Guide to Opening Your Practice for Lawyers

Introduction to the Guide
Should I Open My Own Practice?
Defining Your Practice
Office Space
Computer Systems for Your Practice
Setting Up Your Office
Business Structure or Practice Arrangement
Business Registrations
Bank Accounts, Accounting and Other Financial Issues
Insuring You and Your Practice
Building Your Support Team
Marketing Your Practice
Networking
Mentoring
Administrative Requirements
Practice Management
Contingency Planning for Your Practice
Office Manual
Preparing a Business Plan   

Appendices
    Appendix 1 - Letter To Law Society Of Upper Canada
    Appendix 2 - Law Office Inventory Checklist
    Appendix 3 - Law Office List Of Contacts
    Appendix 4 - Developing a Law Firm Business Plan
    Appendix 5 - Fee Projections Worksheet
    Appendix 6 - Cash Flow Worksheet
    Appendix 7 - Profit and Loss Statement


List of Resources
 



Introduction to the Guide 

The Law Society of Upper Canada created the Guide to Opening Your Practice to inform lawyers of the steps involved in opening a law practice and to assist them to prepare a business plan.[1] Intended for lawyers interested in operating as either sole practitioners or in a small firm, the Guide will be helpful if you are considering or have decided to open your own practice.

Because of the wealth of information available, researching how to open your professional business can be overwhelming. If you have already begun your research, the Guide will help you to complete a business plan for the law practice you wish to create. If reading the Guide is your first step, it will inform you about the major issues you should consider when opening a law practice and will direct you to other materials in each area you should review. Once you have completed your review, you may return to the Guide and use it as a roadmap to assist you to complete your business plan.

Where possible, sample documents,[2] references, links and/or contact information have been included. The information and resources contained in the Guide may not be applicable to other professional businesses and references to relevant government Ministries are accurate at the date listed on this Guide.

Owning a law practice means both practising law and operating a business. It is exciting and challenging. If you take the time to determine for yourself why opening your own professional business is attractive to you and to write a business plan that creates the professional business you desire, your chance for success will be greatly increased.      

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Should I Open My Own Practice? 

Opening and operating your own law practice makes you the owner of a business as well as a lawyer. The concerns of a self-employed business owner are different than those of an employee so the decision to open a practice should be well-informed. Before opening your own law practice, you should first evaluate whether you have or need to develop the necessary skills and attitudes to do so.

Tools exist to test your suitability to open and operate your own business, some of which have been included in the Resources section of this Guide. These self-assessment tools can provide you with a snapshot analysis of your strengths and weaknesses, as compared with those of successful business owners. Use the test results to determine what skills you lack to either augment those skills or to tailor your business and business plan accordingly. You will always be the most important part of your law practice.

Checklist


 

Personality and Attitude

  • Consider whether you are
    • a “self-starter”
    • a leader
    • competitive
    • organized
    • energetic
    • healthy
    • a “risk taker”
     
  • Assess your problem-solving style.
  • Evaluate your planning and organizational skills.
  • Assess whether you have the management and interpersonal skills to be an effective leader and to manage others.
  • Consider whether you have the necessary health, energy and drive to open and maintain a law practice.
  • Evaluate whether you have the “people skills” necessary to establish and maintain business relationships, both internal and external.
  • Assess whether you can make decisions easily, either autonomously or with outside input.
  • Consider whether you are flexible and can adapt to changing conditions, financial or otherwise, as your practice evolves.
  • Consider whether you are able to handle stress well and how you deal with crises.

Other Considerations

  • Assess the time needed to focus on your practice and whether you have competing commitments (e.g. family).
  • Evaluate whether and how others will be affected if you open your own practice (e.g. long hours, after-hour demands, financial stress).
  • Consider how you will separate your business and personal lives, considering health benefits, insurance, vacation and retirement planning. See the Insuring You and Your Practice section of this Guide for more information.
  • Determine what skills or knowledge you will not be able to develop that can be provided by a third party (e.g. marketing, accounting, bookkeeping, technology services, etc.).

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Defining Your Practice  

To open a law practice you will need to know in which area of law and in what city or region of Ontario you would like to provide legal services. However, to prepare an adequate business plan, you may need to further define your practice. This includes identifying your target clients, the services you will provide and in what location you would like to provide them.

Initially you may need to offer a wider range of services to a broader-based clientele than you would for the long term. To ensure that you are successful in the long term, you will require a strategy that defines your practice area and target market at the beginning and during the evolution of your law practice.

Checklist


 

Target Client(s)

  • Determine your target client.
  • Ascertain what services your target client wants and values.
  • Evaluate how your target client would like to receive those services (e.g. use of e-mail, offering home visits or evening appointments).

