Expand Your Options Programme
Solicitor Career Development Programme
Module 5 Self Employment
The EXPAND Programme
EXPAND is a career development programme specially structured for Irish solicitors
who want to consider all occupational options open to them and to then effectively
find opportunities of interest, apply for them, and be seriously considered.
EXPAND is an online programme of support, structured in stand-alone modules that
you can work through at your own pace. You can either print off modules and
complete exercises in writing - or do everything electronically.
Modules in the EXPAND Programme
Module 1 - Introduction & Preparation
Module 2 - Considering Your Options
Module 3 - Marketing Yourself
Module 4 - Finding Opportunities
Module 5 - Self Employment
Module 6 - Presenting Yourself
Contents of Module 5
Self Employment
1.
2.
2.1
2.2
2.3
2.4
3.
3.1
4.
5.
6.
6.1
6.2
6.3
Introduction to Module 5 – Self Employment
Is Self Employment Really What You Want?
Entrepreneurial Suitability Check
Business Skills Check
Market Research Check
Adequate Financial Resources Check
Setting Up In Practice
The Issue of Major Costs When You Wind Up a Practice
Setting Up In Partnership
Buying a Practice
Other forms of Self Employment
Drafting a Business Plan
Developing Strategy
Buying Rather Than Starting A Business
EXPAND Programme Module 5
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1. Introduction To Module 5 – Self Employment
Starting a new business, be it as a solicitor in private practice, or in partnership, or in
some other venture outside of the law, is both exciting and rewarding - but it is also
full of challenges. The level of commitment that you will need should not be
underestimated.
The success of your business will depend to a large extent on your attitude and skills.
This means it is best to be honest with yourself about a range of issues including
your knowledge, your financial status and the personal qualities that you can bring to
your new business.
Commitment, drive, perseverance and support from family and friends will go a long
way towards transforming your business idea into reality and will be especially
important during the early days.
This module will help you explore whether you are suited to setting up a new
business. We start by looking at start-up issues generally. These issues are relevant
to any self employed venture. We then review matters that you need to consider if
you are setting up a law firm – be it a private practice or a partnership and then touch
on other entrepreneurial options open to you.
Important Guides and Training Provided By The Law Society
Anyone considering self employment needs to carefully read relevant
guides published by the Law Society including:
 Setting Up in Private Practice
 Partnership
 Solicitors Ceasing Practice and Solicitors Purchasing Practices From
Them
 Planning for Emergencies in a Sole Practioner’s / Principal’s Firm
 Guide for Solicitors Employed in the Corporate and Public Sector
 Guide to Locum Arrangements
Seminars in setting up in practice are also provided and these courses
are strongly recommended to anyone considering this career option.
EXPAND Programme Module 5
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2. Is Self Employment Really What You Want?
Setting up in self employment requires an enormous amount of commitment and
desire. This section outlines some of the challenges you need to think about. Another
valuable way to find out about the day-to-day realities of self employment is to talk to
solicitors who have set up and have experience of the whole area.
Personal Sacrifice
The physical and emotional demands of starting up in business are significant.
Starting a business is a life-changing event and will require hard work and long
hours, especially in the early stages.
Financial Insecurity
There can be financial uncertainty for you and your family. In the worst case scenario
you risk losing your investment and even personal property and possessions.
Loss of Perks
Setting up your own business means that you will no longer be able to take
advantage of benefits associated with a permanent job. This includes the loss of
‘safety net’ benefits such as sick pay, paid holidays and other employment perks.
Pressure On Close Relationships
You will need the support of your family and friends. They should be aware from the
outset of the effect that starting up a business will have on your life and it is crucial
that they are right behind you.
Isolation
Being your own boss can be a satisfying experience. However, shouldering all the
responsibility for the success of the business can prove lonely. Unless you develop a
network of contacts, there will be no-one there to bounce ideas off.
2.1 Entrepreneurial Suitability Check
Research has shown that there are certain characteristics commonly found amongst
successful entrepreneurs. How do you rate against the following?
Self-confidence
Self-belief and passion about your product or service is key and your enthusiasm will
need to win people over to your ideas.
Self-determination
Belief that the outcome of events is primarily down to your own actions, rather than
external factors or other people's actions, is how successful entrepreneurs operate.
Being a self-starter
Ability to take the initiative, work independently and to develop your ideas is required.
