Managing a law firm: Going it alone

My decision to start my own firm came while I was at Baker & McKenzie. I enjoyed my time there - and at HM Revenue and Customs where I was before that - meeting great people who have been influential in my career. I learnt how to operate in a commercial environment and also the need to focus on the overriding objectives of client service and profitability. I then went into partnership with a small firm for a year. For various reasons, the move was a total disaster. Leaving and branching out on my own was the most difficult decision I have taken in my career.I have often felt lawyers are risk-adverse and non-entrepreneurial. In 2002 I completed an MBA, which gave me an insight into effective commercial structures and how to identify and develop niche markets. I realised that the mentality of our profession, and the conventional structure of law firms, often discourages entrepreneurialism. Decision making in firms can be slow and inflexible. I was keen to avoid this.

November 26, 2008 at 09:29 PM

5 minute read

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Khan Partnership senior partner Hassan Khan explains how he overcame a risk adverse professional culture and fee dodging clients to successfully establish his own law firm

My decision to start my own firm came while I was at Baker & McKenzie. I enjoyed my time there – and at HM Revenue and Customs where I was before that – meeting great people who have been influential in my career. I learnt how to operate in a commercial environment and also the need to focus on the overriding objectives of client service and profitability. I then went into partnership with a small firm for a year. For various reasons, the move was a total disaster. Leaving and branching out on my own was the most difficult decision I have taken in my career.

I have often felt lawyers are risk-adverse and non-entrepreneurial. In 2002 I completed an MBA, which gave me an insight into effective commercial structures and how to identify and develop niche markets. I realised that the mentality of our profession, and the conventional structure of law firms, often discourages entrepreneurialism. Decision making in firms can be slow and inflexible. I was keen to avoid this.

You've got to be flexible with your business plan. It is okay to adapt it in light of client feedback, profitability achieved and market opportunity. In other words, keep your business plan as a reminder of your aim, but do not follow it too rigidly. And always be true to your instinct about your chosen market.

Location is everything. We made the decision to obtain the best offices we could afford, and were fortunate to obtain a lease at the Old Bailey in London EC4. This was a calculated decision, which thankfully paid off immediately. It meant that clients did not question charge-out rates as the location further enhanced our perceived level of service quality.

The Law Society dealt with the registration of the new firm impressively speedily. Within the space of 10 days from bank approval of funding, the firm was established as a registered entity, with insurance and premises in place. Our first day consisted of my pregnant wife, her father and me moving things in, with our 13-month-old daughter playing on the floor while we unpacked boxes and answered telephones. Their support was – and continues to be – crucial.

The next phase was to obtain staff. I interviewed approximately 15 potential assistants in a three-day period, making offers to two of them. For the first year it was myself, two assistants and one secretary. We are now up to six partners and approximately 60 very able and supportive staff, and have a multi-million pound turnover.

First class IT infrastructure proved way over budget, but was essential. We gave BlackBerrys to all fee earners (including paralegals), along with digital dictation and remotely accessible time recording systems. Initial investment cost was high, but this enabled faster client work turnaround and administration to be carried out from anywhere in the world.

We also learnt that not all work is profitable. While we were fortunate in receiving many new instructions, we extended credit to a raft of unproven new clients who then did not pay. Realising tight credit control of billing and collection is vital, we subsequently hired a full-time qualified accountant. Although this was expensive, the investment paid for itself in reduced write-offs within months.

Diversify quickly according to market opportunities. Our tax litigation work (which obtained a tier one ranking in Chambers and Partners in our second year) rapidly developed into cross-border litigation. Commercial projects and other work such as Islamic Finance transactions and oil field exploration deals followed soon after. To our very pleasant surprise, profitable and fascinating instructions have arrived from multinational corporations and governments.

Our law firm today is totally unrecognisable from the one I founded in October 2004. And a world away from where I ever envisaged it would be. My core principles have always been to provide excellent quality advice, be proactive in all matters, not tolerate internal politics and to always maintain profitable margins. Against these principles we have grown a dynamic firm which outpaced my carefully drafted two-year initial business plan within its first four months. In October I was surprised and delighted to be awarded the Lloyds TSB Jewel Award in the Professional Excellence category.

The key factor for me is how I feel when I wake up each morning. I remain totally excited and enthusiastic about the day ahead. I could not enjoy anything else more or envisage doing any other job. After a fast-paced and dynamic four years, I do not think at all that it is time to slow down.

I do not have any regrets whatsoever. Except for not believing in myself enough to start on my own earlier. Any other advice to others contemplating starting a firm? Research your market, speak to your clients, trust others, do not delay difficult decisions and be prepared to work day and night – well initially, anyway. Then don't look back.

Hassan Khan is senior partner at Khan Partnership.