4 Coping financially

This is Post 4 of my blog for lawyers who are considering becoming self-employed, which deals with considering how you will manage financially.

The financial side of becoming self-employed is,naturally, one of the main concerns and is a significant factor to consider whether you're a lawyer or doing any other kind of business instead of taking salaried employment. This is particularly so for example if you have a young family, a mortgage etc..

Cashflow when starting off is the obvious concern. There are some areas of law where the work is paid for relatively quickly, for example if you are a litigator being paid on a fee paying basis, but even this will take a while. There are other areas of law, for example where fees are earned on a "no win no fee" basis where a lawyer may not get paid for several months, even years.

To get an idea of how long it will take to start getting money into your bank account, take a few files and see how long it takes from the time you get instructions from a client to when you first submit the invoice to when you get paid - factor this into your business plan.

Disbursements also have to be factored into the equation. Who is going to pay? If it is a personal injury case conducted on a "no win no fee" basis, some firms may lend the money for the disbursement, but interest may be charged and if the case is lost, the disbursement will have to be paid for.

As and when the money does start to come in, remember that tax will have to be paid and money will have to be set aside to pay for this. VAT will be payable quarterly and a good quarter when the VAT generated will be high, may be followed by a poorer quarter but the VAT for the good quarter will still have to be paid.

Other expenses may include a website, business cards, stationery, insurance, dictation, networking meetings.

You can take all of the above when generating your business plan which will help you to assess your cashflow position and when you can expect (or hope) to be in profit.

Coming up next ... Indemnity Insurance

3 How Will You Find Work

This is Post 3 of my blog for lawyers who are considering becoming self-employed, which deals with some of the potential ways of getting business.

If you are working through a high street firm (or firms), it may be that work will come to you as that firm will hopefully have a recognised presence and be known locally.

If you are working through a virtual firm, as they will often not have a presence on the high street where you intend to practice it will often be down to you to find your own work, for example through networking, a website or other channels.

Networking Meetings

There is a multitude of networking organisations out there to make contacts with a view to finding work. For the uninitiated, these can seem daunting at first, but after a while you will get used to standing up in front of complete strangers, honing your sales pitch and trying to convince them why you should be their first port of call if they or someone they know wants a will drafted, employment law advice or terms of business.

Although there are one-off events that can be useful to go to, I consider it is mostly best to focus on one or two networking groups and to concentrate on building long-term relationships with members of those groups. If this is all new to you, try out a few and then settle on the ones that you like as you'll be more likely to go, and which you consider will provide a good source of connections for you.

A useful by product of networking groups is that they can provide moral support and advice as well as being a useful source of professions and trades for your business and personal use, e.g. a marketing consultant, web designer, virtual assistant, to answer your calls or do your typing, stationery provider or a plumber.

Website, LinkedIn, Facebook, Google+,Twitter ….

If you don’t consider any/all of the above then you are missing out on potentially valuable sources of business. The way that people look for and buy professional services is changing and the above give you the opportunity to say more about yourself, what you do and how you do it.

As with all marketing, you need to give it some thought. If your website looks like it was thrown together as an afterthought with an iffy photograph, chances are that you will get little or no business through it.

I have noticed that a number of clients have checked out my LinkedIn profile before calling me, which again shows how powerful it can be. They may have instructed me anyway even if I wasn’t on LinkedIn but who knows ? 

Put some thought into the LinkedIn profile and don’t use the photo of you with a bottle of wine to your lips taken when you were on holiday in the Med – really, I have seen this !

Don't Use Just One Source

If I was to draw a wagon wheel of where I get business from, although some sources are more useful than others, there is no one source that gives me enough business, so I think it's important to try various methods. Also, what happens if you have a good source and it dries up.

Coming up next ...

In my next post I'll talk about coping financially - now, where's that glass of (virtual) Rioja ...

2 Where will you work?

This is a continuation of my blog for those lawyers who may be thinking about becoming self-employed. Click here for my previous post.