Judgement
Entrepreneurs tend to be open-minded when listening to other people's advice, while
always also bearing in mind their objectives for the business.
Commitment
Willingness to make personal sacrifices and forgo leisure time is key.
EXPAND Programme Module 5
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Perseverance
Ability to continue despite setbacks and exposure to risk is often necessary.
Initiative
Entrepreneurs are usually resourceful and proactive, rather than following a passive
"wait and see" approach.
2.2 Business Skills Check
As a self employed person you need core skills to ensure your business survives for
the long term. Think about your experience and knowledge. This will help you decide
whether you need to learn new skills or to draw on help from someone else. Consider
how you rate in the following key business skills areas:
Financial Management
This includes having a good grasp of cash flow planning, credit-management and
maintaining good relationships with your bank and accountant.
Business Planning
The ability to assess the strengths and weaknesses of your business and plan
accordingly is of fundamental importance.
Marketing Skills
A sound marketing approach will help you set up and oversee sales and marketing,
analyse markets and identify selling points for your service.
Service Development
The ability to make long-term plans for service development and to be able to identify
people and processes that will contribute to success is critical.
People Management
This includes managing recruitment, resolving disputes, motivating staff and
managing training. Good people management will facilitate employees to work
together as a well-functioning team.
Supplier Relationship Management
The ability to identify suppliers and positively manage relationships is important.
Selling Skills
Without sales your business cannot survive and grow. You need to be able to identify
potential customers and their individual needs, explain your goods and services
effectively to them and convert these potential customers into clients.
Business Start-up Course from Bank of Ireland
There is a useful online business start-up training course available
You can access it at www.bankofirelandstartupcourse.com
EXPAND Programme Module 5
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2.3 Market Research Check
You need to research your target market and your competitors carefully. A common
misconception is that entrepreneurs who have failed simply lacked sufficient funding
or did not put the right team in place. In many cases new businesses fail because
they have not spent enough time on researching their business idea and its viability
in the market. There are criteria you should check against including:
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Does your product or service satisfy or create a market need?
Can you identify potential customers?
Will your product or service outlive any passing trends or capitalise on the trend
before it dies away?
Is your product or service unique, distinct or superior to those offered by
competitors?
What competition will your product or service face - locally, nationally and
globally?
Does your service or product comply with relevant regulations and legislation?
Can you sell the service or product at a price that will give you sufficient profit?
Market research can play an important role in answering many of these questions
and increasing your chances of success. How much research you do will depend on
the time and funds you have available. You can:
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Informally canvass the opinion of friends
Talk to industry contacts and colleagues
Survey the public about whether they would use your product or service
Ask customers of competing products what improvements they would like to see
Set up focus groups to test your product or service
Monitor what your competitors are doing
Look at what has and hasn't worked in your industry or market niche
Study wider economic and demographic data
The more information you have, the better chance you have of making your planned
business a success.
2.4 Adequate Financial Resources Check
Securing the right financing for your venture is crucial as there is no guarantee that
your business will make money for you as quickly as you envisage. You probably
should aim to have sufficient reserves to last you for several months without the
business generating an income.
You need to be honest about your start-up capital reserves. If there is not enough
money to see you through until your business begins to make money, then you are
not ready to start up. Being realistic at this stage is likely to save a lot of pain. If you
decide to launch your new business without enough funding behind it, keeping it
afloat will prove extremely difficult.
There are many different sources of potential start-up funding, including bank loans,
overdrafts and private loans. For expert help, contact an accountant, small business
adviser or your bank manager.
EXPAND Programme Module 5
© The Law Society of Ireland
3. Setting Up In Practice
The regulatory requirements of setting up in private practice and a wide range of
other useful information is contained in an informational booklet published by the Law
Society entitled ‘ Information for Solicitors Setting Up In Private Practice’. A number
of other information booklets and guidelines published by the Society should be read
including the ones listed at the beginning of this module.
The Society also organises seminars that cover critical matters involved in setting up
and running a law firm and anyone thinking about setting up is strongly advised to
attend one of these courses.
The booklet ‘Information for Solicitors Setting Up In Private Practice’ commences by
recording that solicitors are required to inform the Law Society if they are going to set
up in private practice. A ‘Commencement in Practice’ form needs to be completed
and the booklet details what information needs to be disclosed on it and related
matters.
The requirement to have a practicing certificate and professional indemnity insurance
is specified within the booklet and other matters covered include:
 The need for run-off cover when a practice is closed down / wound up.
