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Starting a Law Firm – How Much Does It Cost?

Do you want to know exactly how much it cost to start a law firm? If YES, here is a detailed cost analysis for starting a law firm and raising finance.

The services of lawyers are needed in every part of the United States of America, United Kingdom, Canada and Australia. Statistics has it that the United States of America has about 165,000 law offices and they generate about $180 billion in annual revenue. This goes to show that starting a law firm is indeed a thriving business in the U.S because there is a large market for such business and the industry provides loads of job opportunities for lawyers and other professionals.

Having provided you with a:

  1. Industry Overview
  2. Market Research and Feasibility
  3. Law Firm Business Plan
  4. Law Firm Name ideas
  5. Licenses and Permits
  6. Law Firm Marketing Plan
  7. Cost of Starting a Law Firm
  8. Marketing ideas & Strategies

Industry Overview

The United States Bureau of Labour Statistics predicts that job opportunities for legal practitioners will grow at the same rate as the average for all other occupations in coming years; the growth will be fastest in areas such as intellectual property, health care, antitrust, environmental law et al. No doubt, the growth of the U.S. population and the expansion of corporate America will definitely lead to the growth in the demand for legal services.

All over the globe, before anyone can be allowed to practice law, they are expected to pass the bar exam in the country or state in which they want to practice. In other words, the journey of starting your own private law firm starts when you eventually pass through a law school. Although a large percentage of lawyers work for big, corporate law firms, but there are still many lawyers who are employed at mid-sized regional firms and even in one-man and two-person law firms.

Just like most industries in the United States, United Kingdom, Canada, Australia and in other parts of the world, the legal services industry is globalizing at a swift pace. Progressively more, bigger law firms are establishing offices in other countries, some are restructuring and repositioning their existing foreign offices, and others are merging or partnering with local law firms in order to position their organization to handle legal aspects of international trade and other related issues. This recent trend is responsible for creating job opportunities for lawyers with expertise in international relations and cross-border transactions et al.

Law firms who offer services in various niche areas such as Civil Litigation (complex civil litigation, commercial litigation, insurance defense, class actions, labor and employment, personal injury lawsuits and regulatory actions), Environmental Law (Green Law), Bankruptcy Law, Labor and Employment Law, Foreclosure Law, Intellectual Property Law and E-Discovery Practice, should look towards budgeting well over one million, five hundred thousand dollars ($1.5 million).

Some law firms may decide to operate a general law business that cuts across various law practices while others may choose to specialize in any of the two major areas of private sector law. They can choose to operate as a transactional (corporate) law firm or specialize in litigation.

Beyond every reasonable doubt, being a lawyer can be extremely challenging and demanding, but at the same time, it can also be quite rewarding. Lawyers have the privilege of providing vital services to the business world and to individuals as well. Lawyers serve as protectors, advisers and advocates which is why they are considered experts in communication, analysis and persuasion, giving them prestige and leverage in society.

Countries like Australia and some Common Wealth Nations still allow non-lawyers to own law firms. States like Washington DC in the United States of America also have a law that allows a non-lawyer to own shares not exceeding 25% in a law firm.

How Much Does It Cost to Start a Law Firm?

This industry has a low level of capital intensity, which is similar to other service industries. The cost analysis as it relates to starting a standard law firm business in the United States of America, Canada, United Kingdom and Australia can be said to be almost the same except for few variations.

For example, the cost of setting up a full functional law firm office with the required furniture and gadgets (telephone, printing machines, computers, tables and chairs, book shelves, cabins, standard library, photocopier, fax machine, amongst others) are same especially when bench–marked against the US Dollars.

Other factors that may be slightly different in terms of costing when it comes to starting a standard law firm business in any of the countries listed above are cost of labor, cost of transportation and logistics, local tax, business incorporation fee and rent/leasing amongst other factors.

Over and above, when it comes to starting a medium scale law firm, you should be prepared to either rent or lease a standard and centralized facility in a business district; this is going to be one of the areas where you are expected to spend the bulk of your start–up capital.

How Much Does It Cost to Start a Law Firm in the United States?

These are the key expenses you are expected to make when starting a medium scale but standard law business in the United States of America;

  • The total fee for registering the business in the United States of America – $750.
  • The amount required for obtaining licenses and permits as well as accounting services (software, P.O.S machines and other software) – $3,300.
  • Marketing promotion expenses for the grand opening of the law firm in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  • The cost for leasing a standard office facility in good location/business district – $150,000
  • The cost for remodeling the facility – $5,000.
  • Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
  • The cost for start-up inventory (printing papers, printing inks/cartridges, pen and stencil et al) – $2,500
  • The cost for cash register, security, ventilation, signage – $3,750
  • The cost for the purchase of furniture and gadgets (Telephone, printing machines, computers, tables and chairs, book shelves, cabins, standard library, photocopier, fax machine, amongst others): $4,000.
  • The cost for building and hosting a website: $600
  • The cost for opening party: $2,000
  • Miscellaneous: $5,000

You will need an estimate of two hundred and fifty thousand dollars ($250,000) to successfully set up a medium scale but standard law firm in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and it applies to a law firm that offers variety of services within the legal industry.

