Become A Self-Employed Solicitor
Last updated on November 18th, 2019 at 06:59 pm
How to become a self-employed solicitor and grow your own practice
Long working days, unachievable billing targets, office politics, a lack of control, challenging commutes and high levels of stress. This is, of course, a normal day in the life of many solicitors. But things are starting to change and there are alternatives.
Is this really why you chose to become a solicitor?
Back in 2012 LawCare (an organisation that supports and promotes the health and wellbeing of the legal profession) reported that after an initial survey of UK lawyers, over 66% admitted to suffering from stress in the past, with 32% admitting suffering from clinical depression.
And as recently as this year, according to the Law Society, a survey conducted on behalf of the Junior Lawyers Division (JLD) revealed that over 93% of junior lawyers who responded to the survey had suffered with stress in the month before completing the survey.
Whilst perhaps not surprising, what these surveys reveal is, that despite recent shake ups, for many there’s been no real shift in attitude and approach when it comes to the working practices and habits of the legal profession, whether that’s working for a firm / partnership or in-house.
So, is it possible to build a practice whilst delivering a great service to interesting and diverse clients at the same time as clawing back some quality of life and control? And if so, what are your options?
Locum, sole practitioner, part time or consultant
Going it alone can seem like an attractive and obvious choice and if you’re considering it, you’re faced with four main options:
Becoming a locum is something many enjoy. Of course, you’ll be self-employed and you’ll need an ability to be able to pick up and run with someone else’s work, often with little assistance.
The downsides of being a locum are that contracts can range from as little as a few hours to a few years and you’re always at risk of periods of time without work. What’s more, however long a contract is, you’re always going to be investing all your hard work and effort into someone else’s practice and there is no opportunity to build up your own brand and client base.
Again, for some, this represents an ideal solution but it’s not without its difficulties. Professional indemnity insurance, getting accepted on lenders’ panels, finding premises, funding and managing the administration, marketing and business development all fall to you.
If you’re going it alone for the first time, this increased level of responsibility falls at a time when your income, reputation and client base is not yet secure. And there’s also the public perception of being a one-man / woman band to overcome.
Having made the transition myself from self-employed solicitor to operating a regulated firm as a sole practitioner, if you’re starting with no capital my advice would be to wait until you can regularly generate a turnover of over £10,000 a month (maybe more if you’re based in London) as a self-employed consultant solicitor before it makes practical and financial sense to set up and run your own regulated and insured law firm. You’ll also know by then that you can hack it as an entrepreneur, rather than make the costly mistake of spending a lot of money starting a firm, but finding out you are unable to make any money.
Before making the move to operating as a sole practitioner, and in order to grow your turnover as a self-employed solicitor, I recommend first hiring a good virtual assistant, as well as employing a paralegal and also possibly an assistant solicitor – who due to the SRA rules will actually need to be employed by the virtual firm you contract with but whose salary costs you pay to the firm in advance each month.
If you really want to keep the relative security of working for a firm but you want to reclaim some quality of life, you can always seek to go part time. However, of course this inevitably comes with a pro rata reduction in pay and often comes with a certain stigma attached, especially given the demands of clients.
An increasingly popular alternative to the options above, self-employed consultancy allows you to provide your services through established law firms either as an individual or using a wholly owned service company to contract with one or more firms at any one time.
It also comes with a lot of advantages:
- You decide when to work and where to work. That means you can work remotely, part time, whatever suits you.
- You decide what type or clients you want to work for and you don’t have to do work offered to you by the firm if you’d rather not. Meaning you can shape your practice into the one you want.
- You set your own targets and fee structure, meaning no more beating yourself up to achieve someone else’s targets. If you want to take the day off, work part time, or set your own flexible hours, that’s also fine.
- But you don’t have the additional worry of professional indemnity insurance, funding and premises (as well as all the other overheads relating to operating a regulated law firm).
- In short you take back control of your practice. You can develop it at a pace and in a way that suits you.
- And you say goodbye to office politics, commuting and late nights in the office.