 Regulations regarding accounts.
 Regulations regarding professional names and professional notepaper.
 Regulations regarding advertising.
The booklet also outlines various professional services in place including:
 Seminars and Meetings – such as ‘Setting Up in Practice’ seminars.
 Facilities for keeping legal knowledge up to date.
Rules regarding professional conduct are outlined in the booklet and the wide range
of general assistance provided by the Society are listed with contact information.
Information on assistance provided outside the Society is also provided.
3.1 The Issue of Major Costs When You Wind up a Practice
Before setting up in practice, solicitors need to fully consider the expensive costs and
work involved in winding down a practice. This whole issue was covered very well
within a recent article in the Gazette. This article is reproduced below, almost in its
entirety, because it lays out clearly what obligations a solicitor takes on by setting up
in practice. The article was written as a general guidance and it does not constitute a
definitive statement of the law. Thanks to the three authors of the article - Pat Howett,
Nicola Darby and Therese Clarke.
EXPAND Programme Module 5
© The Law Society of Ireland
Gazette Article – April 2009
Opening a solicitor’s practice is a relatively straightforward affair, but the decision to
close can be fraught with myriad difficulties, warn Pat Howett, Nicola Darby and
Therese Clarke.
The day the first client walks in the door, the solicitor commits herself to
responsibilities that will be difficult – and, inevitably, expensive – to set aside. A
solicitor cannot leave practice until she divests herself fully of all her responsibilities
and must continue to take out a practising certificate until the day she can
demonstrate that her responsibilities have been taken care of and are at an end. For
this reason, setting up in practice should only be undertaken as a long-term project.
Sale or transfer
Solicitors who plan to leave practice hope for a sale of their practice to another
solicitor or firm. This takes care of some of the expenses that would otherwise be
incurred and is obviously the neatest solution-but are there any assets to sell? Is
there anything for which a buyer would be willing to pay hard cash? Is the work in
progress – that is, ongoing work that has not yet been billed – likely to translate into
collectible fees later on? What track record is there to indicate that profits can be
made from the practice in the future? Is there an established client base, from which
it can reasonably be expected that new work will generate?
A solicitor leaving practice within only a few years of setting up is unlikely to have
built up a significant asset. The work in progress is likely to be small. The clients are
likely to be ‘floating’ rather than established. The reality may be that, once the
proprietor closes the door for the last time, the practice will be gone.
If a sale of the practice cannot be achieved, the next best option would be the
transfer of the practice to a colleague without any money being paid by the acquiring
solicitor. The acquisition may even be subject to the acquiring solicitor being paid
money because, for instance, they will incur storage charges for the files or because
they have to undertake a labour-intensive file destruction exercise and arrange for
confidential shredding.
If a sale or transfer is not possible, the reality is that, if you are the proprietor of a
young, small firm, you will find yourself having to wind up the practice yourself. The
result may be that you will be bearing the cost of continuing overheads, without
ongoing income, and you will also have significant additional costs under many
headings – for example, practising certificate and professional indemnity insurance
costs.
Insurance
Solicitors’ professional indemnity insurance (PII) cover is provided on a claims-made
basis. A practice is covered only for circumstances or claims that are notified to the
insurer during the period of insurance cover. After the cessation of a practice, claims
may arise from work undertaken prior to the practice closure. Accordingly, solicitors
need to acquire PII – called run–off cover- to protect themselves, their clients and
their estate (if relevant) against claims that may arise after closing a practice. Under
SI no 617 of 2007, solicitors are required to take out run-off cover for a period of six
years following the closure of a practice, unless a succeeding practice, within the
terms of the regulation, takes over – and even then the circumstances of the takeover may, of necessity, require ongoing run-off cover to be maintained.
EXPAND Programme Module 5
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Thus, even though you have closed your practice and have no incoming revenue
from it, you will continue to have the expense of run-off cover. Normally, such cover
will be obtained from the insurer providing professional indemnity at the time of
closure.
Where there is a continuing practice, retiring partners, solicitors and employees are
covered by the ongoing firm’s PII cover. Thus, run-off cover is an issue mainly,
though not exclusively, for sole practitioners.
Cost of run-off cover
Some insurers provide run-off cover at 300-350% of the expiring premium for the
practice (amounting to approximately €30,000, depending on the size of the practice).