Starting a small–scale but standard law firm business that can only carry out basic legal services in the United States of America will cost about twenty thousand dollars to fifty thousand dollars ($20,000 to $50,000). Please note that just like most service based business, it is cost effective to start a small-scale law firm and you can afford to operate your law firm office from your home.

When it comes to starting a standard and large-scale law firm with several lawyers and offices in key cities in the United States of America, a law firm that offer services in various niche areas in the legal industry; services such as Civil Litigation (complex civil litigation, commercial litigation, insurance defense, class actions, labor and employment, personal injury lawsuits and regulatory actions), Environmental Law (Green Law), Bankruptcy Law, Labor and Employment Law, Foreclosure Law, Intellectual Property Law and E-Discovery Practice, then you should look towards budgeting one million five hundred thousand dollars ($1.5 million).

How Much Does It Cost to Start a Law Firm in the UK?

These are the key expenses you are expected to make when starting a medium scale but standard law firm business in the United Kingdom;

  • The cost for remodeling – £3,000.
  • The cost for leasing a standard office facility in a good location/business district – £105,000.
  • The cost for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – £2,400.
  • The cost for hiring business consultant (including writing business plan) – £2,500.
  • Marketing promotion expenses for the grand opening of the law firm in the amount of £3,500 and as well as flyer printing (2,000 flyers at £0.04 per copy) for the total amount of £3,580.
  • Legal expenses for obtaining licenses and permits as well as accounting services (software, P.O.S machines and other software) – £700.
  • In the United Kingdom, Online applications are usually registered within 24 hours and cost £12 (paid by debit or credit card or PayPal). Postal applications take 8 to 10 days and cost £40 (paid by check made out to ‘Companies House’). There’s a same day service costing £100.
  • Other start-up expenses including stationery (£300) and phone and utility deposits (£1,500).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – £60,000
  • The cost for start-up inventory (printing papers, printing inks/cartridges, pen and stencil et al) – £2,000
  • The cost for cash register, security, ventilation, signage – £2,500
  • The cost of purchase and installation of CCTVs: £4,500
  • The cost for the purchase of furniture and gadgets (Telephone, printing machines, computers, tables and chairs, book shelves, cabins, standard library, photocopier, fax machine, amongst others) – £2,500.
  • The cost for building and hosting a website: £600
  • The cost for opening party – £2,000
  • Miscellaneous: £5,000

You will need an estimate of two hundred and fifty thousand Pounds Sterling (£205,000) to successfully set up a medium scale but standard law firm in the United Kingdom. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and it applies to a law firm that offer variety of services within the legal industry.

Starting a small–scale but standard law firm business that can only carry out basic legal services in the United Kingdom will cost about eighteen thousand to forty-eight thousand Pounds Sterling (£18,000 to £48,000). Please note that just like most service based business, it is cost effective to start a small-scale law firm and you can afford to operate your law firm office from your home.

When it comes to starting a standard and large-scale law firm with several lawyers and offices in key cities in the United Kingdom, a law firm that offer services in various niche areas in the legal industry; services such as Civil Litigation (complex civil litigation, commercial litigation, insurance defense, class actions, labor and employment, personal injury lawsuits and regulatory actions), Environmental Law (Green Law), Bankruptcy Law, Labor and Employment Law, Foreclosure Law, Intellectual Property Law and E-Discovery Practice, then you should look towards budgeting one million, three hundred thousand dollars (£1.3 million).

How Much Does It Cost to Start a Law Firm in Canada?

These are the key expenses you are expected to make when starting a medium scale but standard law firm business in Canada;

  • For federal incorporation of business in Canada, the cost to incorporate is $200 if filed online through Corporations Canada’s online Filing Centre ($250 if filed through other means).
  • The amount required for obtaining licenses and permits, as well as accounting services (software, P.O.S machines and other software) – $3,300.
  • Marketing promotion expenses for the grand opening of the law firm in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  • The cost for leasing a standard office facility in good location/business district – $150,000
  • The cost for remodeling the facility – $5,000.
  • Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000.
  • The cost for start-up inventory (printing papers, printing inks/cartridges, pen and stencil et al) – $2,500.
  • The cost for cash register, security, ventilation, signage – $3,750.
  • The cost for the purchase of furniture and gadgets (Telephone, printing machines, computers, tables and chairs, book shelves, cabins, standard library, photocopier, fax machine, amongst others): $4,000.
  • The cost for building and hosting a website: $600
  • The cost for opening party: $2,000
  • Miscellaneous: $5,000

You will need an estimate of two hundred and fifty thousand dollars ($250,000CAD) to successfully set up a medium scale but standard law firm in Canada. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and it applies to a law firm that offer variety of services within the legal industry.