Practice Area(s) and Scope of Service(s)

  • Determine in what area(s) of law you will practise and provide legal services.
  • Consider compatible practice areas (e.g. you may start your estate litigation practice as a general litigation practice, or may also do wills and estate planning, before restricting your activities to estate litigation).
  • Ensure that you are competent to practise in your chosen areas of law, and take appropriate steps to build and maintain your competence, in accordance with the Rules of Professional Conduct [Section 3.1].
  • Consider whether you will provide other ancillary non-legal services (e.g. commissioning or notarization of documents) in addition to legal work. Review the Commissioners for Taking Affidavits Act and the Notaries Act, as the ability to commission affidavits or notarize documents is not regulated by the Law Society.
  • Consider doing contract work for other lawyers or becoming a practice locum. See the Law Society’s Contract Lawyers and Paralegals List.
  •  Consider doing work for Legal Aid Ontario, as a panel lawyer or as duty counsel. Note that you must first receive a solicitor number from Legal Aid Ontario before you may do certificate work. Visit the Legal Aid Ontario website or contact them directly at 416-979-1446 or 1-800-668-8258.
  • Consider becoming the protégé for a lawyer who is developing his or her succession plans (i.e. to sell or transfer his or her practice upon retirement).
  • Ensure that you understand your obligations under the Rules of Professional Conduct [Section 7.3] if you choose to engage in activities outside the practice of law to supplement your income while developing your practice.

Location

  • Determine where you would like to open your law practice.
  • Consider whether you are limited or are flexible in your choice of location (e.g. by finances or by other commitments).
  • Evaluate whether there is a market for the legal and non-legal services you wish to provide in the location(s) you are considering (e.g. the location is home to enough of your target clients to support your business).
  • If there are other legal service providers in the geographical area, consider whether the market will support your business initially and as your practice evolves.
  • Consider population, demographics and future growth areas of the community where you would like to open your professional business.
  • Research available demographic and market statistics by province or metropolitan area.

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Office Space 

Choosing office space for your practice involves a number of considerations. Issues such as cost, attracting and servicing your target client market, type of practice and personal convenience may all play a role in deciding where to open your practice. You should also consider whether the office space you seek is for the short or long term. You should ensure that the space you choose will meet your needs for the time period you have in mind and should factor in the cost of moving if the space you select is for the short term only.

Checklist


 

Home Office

  • Before committing to a home office, consider how your office may be perceived and whether a home office will attract your target client.
  • Consider the issues relevant to operating a home office, such as whether
    • operating a law practice from your home is limited by law (e.g. municipal zoning or condominium by-law)
    • a home office would limit your practice by inconveniencing clients (e.g. your home is in a remote location or has no available client parking)
    • your home has the physical space required for a dedicated home office (e.g. privacy, secure storage for financial records and client files, funds and property)
    • your home can support the business systems required for your practice (e.g. power or service for a phone system, facsimile, Internet access, computer system, etc.)
    • your home office can accommodate the support staff you need
    • physical changes are needed to accommodate a home office (e.g. wiring, servicing, renovations, changes to décor, client parking, etc.), and the cost of those changes
    • you can work effectively while dealing with disruptions, both professional and personal (e.g. accepting service of documents or dealing with client inquiries)
    • clients having knowledge of your home address may pose a risk to personal safety, both to you and anyone who resides with you
    • there may be any tax implications for setting up or operating a home office
     
  • Ensure that a home office allows you to meet your obligations under the Rules of Professional Conductand the by-laws to the Law Society Act, including
    • maintaining client confidentiality [Section 3.3]
    • preservation of client property (e.g. original will or valuable property) [Section 3.5]
    • proper delegation to and supervision of support staff [Section 6.1 and By-Law 7.1]
    • procuring adequate professional liability insurance coverage [By-Law 6]
     
  • Where your home office offers limited space, consider using a business centre for “boardroom tenancy” of temporary or occasional use of
    • private office space
    • meeting rooms
    • mail processing
    • telephone and facsimile service
    • administrative support
  • Devise a contingency plan to address all issues associated with relocating your law practice (e.g. cost, equipment, staff, supplies, etc.) in the event you need to vacate your home office unexpectedly. See the Contingency Planning for Your Practice section of this Guide and the Contingency Planning Guide for Lawyers for more information.