How it works
The firm you work as a consultant for will take a percentage of your fees. This is normally in the region of 20% to 40% of what you bill on the work you do for your own clients through the firm, but this will vary.
As their consultant, you can continue to work with your own established clients who’ve chosen to come with you. However, if you’ve chosen the right law firm, you’ll also get referrals from them and be able to do some of their client work should you choose to.
Whether you join a small or large virtual firm, it will usually take a bit of time to start getting decent referrals from other consultant solicitors as people will of course first have to get to know, like and trust you before wanting to send their valued clients and contacts your way.
The Jonathan Lea Network currently offers our consultant solicitors a 75% fee share for their own work they do through us, while for work you accept from us you receive 55% of what is billed and paid by the client. For any matters you refer to us where other fee earners do the work you will also receive a 15% referral fee. When I was working as a self-employed solicitor my referral fees once amounted to £6,000 over the month I took off to go travelling, which included doing the Rickshaw Run in India. This more than paid for the trip!
The Jonathan Lea Network is slightly different from other virtual firms who mostly rely on their consultant solicitors to introduce work and clients to the firm. We on the other hand generate a lot of leads and new clients ourselves through our website and generally more sophisticated and effective marketing activities. Within a month of starting our own regulated law firm we won a 90 employee publicly listed company as a client which resulted in supplying one of consultants with 60 hours of well paid commercial contracts work every month, performed remotely and in and around the consultant’s other client commitments.
The other advantages of working this way are significant:
- The firm you work with will be responsible for professional indemnity insurance, although clearly you have to comply with the terms of their cover.
- They’ll also be responsible for compliance and practice management.
- You’ll be able to rely on their marketing and practice development, their administrative support, their legal accounting software and their other resources, including such tools as legal subscription services and sometimes their premises for meetings.
- You’ll also be able to take advantage of their internal library, precedents and in-house knowledge.
In short, the consultancy option offers you all the benefits of going it alone without the same level of risk.
How many years’ experience are required to become a self-employed consultant solicitor?
There’s still a lot of misunderstanding about how experienced you have to be to go freelance. Often perceived as the domain of older partners or the very experienced, this is not in fact the case. Lawyers at all levels of PQE can opt to go freelance, although we generally recommend that you have at least three years post qualification experience as a basic minimum.
How do you make the transition to self-employed consultant?
You can choose to either operate as a sole trader or to set up and operate via a limited company. There are clearly pros, cons and tax implications of either approach and you’ll probably need to take professional advice to choose the best option for you.
Whichever approach you decide on, as someone who’s self-employed, you’ll become responsible for keeping your own records and accounts and paying the correct amount of tax to HMRC, as well as making your own pension arrangements.
SRA Authorisation of Individuals Regulations 2019
These new SRA rules due to come into effect towards the end of 2019 allow solicitors, with at least three years of post qualification experience, to provide reserved and non-reserved legal services on a freelance basis without needing to operate under the umbrella of a regulated firm. However, these new regulations include the following restrictions which I believe will still make it more attractive for entrepreneurial solicitors to instead practice on a self-employed basis under the regulatory and insurance umbrella of a regulated ‘virtual’ firm:
1) You have to practice and trade as an individual in your own name and can’t develop your own separate business brand and trade through a service company so as to limit your liability and maximise your income;
2) You can’t employ anyone in connection with the services that you provide, whereas no such restriction exists if you contract through a virtual firm (I employed two paralegals to assist me before we eventually started trading through our own regulated firm);
3) You need to take out and maintain your own indemnity insurance that covers both reserved and unreserved legal services you provide, as opposed to contracting though another firm where you operate under their insurance cover and there is no need or requirement to have your own insurance policy; and
4) You can only hold client money when it relates to payment on account of costs and disbursements, so you are unable to make use of a firm’s client account to hold settlement sums and completion monies which is key to being able to work on higher value matters.
Choosing the right firm
Choosing the right virtual firm is critical to success. You’ll want to be sure that they have sufficient resources to support you and your clients and that includes administrative, IT and marketing support. And do they have a strong client base of their own? One thing to look out for is whether they organise the odd social gathering (like a Christmas party) which I found invaluable in building relationships with other consultants and generating referrals as a result.
