while benefiting from partnerships.
Question how to open a law firm This question is usually asked by lawyers who are tired of working for hire. Although, in order to open such a company, it is not at all necessary to be a lawyer. This activity is not licensed and any person can register a company. The exception is defense services in criminal proceedings - this requires the status of a lawyer.
For stable operation The manager of a law firm must first of all be a successful businessman, but he may not be a lawyer. The manager must be able to attract clients and select qualified legal personnel.
Organizations carrying out activities to provide legal services have the right to use the simplified taxation system (STS). Let me remind you that with this taxation system there can be two rates:
6%, if the object of taxation is income,
15% if the object of taxation is income reduced by the amount of expenses.
Most law firms in our country specialize in providing services for registration, re-registration and liquidation of legal entities. This is explained not only by the fact that this is one of the most popular services, but also by the low barriers to entry into the market. This work does not require legal qualifications and, accordingly, personnel costs are minimal. To operate such a company, two people are enough, even without higher education. But this type of activity is becoming less and less profitable due to fierce competition and dumping by large players like Registrar.
Narrow specialization provides some advantages, but also imposes serious limitations. In my opinion, more competent legal business should be built on a wide range of services, where registration of companies would be only one type of service. The most interesting area of activity in terms of income is b2b (Business to Business) - servicing legal entities. Here the competition is already lower, especially in the small business sector. Large businesses prefer to use the services of foreign consulting companies.
Therefore, before opening a law firm, you need to have a plan for the future and decide on a strategy. If we focus on the growth and expansion of the list of legal services, then this already requires qualified lawyers. Many legal entity registration firms have realized that they have reached the ceiling within their narrow specialization and are expanding their range of services. This is easier to implement than starting from scratch, immediately offering a wide range of legal services, which requires significant investments
It’s easier for a lawyer in this regard. He has the opportunity to start a legal business from scratch and without investment. As I did with my partners, I built up a client base while working for hire, and only then opened an official account and registered the company. But I started by providing services only for individuals and individual entrepreneurs. And only after the official opening it began to focus on legal entities.
What expenses are required to start? I’ll reveal the figures for my office, although this is far from an indicator.
The initial costs were as follows (prices in Moscow):
There was already a registered LLC, so there were no expenses for this item. And so registering an LLC will cost an average of 20-30 thousand rubles, of which 10,000 - 15,000 rubles cost legal address. If you register yourself, you can save about 10,000 rubles.
Furniture and office equipment – 50-60 thousand rubles.
Rent and repairs – 60 thousand rubles.
Other expenses (telephone, Internet, software) – 30-40 thousand rubles.
In our case, there was no need to hire lawyers, since we were specialists ourselves. And so you should expect that the minimum salary for a lawyer in Moscow is 30-40 thousand rubles (the level of qualifications is a separate issue).
We also need a secretary, but for the first couple of months we didn’t bother. And then they hired a person who worked from home: took calls and made appointments. When we were in the office, we sometimes switched the phone to ourselves and took calls ourselves. Technically, this is easy to organize. You can, of course, rent a professional call center, but this is necessary when there is really a flurry of calls, and a self-organized virtual secretary is not inferior in quality if everything is done correctly. The asking price is 7,000 rubles per month. Call center services – 11,000 rubles one-time and 9,000 rubles monthly, i.e. it’s still two to three times cheaper than hiring a secretary for an office and organizing a workplace.
There’s no point in talking about an accountant - definitely outsourcing (incoming accountant). We have a simplified taxation system and, accordingly, simple accounting. Services cost 2500-5000 rubles per quarter, depending on the amount of work.
In total, about 200 thousand rubles were spent at the start in the first month. We reached the break-even point in the second month, but this is thanks to the existing customer base and current orders.
It should be borne in mind that we did not use classic scheme organization of the company, which allows us to significantly reduce costs, which will be discussed below. Therefore, when calculating a regular business plan, these figures must be multiplied three times, and when the enterprise reaches payback depends on the skill of the manager.
