Do you want to start a law firm business?
Do you plan to start a law firm business? There is no doubt this is an awesome business venture with amazing potential. In recent years, the law firm industry has been experiencing a steady growth of more than 15% per annum. The need for individuals, businesses and companies seeking for lawyer services in order not to get into legal problems has greatly increased. Today, there are many niches you can choose to start your practice on. All you need to have is the right qualification and target the right customers for your law firm business plan.
Executive Summary
2.1 The Business
The law firm will be registered under the names Raymond Associates, and will be situated in Houston, Texas. The law firm will be owned and managed by Alex Raymond who is a lawyer by profession.
2.2 Management Team
Alex Raymond is a lawyer by professional who has worked in the legal industry for more than fifteen years. Before coming up with a law firm business model, Alex worked for many to law firms across the United States and is an accomplished legal business service expert.
2.3 Customer Focus
Raymond Associates plans to offer different top notch legal services to customers in Houston, Texas. The customer focus will cater for different age groups and working class.
Note
Once you have figured out how to start your own law firm, having an idea of the customer you intend to target is important. The customers you plan to target is essential for the growth of the business.
2.4 Business Target
Raymond Associates intends to offer services to a wide range of clientele keen on seeking legal services for their various needs. For a business to grow, it is important to carry out an in-depth research to target the right clientele.
Company Summary
3.1 Company Owner
Alex Raymond is a lawyer professional who has worked with famous legal firms in the United States. In the course of his career, he ascended to the position of a seasoned attorney and took the lead role in planning the law firm operations and overseeing all management related aspects.
3.2 Aim of Starting the Business
After having been in the career long enough, Alex noticed there was a lot of potential in the legal industry in his home town Houston. That is the when he decided to move back to home and start a business plan for law firms. With a good business plan for law firms, Raymond Associates will indeed be one of the best law firms in Houston.
3.3 How the Business will be Started
As an expert in legal services, Alex understands what he needs to start the law firm. To set his idea into action, he has worked closely with businesses set-up experts to develop a financial plan for the law firm.
| Start-up Expenses | ||
| Legal | $7,000 | |
| Consultants | $5,000 | |
| Insurance | $20,000 | |
| Rent | $25,000 | |
| Research and Development | $12,000 | |
| Expensed Equipment | $25,000 | |
| Signs | $6,000 | |
| TOTAL START-UP EXPENSES | $100,000 | |
| Start-up Assets | $0 | |
| Cash Required | $70,000 | |
| Start-up Inventory | $30,000 | |
| Other Current Assets | $33,000 | |
| Long-term Assets | $10,000 | |
| TOTAL ASSETS | $30,000 | |
| Total Requirements | $25,000 | |
| START-UP FUNDING | $0 | |
| START-UP FUNDING | $120,000 | |
| Start-up Expenses to Fund | $34,000 | |
| Start-up Assets to Fund | $30,000 | |
| TOTAL FUNDING REQUIRED | $0 | |
| Assets | $25,000 | |
| Non-cash Assets from Start-up | $20,000 | |
| Cash Requirements from Start-up | $0 | |
| Additional Cash Raised | $80,000 | |
| Cash Balance on Starting Date | $25,000 | |
| TOTAL ASSETS | $0 | |
| Liabilities and Capital | $0 | |
| Liabilities | $0 | |
| Current Borrowing | $0 | |
| Long-term Liabilities | $0 | |
| Accounts Payable (Outstanding Bills) | $0 | |
| Other Current Liabilities (interest-free) | $0 | |
| TOTAL LIABILITIES | $0 | |
| Capital | $0 | |
| Planned Investment | $0 | |
| Investor 1 | $30,000 | |
| Investor 2 | $25,000 | |
| Other | $0 | |
| Additional Investment Requirement | $0 | |
| TOTAL PLANNED INVESTMENT | $140,000 | |
| Loss at Start-up (Start-up Expenses) | $60,000 | |
| TOTAL CAPITAL | $70,000 | |
| TOTAL CAPITAL AND LIABILITIES | $50,000 | |
| Total Funding | $130,000 | |
Services for Customers
Raymond Associates is focused on offering professional legal services to different type of clients. According to the starting a law firm business plan, the business is focused on offering the following services:
- Provide property law services to people facing mortgage, foreclosure and other property acquisition.
