How to Open Your Law Company in the UK

Law practices in the UK are on the rise. Qualified lawyers are establishing law companies because they prefer to be self-employed instead of working for others. They want to benefit from their hard work and possibly employ other like-minded lawyers.

This may sound desirable, but opening a law company is not easy. If you are planning to start a law company, you should ensure that you follow all the required guidelines and practices that can enable you to succeed. This is how you go about it.

Develop a Business Plan

Before you open a law company, you should develop a business plan detailing how you intend to obtain business from clients. The business plan should also include:

• The kind of legal services you want to offer.
• Sources of funds.
• Location.
• Management team.
• SRA compliance detailsOpens in a new tab..

For a meaningful, rewarding, and specific business plan, you should define your success. Ask yourself why you want to start the law business. Owning a law business is not all about having a job, but it can give you fulfillment and freedom. 

Ask yourself what can make you happy, and what kind of life you desire, the kind of a house you want to live in, and so on. Without clear goals, investing in a law firm may be misguided. Consider the amount of revenue you will need to sustain the business and how many cases you will need to handle to meet your revenue goals.

After setting the revenue goals, you can develop a business plan. The business plan should constitute an executive summary, mission statement, core values, goals, and selling proposition. It should also describe the law firm in terms of the type of law you want to practice, legal structure, values, history, and location. 

Include the market analysis and details of the management team that will oversee the business operations. Outline the kind of legal services you want to provide and your target customers. Since marketing is an important part of your law business, describe the marketing strategy.

The market analysis should include your target audience profile, industry description, and the demographics and needs that match your client base. You should also define your current and projected business size and the trends in your niche. Describe the success factors of your competitors and the opportunities available for your firm. 

According to writing experts who help law students when they order a law assignment at uk.edubirdieOpens in a new tab., your business plan should have a description of your management team. You may be the best person to lead the form, but you have to make it known to others. Highlight your educational background and experience. You could also add an organizational structure showing the reporting relationships among your employees in a hierarchical form.

A business plan can help you to make better decisions and avoid making financial and technical mistakes. It also helps to prove that the business is viable and therefore, it can guide lenders in making lending decisions. 

Choose the Name, Practice Area and Organizational Structure

As per legal writers on WritixOpens in a new tab., you can base the name of your company on your expertise or just use your own name. If you decide on a creative title based on your area of expertise, choose a name that won’t mislead your potential clients. For instance, if you add, “and Associates” to your company’s name, you might violate the Rules of Professional Conduct if you don’t have any associates. In the same way, using the word “Group” violates these rules if your company is a sole proprietorship.

The business name helps to build relationships with your customers, employees, and suppliers. Choose a memorable name and avoid initials and long names. You can make a name more memorable by incorporating it into graphics, logos, and designs. 

After completing the requirements, the next thing to do is to identify which areas of law you will practice. By choosing where you fit best, you need to focus on both your weaknesses and strengths as a lawyer. These days, “generic lawyers” are a thing of the past since most lawyers now opt for a clearly defined area of practice like family law or bankruptcy. Specializing in a specific area will build your network and credibility faster.

You must also decide on your company’s organizational structure. This will primarily depend on how you plan to run and manage your company. For instance, as a “solopreneur”, you would logically choose sole practitioners and single LLC entities. But if your company will have several members, you may choose a professional corporation, LLC, LLP, or partnership.

LLPs and limited companies limit your liability, which is a good thing because without limited liability if things go wrong, your personal assets may be at risk. At the same time, the two also have some limitations. In the case of a limited company, if the firm is declared insolvent, directors could be accused of wrongful trading. 

The structure you chose may have some implications from taxes you pay to how you operate. Consider what matters to you and pick an option that best suits you. Tax matters are not the only important factors to influence the choice of structure. Others include administrative requirements, risk exposure, flexibility due to owner succession, and so on.