Starting a small–scale but standard law firm business that can only carry out basic legal services in Canada will cost about twenty thousand dollars to fifty thousand dollars ($20,000CAD to $50,000CAD). Please note that just like most service based business, it is cost effective to start a small-scale law firm and you can afford to operate your law firm office from your home.

When it comes to starting a standard and large-scale law firm with several lawyers and offices in key cities in Canada, a law firm that offer services in various niche areas in the legal industry; services such as Civil Litigation (complex civil litigation, commercial litigation, insurance defense, class actions, labor and employment, personal injury lawsuits and regulatory actions), Environmental Law (Green Law), Bankruptcy Law, Labor and Employment Law, Foreclosure Law, Intellectual Property Law and E-Discovery Practice, then you should look towards budgeting one million, five hundred thousand dollars ($1.5 millionCAD).

How Much Does It Cost to Start a Law Firm in Australia?

These are the key expenses you are expected to make when starting a medium scale but standard law firm business in Australia;

  • In Australia, the fees to register your business name with ASIC include: $34 for 1 year. $80 for 3 years.
  • The amount required for obtaining licenses and permits as well as accounting services (software, P.O.S machines and other software) – $3,300.
  • Marketing promotion expenses for the grand opening of the law firm in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  • The cost for leasing a standard office facility in good location/business district – $150,000.
  • The cost for remodeling the facility – $5,000.
  • Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000.
  • The cost for start-up inventory (printing papers, printing inks/cartridges, pen and stencil et al) – $2,500
  • The cost for cash register, security, ventilation, signage – $3,750
  • The cost for the purchase of furniture and gadgets (Telephone, printing machines, computers, tables and chairs, book shelves, cabins, standard library, photocopier, and fax machine, amongst others): $4,000.
  • The cost for building and hosting a website: $600
  • The cost for opening party: $2,000
  • Miscellaneous: $5,000

You will need an estimate of two hundred and fifty thousand dollars (AUD$250,000) to successfully set up a medium scale but standard law firm in Australia. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and it applies to a law firm that offer variety of services within the legal industry.

Starting a small–scale but standard law firm business that can only carry out basic legal services in Australia will cost about twenty thousand dollars to fifty thousand dollars (AUD$20,000 to AUD$50,000). Please note that just like most service-based business, it is cost effective to start a small-scale law firm and you can afford to operate your law firm office from your home.

When it comes to starting a standard and large-scale law firm with several lawyers and offices in key cities in Australia, a law firm that offer services in various niche areas in the legal industry; services such as Civil Litigation (complex civil litigation, commercial litigation, insurance defense, class actions, labor and employment, personal injury lawsuits and regulatory actions), Environmental Law (Green Law), Bankruptcy Law, Labor and Employment Law, Foreclosure Law, Intellectual Property Law and E-Discovery Practice, then you should look towards budgeting one million, five hundred thousand dollars (AUD$1.5 million).

Estimating Start–Up Cost for Law Firm Business Based on the following factors;

  • Staff/Manpower

When it comes to starting a standard law firm business on a large scale, you would need the services of the following professionals;

  • Founder and President
  • Attorney
  • Patent Attorney
  • Legal Secretary
  • Paralegal
  • Legal Assistant
  • Admin and HR Manager
  • Business Developer
  • Accountant
  • Front Desk Officer

Can a Law Firm be Bootstrapped on a Lean Budget Right from Home?

If you a looking for a small scale business that you can successfully bootstrap on lean budget right from your home, then you should consider starting a law firm. One good thing about legal services is that you can successfully run the business from your home especially if you choose to operate in just a niche law practice area as a solo lawyer.

As a matter of fact, you can start a law firm business with as low as thirty thousand dollars or even less depending on how small you want the business to be. All you need to do is to register the business, purchase the basic needed office furniture and equipment, and print your business card.

The challenge here is that you must be ready to take on more than half of the available roles in the business. You should be able to serve as the manager, attorney, accountant, human resource and admin officer, sales and marketing officer.

How Much Does It Cost to Buy a Law Firm Franchise?

From available research conducted, there are no known law firms in the United States of America, United Kingdom, Canada and Australia that are into franchising; most players in this line of business are adopting strategies that will help them push their services beyond the city, state or country where their business is domiciled, to other parts of the world as against selling franchise of their product.

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