Launching your own law firm can be one of the most rewarding moves in your legal career, but it also brings a unique set of challenges. Here, one firm founder shares her insights to help others not just survive, but thrive during their first financial year in business.
While many celebrate the rewarding and exciting aspects of launching a new law firm, it’s equally important to acknowledge the challenges that come with stepping into the role of a business owner.
Speaking with Lawyers Weekly, Selina Nikoloudakis revealed that when she launched Divorce Legal, she was stepping into more than just a new chapter in her legal career – it was a role that demanded far more than exceptional legal skills; it required wearing multiple hats.
“Prior to establishing Divorce Legal, I only had to concern myself with completing the legal work, servicing clients and mentoring junior practitioners. Becoming a business owner caused me to step out of my comfort zone,” she said.
“As a business owner, I was no longer responsible for just completing my legal work and mentoring younger practitioners. I was now responsible for ensuring the firm was running smoothly. If the backup system failed, I had to find a solution. If the emails weren’t working, I had to find a solution. I was responsible for setting up precedents and integrating them with my software program.”
Building financial stability from the ground up
A key part of successfully transitioning into law firm ownership is developing a solid understanding of the financial foundations of running a business, an area in which many lawyers have limited training or experience.
This was the case for Nikoloudakis, who took a careful and strategic approach to assessing her financial position to ensure a smooth entry into business ownership.
“Prior to establishing my legal practice, I took the time to research, identify and accurately record my likely future outgoings and expenses. Having completed this task, I was able to confidently forecast the amount of working capital I would require to commence my venture, which would include employing a law clerk from the outset,” she said.
Nikoloudakis was in a fortunate position to manage the firm’s cash flow from the outset, with many clients from her previous firm choosing to follow her to the new practice.
In addition, the strong referral network she had built over 16 years as a legal practitioner played a key role in attracting new clients and generating consistent revenue early on.
Another crucial component of her first-year strategy was establishing a sustainable pricing structure. For Nikoloudakis, this wasn’t just a financial decision – it was a strategic move aligned with her professional experience and the broader economic landscape.
“Over the years, I have familiarised myself with the charge out rates of boutique and mid-size law firms. When I was formulating my own business plan, I identified that I wanted my fee structure to reflect my personal and professional values of delivering a high-quality legal service in a cost-effective manner,” she said.
“Accordingly, my fee structure, in my view, reflects the current economic climate as well as my qualifications, as an accredited family law specialist (one of only a few in SA), and my 16-plus years of experience.”
Advice for aspiring firm owners
Having now built a boutique practice that continues to grow, Nikoloudakis offered a few crucial pieces of advice for those considering opening their own practice. These include:
“Build and maintain strong referral relationships; in my view, such relationships are crucial to long-term sustainability and growth,” she said.
“Ensure their fee structure remains within reach of those requiring the service.”
“When considering the business model, reflect upon personal and professional values. If your firm’s values do not align with personal and professional values, it will be challenging to successfully promote the service offerings of the firm.”
“Budget, plan, speak to existing business owners and seek guidance and support. You are not alone on this journey of being a business owner. Although it can at times be challenging, consider each challenge as an obstacle [that] can be overcome and once overcome, the journey is fulfilling and rewarding.”
