Going Solo. The SPG s Karen Purdy gives the what, how and why of setting up as a sole practitioner

Transcription

1 Going Solo The SPG s Karen Purdy gives the what, how and why of setting up as a sole practitioner

2 Setting up as a Sole Practitioner: Deciding to set up on your own is really exciting and full of possibilities, but it can be daunting. Doing your research can help avoid it being a scary process. I really enjoy being a sole practitioner (an SP ) and have gradually built up my niche firm to be a small team of experts. For me it works being a specialist firm, dealing in Wills, Probate and Contentious Probate. I get referrals by word of mouth, mainly from existing clients and financial advisors, rather than me spending huge amounts of cash on advertising the huge initial outlay costs are not always required, though there are some expenses such as PI insurance that you will need. The Sole Practitioner s Group (SPG) has a website that should be very helpful for SPs and those considering setting up as an SP - It has KnowHow sections, a forum and contact details for the Executive Committee members of SPG. You can contact me or anyone from the Executive Committee if you have any questions. This guide shares my thoughts on what you need to consider and where to turn to for advice. For more thrival tips for independent lawyers, visit: 2

3 How do I set-up? Where do I set up? For technical help on the forms to complete for the SRA, you should visit Compliance will be a big thing to consider (from setting up your client care letters to choosing your firm s COLP and COFA) and there is plenty of help out there. Your PI insurer may have some compliance tools and advice that you can access. LexisNexis has a very good blog, currently focusing on compliance, but also looking at other management topics You will need 36 months of PQE (usually!), PI insurance and a viable business plan; hopefully this guide will help you get these and consider the key aspects for your new firm. Your office could be at home or on the high street, but additional things that would be useful for you to investigate are: 1. Checking house deeds for restrictive covenants if you want to work from home, 2. Finding out how much your business rates would be, as these apply even if you work from home, 3. Finding out the cost of insurance (separate to PI insurance) that covers clients or employees visiting you (mine is about 150). Once you are set up, you should begin to receive SPG s quarterly magazine, SOLO. You can download it from our website For more thrival tips for independent lawyers, visit: 3

4 A few key things to consider: 1 Sole Trader ( Own Account ), LLP or Company? After trading for a few years, I converted from sole trader to Limited Company, it made negligible difference to my PI cover costs (despite companies having to have the 3m insurance rather than 2m insurance). You will need to use specific Memorandum & Articles for them to be accepted by the SRA (so they state you are a solicitor, rather than someone who can sell fruit and veg or baked beans...). The Memorandum & Articles were on the SRA website in a leaflet called Recognised bodies companies by the Professional Ethics team. Do get advice from a decent accountant. For tax reasons it was better for me to be set up as a sole trader for a few years initially, so I could then sell the goodwill to the company I was setting up. Depending on your situation, it may be different. Looking at the discussions on this on SPG s LinkedIn forum may help you weigh up the pros and cons of each option. 2 Indemnity insurance is expensive. It is valued as a percentage in relation to your estimated fees and in relation to the insurance market s perceived risk involved in your work-type. I have heard different arguments for whether to go for a nil excess or not. SPG s preferred broker is Prime Professions. The team there are very helpful and they understand the needs of SPs. Some insurers have exclusive deals with them, which are aimed at SPs and small firms. They are also very good when it comes to providing information on that all-important risk management. Visit or contact Richard Brown: rbrown@primeprofessions.co.uk, You may also wish to try: QPI (Claire Wills is very knowledgeable and helpful ) QPI also help with your business plan and have some forms that can assist. Aon (they only deal with QBE & XL, with whom they have an exclusive agreement. You could try Kim Swestun solicitors@aon.co.uk, +44 (0) ). Please let Claire, Kim & Richard know that I gave you their details it s best when us sole practitioners work together to negotiate discounts! If you start your practice and then finish it, there is a run-off insurance premium to pay (usually 2 or 3 times your annual premium). This could be a huge expense and has to be paid in one chunk, so is a very important consideration. Insurers often require you to show them your headed notepaper and a business plan including an estimate of your turnover. The BBC website produced some handy information on preparing a business plan at Mine was only one side of A4 and said I was going to be niche firm, specialising in Wills & Probate. It stated what kind of clients I was going to be dealing with and where I d find them. Just a few bullet points under Aims, Clients, Marketing and, Strengths. However, things now need to be a bit more detailed. Have a chat with Claire Wills at QPI (mentioned above), as she s very helpful on these things and has some forms to assist you! Claire says Your Business Plan and Cashflow are critical to obtaining terms from insurers. What needs demonstrating is that you have a viable risk managed business and have the requisite management skills to run the practice. Ill thought out plans and trying to start on your own without thinking through what and how you are going to achieve will not impress. Underwriters know solicitors understand the law but what they really want to see is new start-ups who know how to run a business. 3 Legal Accounting Software - I waited before buying legal software. I didn t have a client account at first, so just used Sage initially, but have moved over to software that helps ensure I am compliant with client account rules (the software my firm uses is called Cognito and is great, with very good support - cognitosoftware.com/ ). SPG s SOLO magazine has adverts from various software providers who are sole practitioner-orientated. You can see back issues of the magazine at uk.com/magazine/soloback/ If you have a specific query, raising it on SPG s LinkedIn forum is a good way to get different views and feedback on products that other SPs are using. For more thrival tips for independent lawyers, visit: 4