Renting or Leasing Office Space

  • When looking for office space, consider
    • location
    • cost of space
    • square footage required
    • onsite storage
    • security of premises
    • room for growth or expansion
    • facilities and services included (e.g. client parking)
     
  • Compare rental rates in your area by reviewing information available from
    • commercial real estate websites
    • municipal development agencies
    • business improvement agencies
    • local chambers of commerce
     
  • When entering into an arrangement to rent or lease office space, ensure that you review
    • the type of lease (i.e. gross or net)
    • the terms of the lease
    • improvements or betterments and how these will be paid for
    • whether rent-free periods can be negotiated to allow for improvements
    • if the total rental cost is reasonable in comparison to market rates in the area
     
  • Ensure that the proper party or parties are listed as tenant(s) in the agreement to rent or lease if operating as a sole practitioner, through a professional corporation or partnership.
  • Consider whether you are interested in providing the landlord a personal guarantee in the event the corporate structure will be listed as the tenant in the agreement to rent or lease.
  • Consider hiring a lawyer and commercial real estate agent if you are unfamiliar with the issues involved with commercial leases.

Sharing Office Space

  • Evaluate if there is any cost or other benefit to sharing office space with one or more other professionals, legal or otherwise.
  • Before entering into an office sharing arrangement, consider how the arrangement may be perceived and whether shared premises will attract your target client.
  • Where you have decided to enter into an office sharing arrangement, ensure that you discuss relevant issues and terms with the prospective party or parties, such as
    • who will sign the lease as the tenant (i.e. one, some or all of the individuals or corporate entities sharing office premises)
    • whether there will be shared staff, who will employ them and who must fulfill any employment related responsibilities (e.g. salary, standard deductions, benefits, etc.)
    • whether there will be shared equipment and who will be responsible (e.g. for the purchase or lease, maintenance and repairs, etc.)
    • whether there will be shared office supplies (e.g. standard printer or photocopier paper), whether some supplies must be restricted (e.g. lawyer’s letterhead), and who will be responsible for purchasing
    • how joint expenses will be allocated among the parties to the arrangement (e.g. phone service, Internet access, utilities, etc.)
    • what will happen if there is a dispute or one or all of the parties involved choose to end the space sharing arrangement
     
  • Ensure that the office sharing arrangement allows you to meet your obligations under the Rules of Professional Conductand the by-laws to the Law Society Act, including the requirements to
    • operate your trust account(s) appropriately [section 7(1) of By-Law 9]
    • maintain client confidentiality [Section 3.3]
    • properly preserve client property [Section 3.5]
    • avoid or manage conflicts of interest [Section 3.4]
    • properly delegate to and supervise support staff [Section 6.1 and By-Law 7.1]
    • refrain from fee splitting with or paying referral fees to non-licensees [Rule 3.6-7]
    • split fees or exchange referral fees with licensees properly [Rules 3.6-5 and 3.6-6]
    • market services in a way that does not or is not likely to mislead, confuse or deceive anyone about the arrangement (e.g. letterhead, signage, website, etc.) [Section 4.2]
    • carry adequate professional liability insurance coverage [By-Law 6]
  • Consider putting the terms of the office sharing arrangement in writing. Doing so will clearly outline responsibilities and reduce the possibility of misunderstanding.
  • You should recognize that non-licensees may not have the same standards of conduct required of you by the Law Society. Where the office sharing arrangement is with a non-licensee, consider informing him or her of the importance of your professional obligations and including terms for compliance in your office sharing agreement.
  • Devise a contingency plan to address all issues associated with relocating your law practice (e.g. cost, equipment, staff, supplies, etc.) in the event you need to vacate the shared premises on short notice. See the Contingency Planning for Your Practice section of this Guide and the Contingency Planning Guide for Lawyers for more information.

Purchasing Office Space

  • If you are in the rare position of being able to purchase a commercial property to house your practice, ensure that you consult with the appropriate professionals for advice and guidance in the transaction, which may include
    • a commercial real estate agent
    • a lawyer with experience in commercial purchases and leases, if there are multiple units in the building you wish to purchase
    • a banker with lending experience in this area
    • a tax accountant to discuss any relevant tax issues

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Computer Systems for Your Practice 

To determine what computer systems are best for your practice, you should assess the different tasks performed during any matter, from the initial contact by a prospective client to the closing of the file. Ensure that your choice of computer system meets your obligations under the Rules of Professional Conduct and consider consulting with an information technology (IT) or information systems (IS) consultant to ensure that your decisions are well informed.