Premises Options

This may seem like an obvious one, but it needs a lot of consideration, e.g not just the suitability of the premises for working, but also cost.

If you are working through a high street firm with an office, you may be provided with an office at their premises, but you may be required to find your own workplace.

With a virtual firm, it is likely that you will have to sort out your own workplace. The type of premises will come down to your own needs. Most, when starting off, will think about working from home. This can seem attractive as it requires no travel (and therefore longer in bed), minimal cost, playing with the dog, watching TV .... and that's another problem - do you have the discipline to work from home?

Also, do you have the space to set aside a working area and enough peace and quiet to be able to speak confidentially and without disruption to a client?

If home is not an option, before committing to leased premises you could consider serviced offices which often offer short-term rentals with termination on one month's notice.

Serviced offices may be more expensive than taking an office on a longer lease in the medium to long term, but as you don’t necessarily know when starting off how much you are going to earn, if things don’t turn out as you hoped you can usually terminate the agreement at relatively short notice.

Leased premises are an option you may consider once you've established a regular income, but they are a serious commitment.

Meeting clients

You will need to consider where you will meet clients. I mostly work from home and when it is necessary to meet a client in person, I either rent a serviced office for around £15 to £20 per hour plus VAT. Alternatively, clients are surprised and pleased when they realise I will actually go and see them at their premises.

Security

If you are working from home, you will have to consider security of client files and data, e.g. locked filing cabinet, alarm, data encryption.

1 Self- Employed Lawyers - Part Of The Future For Legal Services

This blog seeks to set out some of the main issues that you need to consider if you are looking to get self-employed. It's not exhaustive (and it's long enough) but hopefully it will help if you are thinking about going down this path and as a lawyer you'll look into all the legal stuff anyway !

With the changes in the way that legal services are being provided, law firms are understandably wary about recruiting lawyers on a permanent basis.

One of the options if you are out of work or simply looking to change your way of working is to become a self-employed lawyer.

I have been self-employed for almost 2 years now (since May 2011), working mostly through "virtual firm" Scott-Moncrieff and Associates but also other firms. My experience is that overall it has been a very interesting and challenging process and I have learned a great deal about finding work and, in effect, starting my own business.

Constructive comments are gratefully received and I may alter this blog accordingly.

Some Things to Think About

1. Who will you work through? 
2. Where will you work? 
3. How will you find work?
4. How will you manage financially?
5. Are you covered for indemnity insurance?
6. What will be the fee-paying arrangement?
7. Are you employed or self-employed?
8. Insurance - home and public liability
9. Administration, Equipment and stationery
10. Will it work for you?

1) Who will you work through - high street or virtual firm?    

If you are not setting up your own firm, you will need to find a firm that you can work through.

High Street Firms

First of all, it's a question of finding firms that will be prepared to allow you to work on this basis, probably as a self-employed consultant. You may be out of work and have a following (subject to restrictive covenants) which may make you attractive to a firm but the work may not be sufficient to persuade a firm to take you on a permanent basis. A possible approach is to suggest working for them on a self-employed, consultancy basis leaving you free to work for other firms.

Virtual firms

An alternative is "virtual" firms which are a useful means of being self-employed and is the option that I have chosen. The benefit of working through a "virtual" firm is that there is a brand that is already established, and the firm will usually provide indemnity insurance, a case management system, deal with the regulatory requirements and post, as well as archiving once a matter is completed.

There may be a minimum billing target to ensure overheads are covered, and fees that are earned usually split between the firm and the lawyer on a percentage fee-split basis, which will either be a fixed rate or vary according to the amount billed in any one year and whether you or the firm found the client.

You may find that you end up working for both high street and virtual firms.

My next blog post will deal with the issue of where you will work.

Lawyer's Disclaimer

This blog is not meant to be formal advice, it is just a guide to lawyers who are thinking about becoming self-employed. As the blog develops, the issues that you need to consider will be expanded.