5 4 I recommend attending a Code of Conduct seminar, so you get to grip with the rules. You are required to have 12 hours of management CPD in order to be Qualified to supervise ( Usually the SRA require 36 months of post qualification experience as a lawyer. Details about the requirements are in the Solicitors Code Rule 12 of the SRA Practice Framework Rules org.uk/solicitors/handbook/introauthprac/practising/part3/rule12/ content.page There is the possibility of applying for a waiver, if you don t have that experience Rule 21 of the SRA Practice Framework Rules content.page 5 To help with the wording of your Terms & Conditions & Client Care letters, the Law Society produce a useful booklet Your Clients - Your Business. This is available on the Law Society s website & via SPG s site at 6 I have found that many clients like to check my details (after a recommendation or finding me in Yellow Pages) by having a look at my website. I have found it very beneficial to have a website and they do not have to be very complicated or expensive. My own website and SPG s site are set up and run by Silvia and Gavin at Ilia. They offer special discounts to SPs who wish to create a website and can be contacted at silvia@ilialang.com 7 It may be that you do not require a Client Account. If that is the case, you must apply to the SRA for a waiver. The rules on this have changed recently, which has led to some discussion on SPG s LinkedIn forum. 8 Back-up. You may not have given much thought to what happens to your firm if you fell under a bus, or if your computer blew up tomorrow. However, the important thing is protecting your clients and their information. Thinking right from the outset about protecting your clients is vital. You will need: A practising solicitor appointed as a Special Executor in your Will (see the KnowHow section of SPG s website spg.uk.com/knowhow/continuity/ ). A practising solicitor appointed as your attorney to deal specifically with your firm (see the KnowHow section of SPG s website ) Someone being able to access your client account monies (it is currently being considered whether this should be via the facility of a shadow account or perhaps having your special executor and attorney as additional signatories on your client account neither seems particularly satisfactory, so watch this space for more guidance as it becomes available). Ensuring that your IT is backed-up, ideally not on a cloud that passes information outside the UK, but perhaps on a hard drive that you store at home or somewhere secure so that you could access it if your office burnt down tomorrow. Not cheery stuff, but best to plan ahead so that a PC dying on you is a minor hiccup swiftly recovered from, rather than a huge headache. Forums to talk to SPs: SPG have a forum on LinkedIn ( which is very useful for networking and asking questions. There is a brilliant discussion thread about setting up as an SP here - ber&item= &commentid= &report%2esuccess=8 ULbKyXO6NDvmoK7o030UNOYGZKrvdhBhypZ_w8EpQrrQI-BBjkmxwkEOwBjLE28YyDIxcyEO7_TA_giuRN#commentID_ You can also sign up for the TalkBack forum on our website. SPG has an annual conference, usually in May, which is always useful for bringing yourself up-to-date on things that affect management of your firm and is a great opportunity to meet suppliers (IT software, indemnity insurance etc) and most importantly you can socialise and exchange ideas with fellow Sole practitioners! I hope that helps, but please don t hesitate to get in touch if you have any questions or want to discuss things! Good luck! For more thrival tips for independent lawyers, visit: 5

6 About Karen Purdy About LexisNexis Karen Purdy set up Purdys Solicitors in 2003, as a niche private client firm. She is a sole principal and heads a team of specialist solicitors, advising on Trusts, Wills, Probate and Contentious Probate. Karen graduated in Law from Trinity College, Cambridge and then studied at the College of Law in Guildford. Karen has practical and academic experience, having been a co-author of legal texts, presented seminars and is also a Member of the Society of Trust and Estate Practitioners (STEP). Karen is a Committee Member and former Chairman of the Sole Practitioners Group (SPG). About the SPG The Sole Practitioners Group (SPG) is a group representing and supporting sole practitioner solicitors in England and Wales. Now independent, they were previously a Recognised Group of the Law Society. SPG supports members through local groups, their website, organising conferences and publishing SOLO magazine. Over the past 200 years, LexisNexis has combined a deep understanding of the legal profession with technology innovation to help practitioners work more productively, advise with confidence and better manage their organisations. Today, our services help lawyers - of all shapes and sizes - apply legal intelligence to better meet clients needs. With 23 practice areas to choose from - and prices and packages that reflect the number of fee earners in your firm, visit: About the Business of Law Blog Independent lawyers, sole practitioners and smaller law firms are under siege. ABS, the SRA, the Law Society and Legal Ombudsman are ramping up the pressure and all on top of the daily challenges and decisions that smaller businesses face: what level of Professional Indemnity Insurance to take, why spend money on marketing, how to get clients and keep them coming back for more. Who has the time to actually practice law? The Business of Law blog has been set up by experts, for experts. For lawyers to share knowledge with other lawyers about how to not just survive these more competitive times, but to thrive. In time, we hope to build the definitive resource for independent lawyers. An online destination that can help us all do business better. What we like to call: a thrival guide for these troubled times. For further information about this guide or the Business of Law Blog, please contact Lizz Brocklesby: lizz.brocklesby@lexisnexis.co.uk For further information about LexisNexis, please contact Sarah Plaka: sarah.plaka@lexisnexis.co.uk For more thrival tips for independent lawyers, visit: 6

7 A division of Reed Elsevier (UK) Ltd. Registered office 1-3 Strand London WC2N 5JR. Registered in England number VAT Registered No. GB LexisNexis and the Knowledge Burst logo are trademarks of Reed Elsevier Properties Inc. LexisNexis The information in this brochure is current as of June 2013 and is subject to change without notice.