The scheme of work we implemented is as follows. Initially, orders were fulfilled entirely by ourselves. Over time, we expanded the list of services through our affiliate network. This is a criminal lawyer, realtor, auditor, registrar and others. The most difficult thing is to find a conscientious specialist who provides quality customer service, otherwise your reputation may suffer. And you can always agree on a partnership, since this is a mutually beneficial cooperation.
Of course this is one possible options implementation of order execution. I am only describing my personal experience and my path to organizing an office.
This type of organization provides the following advantages:
Minimum costs (rent, salary, etc.);
High quality of services, control over which is not required, since each partner cares about his reputation;
Income is proportional to expenses, resistance to seasonal lull;
Mobility and flexibility in choosing a room.
The main advantage of this approach is that the best price/quality ratio for the service is established.
The classic version of a law firm involves renting a substantial premises and a staff of lawyers and assistants. I see serious disadvantages in this option:
Significant rental costs (especially relevant in Moscow);
More stringent conditions in choosing premises;
Constantly high wage costs, regardless of seasonality;
Other costs also increase significantly (organization and maintenance of workplaces, more complex accounting,
Finding staff is more difficult than choosing a partner, since a hired employee is a dark horse, and private specialist or the company has an established reputation. In addition, it is more difficult to change an employee than a partner;
Less job stability due to staff turnover;
The quality of services is worse; in-house lawyers do not care about their reputation;
Spending time and effort on monitoring execution and working with staff.
We will still come to this option over time. But in order to maintain the level of quality at such costs, it will be necessary to significantly increase prices, which means entering into tougher competition. Or a huge number of orders are needed, which will allow maintaining the price/quality level by reducing margins.
Legal services will be in demand as long as the state exists. And no crisis will prevent this.
Employment gives a lawyer a guaranteed income, but sometimes sets a kind of bar: it does not allow personal income to grow and professional level. The solution for an experienced lawyer may be to create his own business - opening a legal consultation.
The very first step
A future entrepreneur needs to start with a sober assessment of his capabilities:
— is there enough knowledge and experience to set off on a “free swim”;
- whether there is a business qualities:
— entrepreneurial spirit in solving emerging problems;
— persistence in achieving goals;
- communication skills;
— necessary business connections;
— cash;
— technical resource (office, computer, Internet and telephone).
However, the latter is a matter of profit. If the decision to open a legal consultation has been made, the next step will be to register the future company as a legal entity or individual.
At first glance, a legal entity in the form of an LLC seems more prestigious. But a sole proprietor can also hire employees. In addition, several lawyers specializing in different areas of law can become individual entrepreneurs each and equal partners. This will significantly simplify reporting on the activities of the legal consultation and expand the list of services offered.
By the way, the use of the phrase “legal advice” in accordance with the law “On advocacy and advocacy in Russian Federation" in the name of an organization is allowed only if it (the organization) was created by lawyers. Don't forget about this when registering your company.
Experienced entrepreneurs advise using the simplified tax system (simplified taxation system) for reporting and paying taxes:
— 15% of profit, in this case all costs of doing business are taken into account;
— 6% of income. Expenses are not taken into account. But for legal advice they are not great, so this simplified tax system looks preferable.
A cash register or strict reporting forms will be required to record income.
To fill out an application for registration with the State Tax Inspectorate, the classifier offers code 74.11 “Activities in the field of law.” Can add
— 74.14 Consulting on commercial activities and management;
— 74.18 Provision of other services.
In criminal proceedings, only lawyers can represent the interests of clients. The new law firm can only provide advice in this area.
But civil law, family law, business law and corporate law represent a wide field of activity for a lawyer. A friendly team of several narrow specialists will be able to attract different clients to the company, and therefore increase income.
Is it possible and necessary to know everything?
Specialization is vital. If changes in criminal law appear extremely rarely, then civil law is constantly changing right before our eyes. Explanations Supreme Court, orders of the Ministry of Economic Development, new federal laws capable of radically changing the situation in a very short time.
