Starting your own practice? Joining a law firm? Doing due diligence? What questions should you ask?
Before lawyers go into business on their own account – on their own or in a firm – they are required to complete NZLS CLE’s Stepping Up programme.
Many participants in that programme say that they do not carry out any effective due diligence when they join a law firm. They don’t know what things they need to think about before hanging out their own shingle. They don’t know where to start.
Some have already made decisions and commitments and they wish they had done the programme earlier. They needed to be better informed before they took this important step in their careers.
There is uncertainty about what questions to ask and, sometimes, whether it is rude to inquire.
We even hear stories of offers of partnership being withdrawn after perfectly reasonable requests were made for information. We also hear of people joining firms without getting full disclosure beforehand and regretting it when they learn the full story.
There is uncertainty within established firms too. Many firms are not sure what information they should provide.
We would never approve our own clients going into a business, whether alone or with others, without planning and finding out as much as they can about what they are letting themselves in for.
Stepping Up is an intensive programme which provides candidates with comprehensive knowledge about the transition from being an employed lawyer to being a business owner. However, the financial and time commitments that it requires mean that many people leave it until they know they need the qualification. That is, until they have already made the commitment.
NZLS CLE has developed a resource to introduce lawyers to the issues that are involved and to encourage them to think about them before they make any commitments.
The intention is to help educate those who are considering taking this step, and also to normalise the whole due diligence process and bring it out into the open.
Many well organised law firms have packages of information that they provide to incoming partners. This may help and encourage more firms to follow that practice.
The resource consists of two parts.
One part is a series of videos of discussions about things to take into account.
There are discussions about sole practice as a solicitor and as a barrister.
There is also a comprehensive collection of videos aimed directly at those going into a firm. Issues covered include strategic planning, cultural matters, management and decision-making, the financials, staff, clients, premises and equipment risk and whether to use a partnership or a company.
The videos are each about 10 minutes long and are designed so that you can dip in and out of them as time permits.
The other part is a list of questions that you should consider if you are doing due diligence of a law firm. It should prompt inquiry into important issues.
The issues covered here will be more important in some firms and less important in others. Potential partners should turn their minds to these things.
All law firms are different, and so an incoming partner needs to have a good idea of the peculiarities of this firm.
It is also in the interests of the incumbent partners that any new partner fully understands what they are getting into. Surprises don’t help anyone.
The resource can be found on the NZLS CLE website.
Stuart Spicer is course director of the NZLS CLE Stepping Up programme.