Legal services business in India stands at more than US$1.3billion annually. With more than 600,000 lawyers practicing as individuals or at law firms or owning legal services companies, this figure isn’t something astounding. However, India ranks as the second-largest market for legal services worldwide, trailing behind only the US. And the market is growing at a fairly rapid pace.
What Does This Mean?
Though the legal services industry of India is beset with various issues, projections indicate this business will witness exponential growth in the coming years. And this boom will primarily be driven by Foreign Direct Investors.
Given this market scenario, the situation is ripe for every lawyer to start a new law firm. At the same time, we’ve to be realistic and develop a business plan for starting a new law firm. Because Indian laws are complex while customers- including individuals, families and businesses of all sorts have myriad needs.
Therefore, it’s necessary for every new law firm planning on entering the highly lucrative legal services market to develop an excellent business plan. In this context, let’s explore different elements about how to develop a business plan towards starting a new law firm.
Business Plan for New Law Firm
Understandably, it’s not easy to develop a business plan for a new law firm. And there’re strong reasons why this task can prove fairly uphill. We’ll discuss these and more in the following words.
Finalize Your Legal Field
Finalizing your legal field or the type of legal services you wish to offer can be fairly difficult. On one hand, you have corporate law where your new law firm would deal with all issues pertaining to companies. And on the other hand, you have civil laws, with deals with duties, rights and other liberties of individual citizens.
Understandably, corporate law sounds exciting and profitable. However, it’s worth remembering that companies don’t exist by themselves. They require people to run it. Therefore, you’ll also require skills in criminal law, civil law, taxation laws and lots more to open a new law firm.
Civil law may sound simpler but it’s not. It includes issues such as divorce, inheritance, violation of civil liberties and lots more. In some instance, you may have to deal with civil cases that have some association with a crime or even corporate law.
Therefore, develop a business plan towards starting a new law firm that takes into account the intricate nature of cases you would deal with.
Registration of New Law Firm
Also include in your business plan, specific details about how you will register the new law firm. There’re five different types of registration available for your new law firm.
- Sole Proprietary: Where a new law firm is registered in your name alone. This is the best for beginners that have limited resources. The company doesn’t have an independent existence. Instead, it is linked to the owner directly.
- Partnership Firm: As the term implies, you’ll have one or more partners who will invest with you and launch the new law firm.
- One Person Company: This is very different from Sole Proprietary. Here, the company has a proper corporate existence. You can add partners if you wish while starting or at a later date, subject to Indian laws at the time.
- Limited Liability Partnership: Such companies end with suffix LLP. Here, each partner’s liabilities are limited.
- Private Limited Company: This is a very prestigious tag but would be ideal when you have several partners.
Since taxation levels for each type of these companies are different, it’s best to consult a Chartered Accountant to know which registration model keeps your tax low.
Staff & Payroll
A new law firm can’t hire just any staff. You’ll require people that have prior experience at a law firm or retired lawyers. That’s because a single error such as wrong punctuation or spelling or mentioning an improper clause or law can cause you to lose an entire case.
Furthermore, you’ll also need excellent translators because not every client is going to be an expert at speaking English or Hindi. That, however, would depend upon the nature of legal services you’ll offer. Therefore, understanding the client and presenting the case in easy to comprehend language is a must.
When you develop a business plan to start a new law firm, make astute estimations about how many staff you’ll require. Remember, legal services involve endless documents. Therefore, you’ll need people that can create such documents that comply with courtroom standards. And you’ll require people who know how to maintain legal records.
Affidavits & Contracts
Preparing affidavits, contracts and similar documents and notarizing them is an essential part of every legal business. Therefore, when you develop a business plan to start a new law firm, include these services too. Although these services are fairly inexpensive, the sheer volume of such business can provide excellent income for your new law firm.
Landlords and tenants, applicants of fresh passports, construction companies, banks and other business all require all sorts of contracts. By providing these services, you’re ensuring a continuum of income for your new law firm. You may have to hire dedicated staff to create and notarize these documents. Or you can provide the service through outsourcing from other individual lawyers.
Assess Risk Levels
Understandably, nobody would talk openly about this. However, it’s vital to include risk levels on your business plan to open a new law firm. Every court case- criminal or civil, corporate or individual comes with a risk of loss if the other party has a stronger argument and can convince the judge. Unfortunately, people lose their confidence in a law firm when it loses a case. More so, if the case gets wide publicity.
As a lawyer, you’ll know that winning every case or getting a favourable judgment isn’t always possible. Because judges are bound by the law and will adhere to it fully. Therefore, assess how much risk your new law firm would be willing to take when it comes to court cases. You can’t decline a client who walks in with a case. And backing off in midst of a case is a violation of professional ethics.
Once you know the risk levels, you can outsource a case to some highly experienced lawyer. When your client gets a proper and adequate representation at the court, they’ll not indulge in adverse publicity against your new law firm.
In conclusion, I’ll suggest that you also work out the economics of operating a new law firm. Obviously, it’s going to take some time for your new law firm to become famous. Traditionally, Indian clients go for law firms they learn about through relatives, friends, colleagues and word of mouth publicity. Hence, you’ll also have to focus on creating goodwill among the public on your business plan to start a new law firm.