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Guide to Starting a Practice | Law Society of Scotland

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Guide to Starting a Practice | Law Society of Scotland Guide to starting a practice In association with 2 | Guide to starting a practice Contents 1. Business planning ................5 4. Risk management ..............12 • Business plan • Business continuity plan • Structure • Fraud and cybersecurity • Marketing, promotion and • Professional risk attracting business • Communication with clients • Practice and file management 5. Insurance and • Practice management course client protection ....................13 • Policy templates • The Master Policy for professional indemnity insurance • Additional cover 2. Finance and cashflow ...........8 • Client Protection Fund • Cashflow • Banking arrangements • PAYE/Real Time Information 6. Legal Aid ............................14 (RTI) Registration • VAT • Making Tax Digital (MTD) 7. Practice unit options • Corporation tax and income tax and information .....................15 • Account management software Checklist and contacts ...........19 3. Compliance ........................10 • Accounts rules • Anti-money laundering (AML) • Data protection and GDPR • Incidental financial business • Officers of the firm You can read the relevant rules and guidance on our website. Where possible, this guide also provides details of where you can find more information. Rule Law Society of Scotland practice rule Guidance Law Society of Scotland practice guidance Info More information Guide to starting a practice | 3 Guide to starting a practice Congratulations on taking the first step to setting up your own practice. While establishing your own firm can bring many rewards, it pays to spend time at the outset planning how your business will operate. You will want to ensure that your new practice complies will all relevant legislation, rules and regulations. This guide is designed to help you start out on the right path by getting you to consider some of the main requirements and relevant points for starting and operating a legal practice in Scotland. As you think about your new venture, one of the first considerations is to research the market you are entering and consider what will set your new firm apart from competitors. The type of practice you form will affect how your business operates and develops. Are you planning to operate as a sole practitioner, a traditional partnership, a limited liability partnership or a limited company? It would be advisable to speak to an accountant and a corporate solicitor before making your final decision. If you want to talk to us before setting up, please contact our professional practice team on 0131 226 8896. Eligibility Before setting up a new practice, you need to know if you are eligible to do so. Under the Law Society’s rules, all owners of the business must meet the requirements to be a manager. Scottish solicitors need to have: • A current unrestricted practising certificate • Held an unrestricted practising certificate while employed in the capacity of a Scottish solicitor for at least three years • Worked in the capacity of a Scottish solicitor for the 12 months immediately preceding your practice commencing. The last two conditions may not apply if you are joining an existing practice unit. If you do not meet one of these requirements but you feel your circumstances are in some way exceptional, you can seek a waiver. Please contact the professional practice team for more information. Rule See Rule D2 The Law Society’s rules currently do not permit participation by unqualified individuals. 4 | Guide to starting a practice Guide to starting a practice | 5 1. Business planning Business Plan govern your commercial relationship Customer service – Make sure your with each other. You should also colleagues not only understand your A business plan will help to establish understand your common law and marketing activities, but also appreciate how your firm will operate and what statutory duties to one and other as the role they can play. Whether it is you aim to accomplish. Banks will ask partners, members or directors. following up on leads or being polite to see a copy of this before you open See Section 7. and friendly on the phone/email, good an account. customer service is a key ingredient in attracting new business. Bullet points will highlight key ideas and make the plan easier to digest. Essential Marketing, promotion Use the Law Society brand – Using information includes: and attracting business the Law Society’s ‘Member’ logo lets • Your company details your potential clients know that you • An executive overview, including In your business planning, you will have are part of a regulated profession. The your unique selling proposition identified what services you are going to logo is available as a window sticker • Details of your business provide, your potential clients and how and electronically, and can be used management team and support much you are going to charge. How you on websites, literature, emails and – show key strengths, skills, promote your services will depend on letterheads. You should also update qualifications and management your chosen market. As with any new your ‘categories of work’ in the member experience of your partners and business, expect to pay more in the section of the website. This populates the any senior staff initial years as you establish your firm. Find A Solicitor function on the website, • The legal services you will offer, which can drive traffic to your website. your pricing structure, and the Channels – How will your clients find market for your services you? Channels include advertising Be proactive and refine your marketing • How you will attract new business/ in local newspapers, leaflets and activities as you go along. Use feedback the marketing and promotion you brochures, your office window, from your clients to point you in the will carry out website, activities on social media and right direction. • Your forecasts and budgets. networking/word of mouth. You do not have to use them all – work out where If you are leaving an existing practice to your clients are most likely to find out set up on your own, there are specific Info about you and choose a combination rules on what is and is not permissible A business plan template can of marketing tools. in terms of approaching your existing be downloaded from the clients. Read Rule B3 for more Business Gateway website Message – Be clear about the value and information. www.bgateway.com benefits of the services you are offering, as well as listing what you do. Keep the language simple and jargon free – make Rule and Guidance it easy for your potential clients. See rule and guidance B3, which covers advertising, advertising Structure Brand – Whether you are promoting fees and mandates relating to your services from an office or online (or where your clients come from. If two or more are starting a practice, both), spend time getting your visual you will need to agree at the outset brand set up (logo, fonts, colour palette, what your relationship will look like, images etc). Make sure that your brand CONTACT the ownership split and on what basis is consistently applied across your you will be remunerated. office, website, literature, letterheads, Email the Law Society’s marketing and so on. The key is to devise a brand department at [email protected] You will need to organise a partnership, identity that reflects how you want your for more details. LLP or shareholders’ agreement to clients to view your business. 6 | Guide to starting a practice Communication Practice and Practice management with clients file management course It is both a Law Society rule and good There are advantages, risks and If you have not previously done so (or practice to write to clients with certain challenges with whatever system you you haven’t been a manager in the information before carrying out a new choose to organise and store your preceding three years), you will need piece of work. Properly drafted, these files. It is important to understand to undertake the practice management letters of engagement play a key role the approach that is right for you. course within 12 months of starting in managing the relationship with Ultimately, you need to be clear about: your new practice. The course is usually your client. This includes minimising • Ownership hosted three times a year – typically in the risk of complaints and claims by • Storage March, June and October – though this managing the client’s expectations. • Destruction will depend on demand. • Security. Info Several practice management software Policy templates The Master Policy broker, Lockton, systems are available on the market, has produced an interactive guide with various options for cloud-based, Template policies are useful tools to letters of engagement with server-based, fixed cost, pay as you which can be utilised by new information you should consider go, and so on. A number of practice practice units. Below are a few including in your letters, together management providers are listed in examples that you might find useful. with some sample text. our Member Benefit Scheme. These www.locktonlaw.scot companies have been through a Law Society process to gain ‘Approved Supplier’ • Data protection policy status. However, since individual firm • Anti-money laundering policy. requirements vary, we do not endorse Rule and Guidance any one system. You need to ensure the Lockton See rule and guidance B4. relevant products or services meet with • Information management your needs, being careful to agree what and security policy services will be provided and what the • Clear desk and clear total cost will be. screen policy • Remote working and You could also use a combination of removable media policy system-based and paper-based storage, • Internet and communications with paper files stored in lockable and policy. fireproof cabinets. Guidance See the guidance – Section E, Division B: the ownership and destruction of files. Info See our Guide to Cloud Computing and our Member Benefits pages. The Law Society’s CPD team offers training on risk management, cybersecurity and fraud.
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