Checklist


 

Software

  • Determine your software needs first to ensure that your hardware selections will effectively support them.
  • Consider whether the various software applications available are compatible or can be integrated to work in conjunction with each other.
  • Consider applications specific to a law practice and for use in any business and whether these programs can be integrated.
  • When selecting programs specifically for use in a law practice, consider
    • programs mandatory for the area of law you practice (e.g. Teraview software for electronic registration of documents in real estate)
    • programs commonly used for the area of law you practise (e.g. for assembly and management of documents in family or civil matters)
    • programs for use in any law practice (e.g. for time docketing, fees and billings, trust accounting or checking for conflicts)
     
  • When selecting business-specific programs, consider the need for
    • word processing, spreadsheets, document viewers and software suites
    • research (e.g. Internet access and browsers)
    • communication (e.g. e-mail, electronic facsimile, Internet video conferencing)
    • financial management (e.g. financial books and records, trust accounting)
    • time management (e.g. calendars, to-do lists, reminders)
    • security (e.g. back-up, virus protection, encryption, spyware)
     

Hardware

  • Ensure that your hardware options can support your selected software.
  • Review available hardware options considering
    • desktop and laptop modes, personal digital assistants (PDAs)
    • available and expandable memory (i.e. RAM vs. hard drive)
    • portable memory storage (e.g. memory stick, USB flash drive)
    • peripherals (e.g. monitor, mouse, printer, scanner, CD-DVD drive, webcam, microphone, speakers, external modem or router)
    • necessary or useful accessories (e.g. monitor or tower stands, cables, wires, batteries, chargers, power bars, surge protectors)
    • access ports required
    • networking capabilities, by wire or wireless
    • available warranties
     

Other Considerations

  • Determine your computer system needs by considering
    • system users (e.g. single user or multiple users through a network)
    • system access (e.g. remotely or from multiple locations)
    • system security (e.g. passwords, limited access, theft potential)
    • system back-up (e.g. offsite data storage and backup servers)
     
  • If using the expertise of a consultant
    • consider whether the advice you require is initial or ongoing
    • determine whether he or she can advise on software, hardware or both
    • ensure that he or she understands your obligations under the Rules of Professional Conduct (e.g. your duty to maintain client confidentiality) and consider requiring that the consultant sign a confidentiality agreement. See the Law Society’s sample Confidentiality Agreement.
     
  • Factor your computer system costs into your budget, including
    • purchase, delivery, installation and warranties
    • user fees or service charges (e.g. monthly, yearly or per use)
    • necessary or optional upgrades
    • support and maintenance (e.g. via service contract or per problem)
    • training required for you and your staff
    • consultant expertise
     
  • Review consumer reports or surveys to determine most commonly used software and hardware in business and in a law practice.
  • Speak to colleagues in similar practice environments to discuss the pros and cons of various software, hardware and system options.
  • Contact vendors to arrange demonstrations or obtain samples to test the options available and to evaluate their suitability for use in a law office.
  • Ensure third party service providers (e.g. consultants, technicians) agree (in writing) not to disclose any confidential information they may view.
  • Consider preparing a chart or something similar to compare the suitability of different software and hardware options available to you.
  • Ensure that the technology you choose for your practice is used in a way that complies with the Rules of Professional Conduct. See the Practice Management section of this Guide for more information.

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Setting Up Your Office 

To launch your law practice you will need to choose furniture and equipment, in addition to your computer system, that will fit the needs of you and your staff in your chosen office space. You will also need to design an appropriate layout for these and will need to procure other office supplies to support your practice.

Checklist


 

Office Supplies

  • Determine your supply needs, considering basic (e.g. those for filing, mailing, and other paper supplies) and legal supplies (e.g. legal seals, litigation tab dividers).
  • Investigate and compare different office supply companies, considering
    • specialized legal office suppliers
    • account and payment options
    • referrals from colleagues
    • convenience and reliability
     

Equipment

  • Determine your equipment needs, considering
    • facsimile machine
    • photocopier
    • scanner
    • shredder
    • dictation system
    • telephone system
    • debit/credit imprint or point-of-sale machine
    • single-purpose machines that have a specific function
    • multi-purpose machines that meet multiple needs
     
  • When evaluating your telephone system needs, consider
    • the number of lines required for staff
    • dedicated lines for facsimile machine(s) or Internet connection(s)
    • handsets, headsets and cordless models
    • answering machines or voicemail capability
    • conference calling and call forwarding capabilities
    • intercom and paging capabilities
    • automated system routing, attendant and holding options
     

Furniture

  • Determine your furniture needs, considering
    • private offices
    • staff work stations
    • filing and storage
    • reception or waiting area
    • meeting or conference room(s)
    • servery or lunch room
     
  • Consider basic office furniture (e.g. desks, tables, seating, filing, shelving, and storage) and office accessories (e.g. coat racks, décor, small appliances).
  • Consider specific law office furniture (e.g. lockable filing cabinets and other storage, fireproof safe).