Get Professional Indemnity Insurance

All solicitors in private practice are required to have a PII cover from a recognized insurer. The SRA must confirm the details of your cover before you start practicing. The insurance premiums differ between the insurance companies. The cover is valuable because the Solicitors Regulation Authority (SRA) stipulates all the policy wordings. 

Many law firms in the UK buy their insurance cover through brokers. You should choose a broker with diverse market knowledge. This can help to lower premiums, and you can receive support and valuable advice throughout the insurance period. 

In case you are held liable for the financial loss of a client, the PII can protect you. As such, you can focus on running the law firm knowing that the exposures that may arise as a result of your professional advice are being managed well. 

Your clients expect you to be fully covered. SRA requires law firms to evaluate themselves and buy a level of cover that is commensurate with their risk exposure. Because you are starting, consider the contract values and your client’s size to gauge your risk exposure. Your exposure may be less compared to that of a large established firm. You should be careful when agreeing to limits of indemnity in client retainers. Some clients choose to appoint law firms with specific limits. 

To get a quotation for PII, you must submit a proposal form, duly completed, cash flow forecasts, a copy of your business plan, and the CVs of directors or partners. The information can enable the underwriter to understand the business better in terms of dealings, revenues, and risk management processes.

The premiums will be calculated based on the category of work, the projected revenue, and the number of directors or partners. Present your documents well to create the right impression. The underwriter will assess the quality and professionalism of your firm and if you present the information poorly, an underwriter can decline to give you a quote. 

The key to securing a PII is to start the process as early as you can so that you have ample time to prepare your renewal information. When completing the proposal form, be concise and clear and provide all the necessary information. 

Get SRA Approval

If you want to start a firm as a solicitor, you should obtain authorization from SRA. Apart from your entity is authorized to operate, you should also get the Compliance Officer for Finance and Administration (COFA) and the authorization of a Compliance Officer for legal practiceOpens in a new tab. (COLP). 

All new law firms are required to complete the FA1 form for the business. One FA2 form is also needed to approve individuals for managing the business or for being the COFA or COLP. If you are going to have another company as a shareholder or corporate director, you will be required to fill in the FA3 form. 

SRA needs to see the constitutional documents, including the memorandum and articles of association and the structure chart. Once you put all your documentation together, take time to go through the declarations carefully. SRA is very strict about giving false information or omitting important details. If a major thing changes after you have submitted the documents, inform SRA during the process. 

SRA acknowledges the application for a new firm within one working day. It takes approximately 12 to 16 weeks to complete the approvals. The approval time can be longer and therefore, you need to factor this in your business plan. 

You are eligible to apply for law firm authorization if you are a licensed body and have at least one manager who is authorized. You can also apply as legal services body if all the managers are legally qualified.

Your business must have the intention to deliver legal services and be a legal services body, a licensable body, or a sole practice of a solicitor. If you are a licensable body, you must have a practicing address in England and Wales. If you are a legal services body, your practicing address must be based in the United Kingdom.

The authorized body must be incorporated and registered in Scotland or Northern Ireland, and Wales and England under the Companies Act 2006, part I and 2. All authorized bodies are required to pay a periodical fee to SRA by the date prescribed. For your application, you must quote the PII and confirm the details of your firm structure.

Compliance with Accounting Rules

You will be held liable if you breach any of the accounts rules, whether you are aware of them or not. It is important to consider how you will comply with the accounts rules for solicitors, especially where you will operate clients’ accounts. 

You can choose to outsource or invest in an accounts package. Also, decide who will be operating your accounting system. If you choose to invest in an accounts package, you may be left with less time to do the core business. If you outsource, you may have to incur an additional cost but enjoy the benefits of trusting another company. 

Whatever decision you make, ensure that you understand the Solicitors’ Accounts Rules. If you don’t understand them, take a training course. All law firms must have controls and systems to ensure compliance with the accounting rules. 

All companies are required to keep accounting records containing entries of all the money spent and received on a routine basis. Assets and liabilities must also be recorded. The records must be preserved by the company. 