The contract you agree with the firm will usually have a fee split basis whereby if the work you do is for your own client you retain around 70% of what is paid to the firm, while it will be around 50% if the work you do has been referred from the firm or another consultant. There will also be a 10-15% referral fee for work you introduce to the firm but don’t carry out yourself. At the start of your self-employment journey it is recommended to work as a consultant for more than one firm (more than three is probably unmanageable) so you can better discover which firm you are more suited to. Like I did, this could include picking a small ‘bricks and mortar’ firm who can’t afford to employ a solicitor covering your niche, but who nevertheless generate work relating to your practice area and would welcome the opportunity to discuss working with a consultant on an ad hoc and flexible basis.
As mentioned, depending on the firm, they will probably refer some work to you although you shouldn’t ever rely on this. You will very much be expected to generate your own work, even though this will usually take a little while to build up. You’ll also normally be asked to sign undertakings not to poach clients which weren’t introduced to the firm by you.
And whilst you vet the firm, they will also want a level of re-assurance. Primarily they’ll want to know that you’re competent and an asset to their firm and its reputation. It’s therefore a good idea to put together a business plan and or strategy and have references from clients and former employers.
Go for it!
If you’re still relatively new to the profession, or, for whatever reason, don’t have a well-established client base, the idea of losing the security of an income and building your own case load and business can be the most daunting aspect of going freelance.
However, a few months after you’ve made the initial jump most solicitors should be able to build up a regular stream of work and won’t want to look back to being employed again. Even in the worst case scenario when after a few months you discover self-employment really isn’t for you (although we recommend you give it a good go for at least a year) then you can always find an employed position again, with employers being comforted by the fact that you have made a qualified decision to stick with employment while having picked up some good experience and developed some valuable skills in making a go of it on your own.
At The Jonathan Lea Network, we are now looking to grow our team of self-employed solicitors who’d like to work with us. As a fast growing firm ourselves we consistently attract many new work opportunities which we regularly refer to other self-employed solicitors. In less then two years, starting from when Jonathan moved into an office and the first employee joined, we have increased our turnover almost six-fold, despite only moderately re-investing our cash-flow so far. We therefore now have a great platform for future growth and see that developing a hybrid ‘bricks and mortar’ and virtual firm whereby employed fee earners and self-employed specialist solicitors can work seamlessly together offers the optimum operational model for both clients and consultant solicitors alike.
So, if you love what you do, but just want to be able to deliver a superior service and enjoy a better quality of life, as well as more effectively build your own law practice, then freelance consultancy is an exciting and realistic option.
If you have at least three years of decent post qualification experience and are interested in working with us as a self-employed consultant we would be very happy to hear from you. In the first instance, please send us an introductory email together with your LinkedIn profile (completed in full) for us to assess, following which someone will contact you to arrange a short introductory call – during which you can learn more about how we operate and whether there would be a good fit.
Also, please also let us know by email to email@example.com if you’d like to attend one of our forthcoming ‘The Secrets To My Success’ events in London where in an hour’s free to attend evening session Jonathan will give an overview of how lawyers can make a successful transition to working on a self-employed basis and growing their own practice, as well as a detailed account of how, without any capital or existing client base, in his first of year of trading alone Jonathan earned more working as a self-employed solicitor than a comparable employed solicitor with his PQE. Jonathan will also explain how he was then able to start employing people and grow a profitable regulated law firm.
What support does The Jonathan Lea Network offer to consultant solicitors?
a) Experienced legal secretarial support
b) Cloud practice management software
c) Cloud based email
d) IT support
e) Facebook group
f) App based AML ID checks
g) Indemnity insurance cover
h) Practical Law access
i) Specialist legal cashiers
j) Credit control
k) Virtual office address
Regardless of where you are working from, we will open and scan to email any physical correspondence addressed to you.
l) Search providers
m) Land Registry
To be continued ….