Table of Content

    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.

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    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. 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.

    Law Firm Business Plan - 3 Years Profit Forecast

    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 law firm business. With a good law firm sample business plan, 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.

    Law Firm Business Plan - Startup Cost

    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.

    Law Firm Business Plan - Market Segmentation

    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.

    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 a law firm, 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.

    Law Firm Business Plan - Brake-even Analysis

     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

    Law Firm Business Plan - Profit Monthly

    8.3.2 Yearly Profit

    Law Farm Business Plan - Profit Yearly

    8.3.3 Monthly Gross Margin

    Law Firm Business Plan - Gross Margin Monthly

    8.3.4 Yearly Gross Margin

    Below is the profit and Loss Analysis for Raymond Associates law firm.
    Law Firm Business Plan - Gross Margin Yearly

    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.

    Law Firm Business Plan - Projected 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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