How to start a law firm: your essential guide

After graduating from law school, you may be toying with the idea of setting up your own firm. You might think of peers you want to partner with, where your firm will be, or the specific area you’ll be practicing. But at the same time, you may also wonder how to start a law firm in the first place.

In this article, we’ll discuss key points when opening your own law firm. We’ll also include some tips along the way to help you discover which path works for you.

Starting a law firm in Canada

There are a lot of considerations when you’re thinking about starting your own law firm or doing things on your own. Factors such as administrative processes and costs may play a big role.

Other considerations when starting a law firm on your own:

• business skills that you have, or you would have to learn
• management skills that are necessary for running a new firm
• sustainability of the firm, in terms of finances and manpower

Assess whether running a business is right for you. After all, having your own firm is just that — a business. If you have a good understanding of managing a business, you may have a bigger chance of being successful in starting your own law firm.

“If you do not have an appetite or desire to run a business or learn how to run a business, you shouldn’t do it because it’s a huge part of it,” said Lisa Ridgedale, co-founder of Hakemi & Ridgedale LLP in Vancouver. The firm was established in 2011 and was acquired by MLT Aikins LLP in 2022.  “You can’t just be a good lawyer; you have to be a good businessperson.”

Here’s a video of a short introduction to law firm structures for a clearer picture of the business side when starting a law firm:

You can also check our Practice Management section to find more resources and other articles when learning how to start a law firm.

What are the steps on how to start a law firm?

Below are some of the important steps on how to start a law firm, according to provincial Law Societies and lawyers who have opened their own firms. Take these for what they are – advice – since they’re always on a case-to-case basis. It would also depend on external factors, such as your location and market trends at the time of opening your new firm.

1. Know your practice area of specialty

Setting on what legal area you’re going to specialize in will help you trim down your practice and focus on how your new law firm will move forward. It will also help you create your own business plan, so that you’re guided along the way. This business plan will also help in your periodic evaluation of your level of success after opening your firm.

To help you specify your new firm’s practice, look at:

• location: the city or region you’re going to open your firm (e.g. is it an urban or rural area; are legal services in need in that location)
• legal practice field: the practice field that are ‘marketable’ in that city or region, or the field you’re good at or would like to focus on
• target clients: identify who your prospective clients are, where they’re usually found (related to location), and what are their possible needs from a lawyer like you

According to a 2023 survey, labour and employment law, and commercial real estate law remain strong practice areas.

Tip: Evaluate yourself

Part of knowing how to start a law firm is to do a self-assessment: examine your strengths, weaknesses, and most especially, your interests. Are you passionate about people? Do you enjoy being your own boss?

Once you’ve decided that you’d like to have your own practice, don’t be afraid to take the plunge! Heather Campbell started her own elder law firm in Vancouver after being called to the bar in 2011. She received a lot of encouragement from colleagues, family, and friends but also faced some criticism. She advises listening to their warnings, but “keep your head high and stay confident that [you] can do it.”

2. Set up your office

So now that you’re determined to start a law firm, the next step is to set up your own office space. Where you’ll open your first office will now depend on your legal practice field and target clients (back to step 1). It will also depend on other factors, such as the type of office. Based on your current resources, you may want to review these options:

• home office
• renting or leasing an office space
• sharing an office space with other professionals

The pandemic has changed the way law offices are structured. Take this into account before planning for your office space.

Tip: Develop a business plan

Without a solid business plan in place beforehand, every step towards building your practice will seem more difficult. Here are some important aspects of a business plan:

• business structure
• staffing policies
• practice management
• professional development
• financial investments and leveraging

Another vital aspect in your business plan is your firm’s image. “Part of what you want to look at is the image you want to portray with your firm. When I started my firm, I wanted to have something that’s young, dynamic, and modern,” Elmé Schmid said. She started her own criminal and regulatory law boutique firm in Toronto in 2012.

At that time, she worked with a graphic designer to create a website and stationery to reflect this image. Schmid added that your office space should also reflect your firm’s image. This is related to how you handle your firm’s ‘business’ side, and legal marketing is a big part of running your own law firm.

Investing in a decent website is a non-negotiable when starting a family law firm.

Your website is your business card, brochure, yellow pages, your brand, your reputation, marketing hook — and so much more all rolled into one.