- Offer legal services to people suffering from personal injury. Employees’ injuries at work are extremely sensitive and need a qualified lawyer to intervene.
- Provide legal services to couples going through a divorce.
- Offer legal services to people buying and selling businesses – acquisitions and mergers.
Marketing Analysis for Law Firm Business
For Raymond Associates to meet its market obligations, a detailed market analysis was done to help the business establish itself in the industry and adequately serve the needs of client. This law firm business plan explains the strategy the business will follow to attain its goals. Given the rising demand for various legal services, there is a great opportunity for Raymond Associates to meet its objectives.
5.1 Market Segmentation
Given the increasing popularity of law firms industry, Raymond Associates understands the value of coming up with sustainable marketing strategies to acquire a larger market share. Being one of the largest cities in the United States, Houston is a business hub with many individuals and companies looking for legal services. Based on the market findings and law firm business plan template, the law firm intends to target the following potential customers.
5.1.1 Couples
Marriage is a good thing but a time comes in life where people want to depart for various reasons. Nowadays, there is a high divorce rate in Texas, and for this reason Alex so it necessary to start a law office business plan to provide divorce legal services. When going through a divorce, you want to use a law firm that know how to handle sensitive issues. Raymond Associates highly trained attorneys and family law professionals will be dedicated to help people going through divorce to successfully navigate the family courts.
If you have a family law case, it can be frustrating to sort through the maze of paperwork required to finish your case. Raymond Associates is ready to help though all the steps if filing a divorce, spousal support orders or custody issues among other services listed in the law firm business plan sample.
5.1.2 Property Owners
One of the main services offered by Raymond Associates is foreclosure and mortgage legal services. Whether it is mortgage, foreclosure or other property acquisition, Raymond Associates lawyers will help you go through that. The lawyers will offer the best advice and assist you throughout the whole process. The law firm will help file necessary documents and go through disputes that may arise between the transactions.
Business Plan for Investors
5.1.3 Employees
With so many companies and organization in Houston, Raymond Associates sample law firm business plan will target employees. When it comes to legal services involving employee injuries at work, these cases are usually sensitive and need a qualified lawyer to intervene. In most cases, employees feel oppressed in matters in regards to compensation and opt to use a lawyer. This is why Raymond Associates has a well inclusive personal injury law firm business plan to cater for such cases.
5.1.4 Businesses
According to the law firm marketing plan template, Raymond Associates will offer legal services to businesses to buying and selling businesses – acquisitions and mergers. With many individuals buying and selling businesses, it is important to use the services of a lawyer. A good law office will help you minimize taxes and potential liability issues for buyers and sellers figuring out how to structure a deal.
| Market Analysis | |||||||
| Potential Customers | Growth | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | ||
| Couples | 25% | 20,000 | 23,000 | 26,000 | 29,000 | ||
| Property Owners | 30% | 18,000 | 21,000 | 24,000 | 27,000 | ||
| Employees | 25% | 15,000 | 18,000 | 21,000 | 24,000 | ||
| Businesses | 20% | 13,000 | 16,000 | 19,000 | 22,000 | ||
| Total | 100% | 66,000 | 78000 90000 | 102,000 | |||
5.2 Business Target
Raymond Associates is getting into a highly competitive environment considering there are a high number of law firms in Houston. However, this small law firm business plan outlines the plan the business intends to use to acquire clients and propel business growth. It is costly to set up a fully functioning law firm, but adequate strategies have been put in place to help the business fully recover its initial capital. After finalizing the starting a law firm business and rolling out operations, the call centerexpects to recoup its initial investment in three years based on a projected 30-40% annual sales growth.