Maintaining accounting records can help to prevent theft and fraud that may lead to financial losses. You can also be able to track debts, creditors, and expenses. If you need to apply for additional funding as the business grows, you can present your accounting records for evaluation. 

When starting a law company, set up a proper system of record-keeping and identify proper storage methods of keeping those records. The most important thing is to present the information in a readable format and show all of it. 

Running a law company is demanding and it, therefore, requires setting up electronic systems to manage your records. Various accounting packages can be integrated with management apps to manage cases, appointments, and clients, thus allowing you to save time when reconciling accounts. They can also be used to create customized online invoices.

Install specialized software to manage business expenses and stay up-to-date with the cash flows from anywhere. The legal practice management software is particularly useful for enhancing the efficiency of carrying out repetitive tasks and supporting quick decision-making. 

Consider Tax Issues

When you start a law company, you may need the services of an accountant to assist you with finance and tax issues. If you need to employ staff, you have to put in place a Pay as you earnOpens in a new tab. (PAYE) scheme. Consider registering for the value-added tax (VAT) and establish how you will be making the returns. The PAYE should be operated in connection to non-UK employees who work for UK employers.

The taxes you will pay depend on the legal status of your business, annual turnover, and taxable profits. Put this in mind as you prepare to start running the business. Consider the self-assessment, which is a system used by HMRC uses to collect taxes. The self-assessment returns should be submitted by 31st January every year. 

For tax purposes, All businesses in the UK are required to register with HMRC and must submit their returns on due dates. VAT registration is a requirement for companies whose annual turnover exceeds £83,000. Thus, you need to be prepared for this by registering for VAT early enough.

Tax compliance is important because it serves to protect the safety, health, and welfare of others. The significance of compliance becomes more evident as the company grows. You will have expanded in terms of the number of employees covering hiring, wages, retention, benefits, and more.

Directors are responsible for submitting accounts and the returns annually to the company’s registrar, failure to which they may be penalized. When you register the new company, your details will be passed to HMRC. You will be required to contact your local offices within 90 days, after which you will register the company for corporation tax online. The corporation tax rate is 20% on profits minus the relief and allowances. If your company is a resident in the UK, you will be required to pay taxes on all worldwide profits. Prepare to assess the corporation tax liability upon registration.  

Tax compliance reduces the risks of penalties, fines, work stoppages, and business closure. When you meet your obligations, you can achieve better relations because you can tout them in your marketing materials and on the website. 

Take Your Law Firm Online

With the internet getting clients to local businesses, one of the best ways to build a known brand for your firm and its services is by creating a website and using social media platforms with customized content to engage your prospects. This might seem like a daunting task, especially the part of getting your website’s content written, but you can avail the services of a professional for this.

Use your logo in the attorney web design to build recognition. This recognition can allow your potential customers to identify your posts both online and offline. You should also use the law firm’s name in your website’s URL instead of using exact-match domains. 

One of the greatest ways of making your website stand out is by using brand colors. Use them as buttons, backgrounds, links, or call to action. WordPress themes have various customization options that can let you change colors as you desire on your website. 

You may also want to identify what makes your law firm unique from other firms that offer similar services as you. Your unique selling point can help potential customers to connect with you and decide whether they want to hire you or not. 

Becoming a legal entrepreneur means that you will get involved with plenty of non-legal tasks needed to effectively run the firm. You can outsource some of these tasks to make things easier for you. When the regulatory and administrative tasks are out of the way, this gives you more time to focus on income-earning matters to help drive your business forward.

Your work would often require business development and marketing efforts. Fortunately, with the help of your website, the online market will help deliver new clients and leads. With a great website and good Pay-Per-Click (PPC) and Search Engine Optimization (SEO) campaigns, you can have a competitive advantage over your competitors.

Your website needs to be SEO optimized to allow you to generate organic traffic. If you are using WordPress, you will notice that it has in-built SEO features. Various lawyer and attorney WordPress themesOpens in a new tab. are SEO optimized and a few SEO plugins that can let you customize your site further. 