Other insurers charge an annual premium for the six years, which will depend mainly
on claims experience and the levels of premiums in the marketplace on an annual
basis.
There have been situations where solicitors have opened a practice, it has not
worked out, and they have closed their practice in a relatively short period. Even
though the solicitor has had very little fee income, she has had the expense of
acquiring run-off cover for a six year period, and at considerable cost.
Can run-off cover be avoided?
If a solicitor can sell the practice or pass on all the files to another practising firm,
which becomes a ‘succeeding practice’ under the PII regulations, then there is no
requirement to obtain run-off cover, as the acquiring practice’s insurance gives cover.
However, some firms do not wish to take on unknown exposures when they acquire
the business of a practice. They may require the vendor to take out run-off cover to
reduce the risk to their own professional indemnity policy. Thus, in some cases, the
option of avoiding run-off cover may have limited applicability.
Accordingly, before you open, close or merge a practice, consider the cost of run-off
cover as part of your decision.
If you have already taken out a loan to fund your annual PII premium but have been
finding the payments difficult to meet, then the prospect of having to fund a much
larger premium for run-off cover may be an insurmountable problem. There are no
obvious solutions. If your decision to set up in practice was because you became
unemployed, it is clear that you may find yourself now facing a much greater longterm financial problem.
Even if you are in a position to obtain the six years’ run-off cover, the reality is that
claims may not come until the seventh, eighth or any subsequent year. The
knowledge that, after six years, a solicitor continues to be exposed may cause many
solicitors to have sleepless nights!
If you acted for a person with a disability (a minor, or a person lacking mental
capacity), there is no limitation on the period within which you can be sued.
Notification and files
A solicitor is required to notify the Law Society in writing in relation to his or her
cessation or retirement from practice. Notification should include the date that the
solicitor is ceasing or retiring from practice, and an address must be provided for any
future correspondence issuing from the Society.
EXPAND Programme Module 5
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The Society should also be notified in writing of the disposal of practice files. In no
circumstances should a solicitor who no longer holds a current practising certificate,
or cease practice, retain any clients’ files or other documentation, for instance in
private storage or at home.
The solicitor should identify in writing to the Society the solicitor(s) who have taken
responsibility for his or her former practice files.
In the event that a solicitor transfers any files to a colleague, whether current files
and/or files for storage only, she should ensure that the colleague understands that
decisions relating to those files will be for the colleague to make.
Furthermore, if there is outstanding work to be completed for which the solicitor has
already been paid, the solicitor may have to pay a colleague to complete the
particular matters outstanding.
A solicitor may have costs involved in organising the destruction of files in a secure
and confidential manner.
Clients’ monies
A solicitor cannot continue to hold clients’ monies if she is no longer the holder of a
current practising certificate. If files are being transferred to a colleague in practice,
the solicitor ceasing practice will have to transfer the clients’ monies relating to those
files to that colleague. If the solicitor cannot divest herself of clients’ monies, she
must continue to take out a practising certificate and PII until she succeeds in doing
so.
Closing accountant’s report
A solicitor is required to file a closing accountant’s report to the date that the solicitor
ceases to receive, hold, control or pay clients’ monies. This report should be filed
with the Society no later than six months after the relevant date.
Therefore, a solicitor should take into account the cost involved in continuing to file
accountants’ reports and a closing accountant’s report to the Society, including the
accountant’s fees.
Informing the clients of the closure
When a firm is closing, the Law Society requires that there is prompt notification to all
the clients of the practice. The cost of this exercise, including postage, must be
considered.
Staff of the practice
Letting staff go always causes upset, not only for the staff who are losing their jobs,
but also for the solicitor who will have build up a relationship with them. There is also
a financial cost to be borne. The unfair dismissals and minimum notice legislation
provides protection for all employees. It is important to ensure that, when dealing
with the staff of a practice on the sale or wind-up of that practice, there is compliance
with the provisions of the relevant legislation.
Redundancies
The sale or wind-up of a practice may be a redundancy situation. The solicitor, as
employer, will be responsible for the redundancy payments. Where such situations
arise, the solicitor should refer to the Guide to Employment Legislation in the
‘Employment and Equality Committee’ section of the Society’s website.
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4. Setting Up In Partnership
Everything within Section 3 above on setting up in practice is also relevant to setting
up in partnership - including Section 3.1 and the issue of major costs when you wind
up. If you are considering setting up in partnership, please read Section 3 before
going on to read the rest of this section as the matters that are most critical to what
you are doing are all laid out there – but are not gone over again in this section.