5.3 Product Pricing
While strategizing on how to start a law firm business plan, Alex Raymond together with the assistance of experts has come up with a competitive pricing structure tailored for different services. At the beginning, the call center intends to offer various incentives to attract clients.
Strategy
When planning to start a law office, you need to come up with a great business development strategy. Alex Raymond has engaged experts to formulate a call center strategy that will be instrumental to steer business growth. He has also invested time to studying law firm proposal examples. The following is Raymond Associates law firm sales strategy.
6.1 Competitive Analysis
Raymond Associates has deployed the latest telemarketing technologies to boost efficiency and seamlessly handle multiple clients without compromising quality. After completing the procedures of how to build a law firm, the business anticipates high competition considering there are numerous similar establishments in Houston.
6.2 Sales Strategy
For Raymond Associates to achieve its intended targets and create a successful law office which is popular with clients, the following sales strategy will be implemented.
- Hire professional marketing agencies to help advertise the law firm and reach out to potential clients.
- Organize an official opening party and welcome top industry stakeholders to create awareness about the business
- Advertise on digital media platforms such as Facebook, Twitter and Instagram
- Use local media channels such as Television and newspapers to advertise the business
6.3 Sales Forecast
Raymond Associates law firm has put in place various sales strategies in order to meet its targets. According to the law firm business plan example, the sales forecast looks promising for the business.
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Legal Services for Mortgage & Foreclosure | 300,000 | 320,000 | 340,000 |
| Legal Services for Personal Injury | 250,000 | 270,000 | 290,000 |
| Legal Services for Divorce | 200,000 | 220,000 | 240,000 |
| Legal Services for Acquisitions &Mergers | 150,000 | 170,000 | 190,000 |
| TOTAL UNIT SALES | 900,000 | 980,000 | 1,060,000 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Legal Services for Mortgage & Foreclosure | $250.00 | $200.00 | $150.00 |
| Legal Services for Personal Injury | $200.00 | $150.00 | $100.00 |
| Legal Services for Divorce | $150.00 | $100.00 | $50.00 |
| Legal Services for Acquisitions &Mergers | $100.00 | $50.00 | $30.00 |
| Sales | |||
| Legal Services for Mortgage & Foreclosure | $240,000 | $260,000 | $280,000 |
| Legal Services for Personal Injury | $200,000 | $220,000 | $240,000 |
| Legal Services for Divorce | $160,000 | $180,000 | $200,000 |
| Legal Services for Acquisitions &Mergers | $120,000 | $140,000 | $160,000 |
| TOTAL SALES | |||
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Legal Services for Mortgage & Foreclosure | $4.00 | $3.00 | $2.00 |
| Legal Services for Personal Injury | $3.00 | $2.00 | $1.00 |
| Legal Services for Divorce | $2.00 | $1.00 | $0.60 |
| Legal Services for Acquisitions &Mergers | $1.00 | $0.70 | $0.30 |
| Direct Cost of Sales | |||
| Legal Services for Mortgage & Foreclosure | $230,000 | $250,000 | $27,000 |
| Legal Services for Personal Injury | $200,000 | $220,000 | $240,000 |
| Legal Services for Divorce | $170,000 | $190,000 | $210,000 |
| Legal Services for Acquisitions &Mergers | $140,000 | $160,000 | $180,000 |
| Subtotal Direct Cost of Sales | $600,000 | $650,000 | $700,000 |
Personnel Plan
Raymond Associates provides diverse services in order to boost the company’s income. When coming up with a business plan for law firms, it is vital to focus on having a good personnel team to handle business operations.
7.1 Personnel Plan
The law firm is owned by Alex Raymond who will be the overall firm manager for the business. The law office intends to hire the following staff to enable the business carry out its operations.
- Secretary
- Administrator
- Operations Manager
- Two Marketing Executives
- Five Lawyers
- Three Advocates
- 2 Cleaners
Successful candidates will undergo intensive training to understand procedures and expectations.