Maintaining Your Business

Defining clear management responsibilities at the onset is your way of accepting how much time it will take you to run your business. Any company that doesn’t consider this usually finds itself struggling. You should understand that it will take a lot of time and effort to complete the groundwork before business picks up. Also, you should learn about the ongoing requirements in setting up your company. This may include a lot of red tape and business expenses.

There is also the aspect of being updated in terms of technological developments. These have implications for your business, as there will always be something new to do. For example, there are plenty of lawyer-specific appsOpens in a new tab. to make your work easy and increase overall productivity.

If you are a partner in the company, you should exclusively focus on your area of specialization. You should focus on the things that interest you and the things you can handle with expertise. In areas where you know other people can do better than you, consider recruiting channel partners, law advisers, and other legal and admin staff to take charge of them. A good suggestion is to employ the services of a top-rate PA as your first employee and then develop your workforce from there.

Don’t focus on employing exclusive or expensive lawyers, even though this seems to be the trend these days. Doing this will cost you a lot. Instead, surround yourself with hardworking support staff to save your company precious resources. Remember that while you can outsource compliance, you cannot outsource the responsibility of compliance.

When you employ lawyers who come from larger firms, remember that their clients may have issues that require specializations that your new company might not have yet. In such a case, you need to establish informal or formal networks with other companies so that you can serve – and keep – these clients.

Hiring employment law professionals can be a great idea for your business. The professionals can make and proofread contracts that you send to clients. Since these documents are legally binding, the professionals ensure that all the important areas are covered to protect the welfare of both the client and the law firm. They can discern whether documents are prepared in good faith or whether there are questionable terms that need to be addressed.

Before hiring employees, it is important to ensure that the government acknowledges you as an employer. An employment law professional can help to simplify the process. They understand all the requirements for hiring and can help you to file tax forms and acquire licenses and permits. 

Contingency Planning

Many people who want to start a business often find it strange to think about what would happen if the business fails. This is something that you need to consider due to the financial and regulatory requirements of closing a legal practice, such as the run-off cover payments.

Run-off cover provides insurance for six years for a price of a single premium of about three times the total cost of the last annual premium. In setting up, you need to commit to at least four years of business insurance cover. 

The SRA needs to know the contingency plans you have in case of an orderly business closure that will comply with legal obligations. This will include considering what will happen to the clients’ files and the archived ones. You should also consider what would happen to your business if you are absent due to a holiday or an illness. 

Setting up a contingency plan starts by identifying the potential risks that can affect your business and focusing on those that are highly probable. Think of things like cyber-attacks, the internet going down, or failure by employees to show up to work. There is no value in focusing on the events that are unlikely to happen or those that you have control over. 

Compile an operational guide for the business, highlighting everything you need to put in place to ensure continuity. Outline the responsibilities of the senior staff members, specifying their scope of work. Put a crisis plan in place for emergencies such as the employee roles. Consider how you can scale down operations in case of calamities or economic recession. 

Have a contingency plan to deal with any unforeseen business events. In case of a prosecution, a good contingency plan acts as a mitigating factor. It can help to minimize potential losses and protect your stakeholders’ interests. If you don’t have a plan, you may be fined heavily based on the number of prosecutions. 


Opening a law firm in the UK starts by identifying the need and developing a detailed business plan. You need to ensure that your firm operates within the legal framework by choosing and registering a business name. Take an insurance cover for your business and get the necessary SRA approvals as you set the accounting and tax procedures in place. By doing so, you may be able to ensure the smooth running of your entity and succeed in the long run. 

Author’s Bio:

James Collins is the head of marketing for a new publishing firm dealing in academic books and journals. He started his career as a freelance writer and still takes up thesis and dissertation writing requests from research students. When he’s not at work, he likes boating, reading novels, and watching nature documentaries.

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