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 business.

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 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 CustomersGrowthYEAR 1YEAR 2YEAR 3YEAR 4
Couples25%20,00023,00026,00029,000
Property Owners30%18,00021,00024,00027,000
Employees25%15,00018,00021,00024,000
Businesses20%13,00016,00019,00022,000
Total100%66,00078000               90000102,000

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 center
expects 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, 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 SalesYear 1Year 2Year 3
Legal Services for Mortgage & Foreclosure300,000320,000340,000
Legal Services for  Personal Injury250,000270,000290,000
Legal Services for Divorce200,000220,000240,000
Legal Services for Acquisitions &Mergers150,000170,000190,000
TOTAL UNIT SALES900,000980,0001,060,000
Unit PricesYear 1Year 2Year 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 CostsYear 1Year 2Year 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 1Year 2Year 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 1Year 2Year 3
Plan Month123
Current Interest Rate7.00%9.00%11.00%
Long-term Interest Rate5.00%5.00%5.00%
Tax Rate10.00%13.00%16.00%
Other000

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-even5000
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 1Year 2Year 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/Sales30.00%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 ReceivedYear 1Year 2Year 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
ExpendituresYear 1Year 2Year 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   
AssetsYear 1Year 2Year 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 CapitalYear 1Year 2Year 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 1Year 2Year 3INDUSTRY PROFILE
Sales Growth15.00%25.00%64.00%8.00%
Percent of Total Assets
Accounts Receivable10.00%12.00%5.10%12.00%
Inventory7.00%5.00%3.40%15.00%
Other Current Assets8.00%3.00%2.80%30.00%
Total Current Assets90.00%100.00%120.00%65.00%
Long-term Assets-7.00%-14.00%-21.00%40.00%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities8.00%4.00%3.40%35.00%
Long-term Liabilities0.00%0.00%0.00%30.00%
Total Liabilities6.00%4.00%5.00%43.00%
NET WORTH80.00%90.00%110.00%35.00%
Percent of Sales
Sales100.00%100.00%100.00%100.00%
Gross Margin60.00%70.00%80.00%3.00%
Selling, General & Administrative Expenses55.00%65.00%60.00%57.00%
Advertising Expenses6.00%4.00%3.50%7.00%
Profit Before Interest and Taxes30.00%35.00%40.00%2.00%
Main Ratios
Current2024283.5
Quick2834381.4
Total Debt to Total Assets8.00%5.00%3.00%45.00%
Pre-tax Return on Net Worth80.00%85.00%90.00%3.20%
Pre-tax Return on Assets50.00%55.00%60.00%13.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin15.00%20.00%25.00%N.A.
Return on Equity55.00%60.00%65.00%N.A.
Activity Ratios
Accounts Receivable Turnover101418N.A.
Collection Days90100110N.A.
Inventory Turnover232935N.A.
Accounts Payable Turnover202530N.A.
Payment Days272727N.A.
Total Asset Turnover5.13.52.5N.A.
Debt Ratios
Debt to Net Worth0-0.18-0.26N.A.
Current Liab. to Liab.000N.A.
Liquidity Ratios
Net Working Capital$200,000$240,000$280,000N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales3.452.451.25N.A.
Current Debt/Total Assets10%7%5%N.A.
Acid Test354045N.A.
Sales/Net Worth4.53.52.2N.A.
Dividend Payout000N.A.