7.2 Average Staff Salaries
Raymond Associates law office plans to pay its staff the following salaries in the first three years of operations.
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Manager | $45,000 | $50,000 | $55,000 |
| Secretary | $25,000 | $30,000 | $35,000 |
| Administrator | $28,000 | $34,000 | $38,000 |
| 2 Sales and Marketing Executive | $50,000 | $55,000 | $60,000 |
| 5 Lawyers | $100,000 | $110,000 | $120,000 |
| 3 Advocates | $60,000 | $65,000 | $70,000 |
| Operation Manager | $40,000 | $45,000 | $50,000 |
| Total Salaries | $348,000 | $389,000 | $428,000 |
Financial Plan
Alex Raymond law firm has formulated a financial plan that will steer the path to business success. To the business, Alex will use his personal savings and funds from two investors. A loan will be sought to help raise startup capital for the business. Crucial financial information for the business has been indicated in the law firm business plan template free.
8.1 Important Assumptions
Financial forecast for Raymond Associates law firm will be based on the following assumptions.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 7.00% | 9.00% | 11.00% |
| Long-term Interest Rate | 5.00% | 5.00% | 5.00% |
| Tax Rate | 10.00% | 13.00% | 16.00% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
Raymond Associates Brake-even Analysis is indicated in the graph below.
| Brake-Even Analysis | ||
| Monthly Units Break-even | 5000 | |
| Monthly Revenue Break-even | $350,000 | |
| Assumptions: | ||
| Average Per-Unit Revenue | $150.00 | |
| Average Per-Unit Variable Cost | $3.00 | |
| Estimated Monthly Fixed Cost | $300,000 | |
8.3 Projected Profit and Loss
Profit and Loss information for Raymond Associates calculated on a monthly and annual basis is shown below.
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $600,000 | $630,000 | $690,000 |
| Direct Cost of Sales | $50,000 | $60,000 | $70,000 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $50,000 | $60,000 | $80,000 |
| Gross Margin | $520,000 | $540,000 | $580,000 |
| Gross Margin % | 85.00% | 90.00% | 95.00% |
| Expenses | |||
| Payroll | $350,000 | $370,000 | $390,000 |
| Sales and Marketing and Other Expenses | $8,000 | $10,000 | $12,000 |
| Depreciation | $6,000 | $8,000 | $10,000 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $5,000 | $7,000 | $9,000 |
| Insurance | $3,000 | $5,000 | $7,000 |
| Rent | $15,000 | $17,000 | $19,000 |
| Payroll Taxes | $35,000 | $40,000 | $45,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $330,000 | $360,000 | $390,000 |
| Profit Before Interest and Taxes | $60,000 | $65,000 | $70,000 |
| EBITDA | $20,000 | $23,000 | $26,000 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $20,000 | $23,000 | $26,000 |
| Net Profit | $240,000 | $250,000 | $260,000 |
| Net Profit/Sales | 30.00% | 35.00% | 40.00% |
8.3.1 Monthly Profit
8.3.2 Yearly Profit
8.3.3 Monthly Gross Margin
8.3.4 Yearly Gross Margin
Below is the profit and Loss Analysis for Raymond Associates law firm.
Below is the profit and Loss Analysis for Raymond Associates law firm.
8.4 Projected Cash Flow
The diagram below is a summary of subtotal cash spent, subtotal cash from operations, subtotal cash spent on operations, subtotal cash received and pro forma cash flow.
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $40,000 | $50,000 | $60,000 |
| Cash from Receivables | $10,000 | $12,000 | $14,000 |
| SUBTOTAL CASH FROM OPERATIONS | $50,000 | $62,000 | $74,000 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $50,000 | $62,000 | $74,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $25,000 | $29,000 | $32,000 |
| Bill Payments | $12,000 | $22,000 | $32,000 |
| SUBTOTAL SPENT ON OPERATIONS | $37,000 | $51,000 | $64,000 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $37,000 | $51,000 | $64,000 |
| Net Cash Flow | $20,000 | $24,000 | $28,000 |
| Cash Balance | $25,000 | $29,000 | $33,000 |
8.5 Projected Balance Sheet
The following is a Projected Balance Sheet for Raymond Associates law firm that shows capital, assets, long term assets, liabilities and current liabilities.