An informational booklet on setting up in partnership has been published by the Law
Society. It should be read in conjunction with the booklet ‘Information for Solicitors
Setting Up In Private Practice’ and other booklets and guides listed at the start of this
module.
The booklet on partnership explores what being a partner means, and how it
compares to other career options such as working as a sole principal or as an
employee. Options such as joining an existing firm versus setting up a new firm are
outlined – as is the whole process of being offered a partnership, entering one and
then working within one.
The seminars organised by the Society on setting up and running a law firm are just
as relevant to people setting up in partnership as they are to people setting up as
sole practitioners and anyone thinking of setting up a partnership or getting involved
in an existing one is strongly advised to attend one of these courses.
5. Buying A Practice
An informational leaflet is available from the Law Society on ‘Solicitors Ceasing
Practice and Solicitors Purchasing Practices From Them’. This booklet should be
read in conjunction with the booklet on ‘Information for Solicitors Setting Up In Private
Practice’ and other booklets and guides such as those listed at the start of this
module.
6. Other Forms of Self Employment
Solicitors are free to set up in any other business, aligned to the law or completely
away from it, subject to any specific rules or regulations that might apply (e.g. special
rules apply to the provision of investment advice). We outline a small number of key
enterprise matters below.
6.1 Drafting A Business Plan
If you have a business idea and need to organise support and / or resources to make
it a reality – then you are going to need to draft a business plan (as everyone you
approach will look for one).
EXPAND Programme Module 5
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People who are asked to support proposed business ventures always want to review
a business plan but drafting one also benefits the promoter by helping her / him in:
 Thinking through all the elements involved
 Fund-raising
 Communicating - internally and externally
 Measuring progress
 Steering the business after set up.
To further develop strategy, go on to consider matters such as the following:
 What are you focused on?
 Growth, decline, stabilisation - How can your market develop?
 Maintaining existing markets - Will this be enough?
 Life cycle of the product - What stage are you at?
 New markets - Where? At what cost?
 New products - How?
 National or international - What are your ambitions?
 Broad market or niche market - Where are you aiming?
 Innovation - What part will it play?
 Small steps or big steps - Which are you most comfortable with?
Is There Support Available?
More than likely not…The first port-of-call for anyone looking for support in setting
up a business is their local County or City Enterprise Boards (CEBS). There are 35
of these across the country and you’ll get a complete list and more information at
www.enterpriseboards.ie
They provide grants – but only for certain types of businesses, However, they
provide other supports, such as subsidised training, mentoring and business advice.
These additional supports are usually available even if your business / business
idea does not qualify for grant aid (which is primarily focused
on manufacturing and internationally-traded services
rather than locally focused service businesses).
6.2 Buying Rather than Starting a New Business
An alternative to setting up a business is to buy an established one. Buying a
business can be a more straightforward proposition. If you find a business that’s
doing relatively well, it may be easier to secure finance for it than if you are starting
one from scratch. The proven customer base is a huge bonus both to investors and
banks and to yourself if you’re risking your own finances.
Many start-ups fail from the outset because it’s so difficult to get people to put money
towards a risky venture. But if you’re buying a business, depending on its cash flow
and assets, you may be able to borrow easier against the acquisition cost.
EXPAND Programme Module 5
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6.3 Franchising
If you’re looking at becoming self employed, a concept you are going to come across
is franchising. Franchises can offer great benefits to those who want to be business
owners but who just don’t have an idea of what they want to do or haven’t run
businesses before and need some help and guidance.
The concept of a franchise is simple. You are provided with the blueprint of how the
business is to be run, the equipment that you need, the training you should provide
for any employees and how you should market the business. In return, you pay an
investment fee and usually a monthly fee and/ or a share of the profits you make.
This is all great news for those who need a helping hand.
Franchises have done the complete circle. It is not too many years ago when they
were viewed with suspicion. Many franchisors were only interested in making the sale
to the new business owners and were not interested in the success of their
franchisees. Lots of new business owners found themselves in trouble and went
under, accruing great debts. Times have now changed and franchisers recognize that
they have a vested interest in the ongoing success of their franchisees.
Strategic Management
Relevant Websites
www.irishfranchiseassociation.com
www.whichfranchise.ie
www.janpro.ie
www.franchisedirect.co.uk
www.findfranchisenow.com
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