Legal consultation usually begins with one or two specialists who will monitor changes in their field. It is impossible for several lawyers to cover all the rights. Therefore, it is wise to decide on the specialization of the consultation, not forgetting the need to receive a stable profit.
If you are not going to do only charity, then a bad niche would be solving problems with
- pensions;
- benefits;
- loans.
When a client has money problems, he will not be able to pay for your work at the proper level.
The next step is to determine the price of legal services. How much will it cost
— consultation;
- compilation statement of claim to court;
— representation in litigation;
— execution of contracts;
- presence at negotiations.
There will always be people who want to get free advice, and sometimes a solution to their problems. A clearly defined price list for services will help, at least psychologically, solve the problem of communicating with “freeloaders.”
How to find clients?
The organizer and future owner of the legal consultation needs to resolve the issue of advertising. How will clients find out about the new company? They will help
— advertising in print media and the Internet;
- sign on the facade office building and a billboard at the entrance;
- business cards and flyers.
How many hired workers are needed and what kind?
The presence of a manager in the office who will respond to phone calls clients and make appointments, will allow consultation lawyers to leave the premises during working hours if necessary.
Such an office manager could be a part-time student, a future lawyer, or a specialist who prefers “sedentary” work.
An experienced legal administrator will be able to
— offer the client a strategy for solving his problem;
— sign a contract for the provision of services;
— draw up a client’s power of attorney with a notary in the name of the absent specialist.
An accountant is needed on staff at a large legal consultancy. Finance and tax professionals have long appreciated the beauty of remote work. A small company can easily find an accountant who will keep records and issue payment orders to the bank, visiting the office if necessary.
If there is someone to clean Staff only, then these are, perhaps, all the necessary workers for the normal functioning of a legal consultation.
Demand for services, small cash investments at the start, lack of licensing to conduct legal advice and representation in court make this business very attractive.
You have firmly decided that you will create your own legal business, you have prepared theoretically and morally for possible difficulties on initial stages, prepared start-up capital... But if you are opening your own business for the first time, then you are still not immune from making common mistakes that most novice entrepreneurs go through.
Don't get into trouble with personal experience. Use our tips on how to start a legal business from scratch and what mistakes to avoid.
At the heart of all these mistakes is one problem - a lawyer who is just starting his business is ready to attract “at least some” clients at any cost and take on every case.
So, what not to do in the first stages, if you don’t want to kill your nascent business:
Rent an office immediately
Office space is, of course, respectable and business-like. But these are significant additional expenses. At the first stage, when you do not yet have an established customer base, such expenses are simply not advisable. You don’t want to work to pay the office rent or even at a disadvantage? Moreover, the lack of an office can even be turned into competitive advantage, offering clients a specialist visit to a place convenient for them.
Invest in marketing without developing a strategy
It’s good if, before registering an individual entrepreneur or organization, you carefully thought through your business development strategy for at least a year in advance. Then you only need to stick to the plan, directing all resources to its implementation. But if you are still in search of a suitable organizational form, business model, specialization - in a word, you have not yet planned what and how you will do and what goal you will achieve through year - do not invest in marketing. There is a 90% chance that this will be a waste of money. In the first stages, you need to rationally use free and low-cost methods of attracting customers.
Engage in a large number of services and work with everyone
Would you trust your health to a cardiologist who works part-time as a dentist three days a week and replaces the surgeon during operations on weekends? Would you send your child to a tutor who teaches geography, algebra, chemistry, French and singing?
No? What is doubtful about these examples? The fact that you cannot be an expert in everything at the same time! And a lawyer is, in fact, the same generalized concept as “doctor” or “teacher”. The client needs an expert in the area of concern for him, and not a “general specialist”. In addition, scattering across all categories of clients and areas of law will in any case negatively affect the quality of your services.
It's important to understand that at the heart of all these errors there is one problem - a lawyer who is just starting his business is ready to attract “at least some” clients at any cost and take on every task. In fact, from the first days you should strive not to ensure that clients choose you, but to ensure that you can freely choose only good clients for yourself.
How to start legal business from scratch : step by step plan
Below we offer you step by step plan on building a legal business.