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $300,000 | $320,000 | $340,000 |
| Accounts Receivable | $25,000 | $27,000 | $29,000 |
| Inventory | $7,000 | $9,000 | $11,000 |
| Other Current Assets | $5,000 | $7,000 | $9,000 |
| TOTAL CURRENT ASSETS | $337,000 | $363,000 | $389,000 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $13,000 | $16,000 |
| Accumulated Depreciation | $14,000 | $16,000 | $18,000 |
| TOTAL LONG-TERM ASSETS | $7,000 | $4,500 | $3,000 |
| TOTAL ASSETS | $368,000 | $396,500 | $426,000 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $20,000 | $24,000 | $28,000 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $20,000 | $24,000 | $28,000 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $24,000 | $28,000 | $32,000 |
| Paid-in Capital | $32,000 | $32,000 | $32,000 |
| Retained Earnings | $40,000 | $45,000 | $50,000 |
| Earnings | $140,000 | $150,000 | $160,000 |
| TOTAL CAPITAL | $380,000 | $400,000 | $420,000 |
| TOTAL LIABILITIES AND CAPITAL | $300,000 | $320,000 | $340,000 |
| Net Worth | $250,000 | $300,000 | $350,000 |
8.6 Business Ratios
Raymond Associates law firm Business Ratios, Ratio Analysis and Business Net Worth are shown below.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 15.00% | 25.00% | 64.00% | 8.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 10.00% | 12.00% | 5.10% | 12.00% |
| Inventory | 7.00% | 5.00% | 3.40% | 15.00% |
| Other Current Assets | 8.00% | 3.00% | 2.80% | 30.00% |
| Total Current Assets | 90.00% | 100.00% | 120.00% | 65.00% |
| Long-term Assets | -7.00% | -14.00% | -21.00% | 40.00% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 8.00% | 4.00% | 3.40% | 35.00% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 30.00% |
| Total Liabilities | 6.00% | 4.00% | 5.00% | 43.00% |
| NET WORTH | 80.00% | 90.00% | 110.00% | 35.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 60.00% | 70.00% | 80.00% | 3.00% |
| Selling, General & Administrative Expenses | 55.00% | 65.00% | 60.00% | 57.00% |
| Advertising Expenses | 6.00% | 4.00% | 3.50% | 7.00% |
| Profit Before Interest and Taxes | 30.00% | 35.00% | 40.00% | 2.00% |
| Main Ratios | ||||
| Current | 20 | 24 | 28 | 3.5 |
| Quick | 28 | 34 | 38 | 1.4 |
| Total Debt to Total Assets | 8.00% | 5.00% | 3.00% | 45.00% |
| Pre-tax Return on Net Worth | 80.00% | 85.00% | 90.00% | 3.20% |
| Pre-tax Return on Assets | 50.00% | 55.00% | 60.00% | 13.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 15.00% | 20.00% | 25.00% | N.A. |
| Return on Equity | 55.00% | 60.00% | 65.00% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 10 | 14 | 18 | N.A. |
| Collection Days | 90 | 100 | 110 | N.A. |
| Inventory Turnover | 23 | 29 | 35 | N.A. |
| Accounts Payable Turnover | 20 | 25 | 30 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 5.1 | 3.5 | 2.5 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | -0.18 | -0.26 | N.A. |
| Current Liab. to Liab. | 0 | 0 | 0 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $200,000 | $240,000 | $280,000 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 3.45 | 2.45 | 1.25 | N.A. |
| Current Debt/Total Assets | 10% | 7% | 5% | N.A. |
| Acid Test | 35 | 40 | 45 | N.A. |
| Sales/Net Worth | 4.5 | 3.5 | 2.2 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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