Building trust with potential clients starts here. pic.twitter.com/fB7Z3YfQGK

— Jeff Sterling Hughes (@jsterlinghughes) February 28, 2024

3. Review the costs of starting a law firm

Still related to setting up your own office, another point to address when starting a law firm is its financial costs. Although there’s no definite answer on how much it would cost to start a law firm, here are few considerations:

• office space: cost of rent or lease
• employees' salaries: if you’re hiring employees or not; if yes, whether they’re hired part-time or full-time
• equipment and supplies: furniture for receiving clients, office supplies (e.g., cabinets, drawers), communication and internet costs, library costs, technologies (e.g., practice management software, computer, printer-scanner)

Tip: Getting your finances in order

Know the financial constraints when it comes to:

• banking
• taxes
• legal structure
• professional reporting and accounting obligations

According to Schmid, it’s important that you set up a good accounting system and find out what your obligations are as a sole practitioner. She suggested using the resources of Law Societies.

“As an associate, you spend so much time on developing your legal skills; in fact, that’s all you spend time on because you don’t have to concern yourself with running a business or handling the accounting side of any firm. So for most people who start out on their own that’s a completely new experience — it was for me — and for that especially, the law society was very helpful,” she said.

It’s also essential to have enough of a financial cushion to fall back on, especially in the first year when you’re unsure of how many clients you’ll have, said Regina Lee, who launched her own general practice in Toronto in 2011.

Watch this video to know more about other critical aspects when launching a law practice:

Check out our various reviews of legal practice management software to see which tool is best for you law firm:

Litify review
AbacusLaw review
PracticePanther Review
PCLaw review
NextChapter Review
Clio software review

4. Build your own network

After starting your own law firm, the next thing to do is to look for clients. To help you with that, it’s highly recommended to put yourself out there and do some networking. Aside from reaching out to interested clients and referrals, it can also open the doors for possible mentors, such as senior lawyers.

Tip: How to do effective networking

Ridgedale said that she takes advantage of every opportunity to network. “Anytime I get an invitation to speak at an event, attend an event, write an article, [or] go somewhere that has potential clients, I do it,” she said.

Schmid also said that networking doesn’t have to be challenging. “You know a lot of people already,” she says. Whether it’s through your summer position, articling term, or law school — those are all referral sources, she said.

Here’s some solid advice on networking for lawyers starting their own firms.

5. Reach out to possible mentors

Having your own law firm, there are times when you may feel isolated and overwhelmed. Then, there are those times when you don’t know how to move forward when working through a case. This does not mean that help is nowhere to be found.

There are mentors who you can reach out to when things go rough. They can advise you on what to do when facing a complex case, how to maintain a work-life balance, or offer some guidance on running your law firm.

Tip: Where to find mentors

Lee admitted that sometimes you need advice from a more experienced lawyer. “As a junior lawyer, it’s really intimidating to call up a senior lawyer that you don’t know [and who is] just some random person and say, ‘I don’t know what I’m doing, can you help me?’ I’ve actually done that before,” she said.

She called a senior lawyer who had been a speaker at a continuing professional development program she attended. He was also a sole practitioner, who seemed friendly and approachable, and he was happy to help her.

Schmid added that there are lots of lawyers who are willing to guide you. “Even though you might feel very alone, it isn’t that lonely out there,” she says. She suggested having several mentors to consult with when an ethical or other issue arises.

Here are good starting points for finding a mentor:

• bar groups
• Law Societies
• local law associations
• branches of the Canadian Bar Association (they offer mentorship programs)

Looking for mentors near your area for guidance on how to start a law firm? Check out this directory of the best lawyers in Canada as ranked by Lexpert.

Legal requirements and licensing

Part of setting up your own office is knowing the requirements according to law and the Law Societies. Below are the business registration requirements according to the Law Society of Ontario:

Tip: Follow the rules of professional conduct

Be aware of your professional conduct – this might be the last thing on your mind when running your own firm. To guide you, always refer to your Law Society’s practice management guidelines for sole practitioners and small firms. You can also go back to what you’ve learned from your ethics class when you were in law school.

How to start a law firm and track growth

Lastly, measuring your progress and then absorbing the results is crucial. Evaluating business performance regularly is crucial for success. The more effectively you can assess your achievements, progress, and efforts, the better equipped you'll be to grow and address potential issues in your business.

Just like the practice of law, starting a law firm or doing solo practice is never easy. However, it’s not impossible. With the right resources and senior mentors, establishing your own law firm can be achieved.

Are you looking to start your own law firm? Which tips or advice did you find most helpful? Let us know in the comments