Ready, Set, Go: 5 Tips To Start A Law Firm

You've put in the hard yards, and now you've made the courageous decision to start your own law firm. Congratulations. It's no easy feat.

Whether the reason is flexibility or the desire to focus on a particular type of law, it is bound to feel overwhelming––read on for our five tips guaranteed to help.

Starting a law firm needs to be approached with a business mindset like any other business, and the key to long-term success is having a plan in place. Remember having your own business means that you are no longer just a lawyer but a business owner too, and this comes with its prerequisites. 

Tip 1: Structure Your Entity 

Once you have a plan in place, structuring your business is your first port of call. Consult a business lawyer and an accountant on what type of entity is best suited to your approach. They will also be able to inform you of the business regulations, laws and tax obligations to which you are accountable within the scope of your chosen legal entity.

The most common ways to structure a legal practice in Australia include:

• a sole practitioner,
• a partnership, and
• an incorporated legal practice (a company structure).

Sole Practitioner

As a sole practitioner, you are single-handedly responsible for running your law firm and putting its operations into place. While employing other legal practitioners and administrative personnel, you remain entirely accountable for the firm.

Partnership

You'll need one or two partners to establish a legal partnership––this may be either individuals or, more commonly, a partnership of discretionary trusts. 

When structuring as a partnership, your firm must consist of two or more legal practitioners. Both parties own and run the practice. A partnership agreement is put in place to reflect each partner's responsibilities, capital contributions, and the distribution of the law firm's profits and losses to protect the interest of both parties. 

Incorporated Legal Practice (IPL)

If you opt for this option, your law firm will be set up as a company and become an incorporated legal practice. By law, the company is registered with the Australian Securities and Investments Commission (ASIC), making it subject to the legal provisions of the Corporations Act in Australia. 

An IPL is becoming an increasingly popular form of structuring a start-up law firm in Australia and would be beneficial to discuss with your accountant.

Tip 2: Be Good to the Taxman

Once you have structured your entity, it's on to tax obligations. Getting this right will help keep your new business running smoothly. Your accountant will advise you of the mandatory requirements you need to meet before starting your practice. These include:

• Goods and Services Tax (GST)

• Australian Business Number (ABN)

• Tax File Number (TFN)

The following are optional and only apply where necessary:

• Fringe Benefits Tax (FBT)

• Collection of Payroll Tax (CPT)

Tip 3: Meet Regulatory Requirements 

When starting a law firm in Australia, you must meet the necessary regulatory requirements.

• You will need to meet with your state's Legal Services Board and Commissioner (LSBC) for the registration and approval of your law firm. Also, make sure to set a framework for annual LSBC statutory payments.

• Upon setting up your law firm, you will need to obtain a practicing certificate issued by the designated regulatory authority in your jurisdiction. 

• Obtain Professional Indemnity Insurance––it's essential.

• If not already done, consult your accountant on Trust Account Management training–it is a mandatory requirement if you plan to operate a trust account.

• Inform your regional legal authority board and hire an external auditor if you plan to operate a trust account.

Tip 4: Clients Keep the Lights On

When starting a law firm, you are more than a lawyer, you're now a business owner, too. You'll need to consider your approach to marketing and how you can best attract clients—whether digital advertising through Google or creating relevant social media content, building your brand leads to generating clients. 

Tip 5: Be at the Forefront with Legal Technology 

Today's law firms require management systems for communication, document organisation, automation of precedents, and tracking time, amongst others.

mattero offers software designed to streamline your business, an essential time-saver when launching a new business.

So there you have it! Five tips to get your law firm started in Australia. Once you have negotiated those, it's on to the fun part––running your practice. Good luck!