Other Considerations

  • Consider both your current and future needs when selecting equipment and furniture for your office. Ensure that your office space can accommodate these selections.
  • Plan the layout of your selected office equipment and furniture to ensure efficient use of the space, including proximity to electrical outlets, light sources and telephone jacks.
  • Ensure your office layout will allow you to meet your obligations under the Rules of Professional Conduct concerning confidentiality [Section 3.3] (e.g. clients in the reception area must not be able to overhear conversations with other clients or see the computer screens used by you or your staff).
  • Consider different payment options for procuring your selected office equipment and furniture, as well as any tax ramifications, including the purchase or lease of new or used equipment or “rent-to-own” options.
  • Factor your office equipment and furniture costs into your budget, including
    • purchase, delivery, installation and warranties
    • user fees or service charges (e.g. monthly or yearly)
    • support and maintenance (e.g. via service contract or per problem)

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Business Structure or Practice Arrangement 

Under the Law Society Act and its by-laws, you are permitted to set up your practice as a sole proprietorship, general partnership, limited liability partnership or a professional corporation. The Law Society also recognizes two practice arrangements that involve non-licensees: multi-discipline practices and affiliations.

A sole proprietor or sole practitioner owns and operates his or her professional business alone. This is the simplest structure for a law practice and may be the least costly as there are few formal business registrations required. This structure may be appropriate for you if you plan to practise law alone or to employ lawyers to practise law under your name or your trade name, as employees of your practice.

A general partnership consists of two or more individuals carrying on business. A limited liability partnership (LLP) is a specific type of partnership that protects the personal assets of the individual partners for purposes of professional liability. Your choice of partnership structure will determine the business registration and regulatory requirements that you must meet. A partnership, either general or LLP, may be appropriate for you if you wish to practise law with another lawyer or lawyers and are not in a employee-employer relationship.

A professional corporation is a type of corporation whose business is limited to providing professional services. When a law practice is incorporated, the resulting professional corporation is a separate legal entity. The shareholder(s) of this entity must also be its director(s), and must be licensed by the Law Society of Upper Canada. Practising law through a professional corporation does not limit your professional liability but this business structure may offer tax deferral benefits. However, these benefits may only be realized after the business has generated income for which the tax may be deferred. There are also specific requirements that apply to professional corporations that do not apply to other business corporations. These include restrictions regarding shareholders, directors, corporate name and the services provided through the professional corporation.

There is no specific legal definition of an “association.” Lawyers who choose to practise in association with other lawyers usually operate their separate practices from the same location, with an agreement to share the overhead costs. Because the term “association” can mean various arrangements, lawyers choosing to practise in association are obliged to clearly identify the nature of the relationship between the associated parties to clients and the public at large.

A multi-discipline practice (MDP) is an association or partnership (that is not a corporation) between a lawyer and an individual who is not a licensee who practises a profession, trade or occupation that supports or supplements the practise of law (e.g. an accountant, tax consultant, trademark and patent agent, etc.). If the lawyer and non-licensee have entered into a partnership agreement, it may also be referred to as a multi-discipline partnership.

An affiliation can be defined as "a lawyer or a group of lawyers who has or have an affiliation with a non-legal entity (e.g. an accounting firm) which regularly joins the lawyer(s) for the promotion and delivery of their respective services to the public." The definition of an affiliation is very broad and captures arrangements that range from the informal to the structured and comprehensive arrangements of a law firm with a non-legal professional services firm.

To determine the most appropriate structure or arrangement for your practice, you should consider a variety of factors, including

  • ownership and control of the business and its assets
  • liabilities and potential for negligence claims
  • professional liability insurance for the business structure or practice arrangement
  • set-up and operational costs for the business, and
  • tax, transferability and estate planning issues

Consider consulting with an accountant, tax lawyer or corporate lawyer to discuss potential benefits or drawbacks of each business structure or practice arrangement to ensure that you select the best structure or arrangement for you.

Checklist


 

Considerations When Comparing Practice Structure or Business Arrangement 

  • Whether the terms of the business structure or practice arrangement must be contained in a written agreement to be recognized (i.e. an LLP) or whether it would just be prudent to document the terms of the arrangement.
  • Any legislation that may govern the business structure (e.g. the Partnerships Act if a general partnership or LLP, Business Corporations Act (Ontario) if a professional corporation, the Business Names Act if operating under a trade name, as a general partnership or LLP).
  • Whether the relevant party (i.e. the sole practitioner, the partnership or LLP and its partners, or the professional corporation and its shareholder/directors) is subject to the laws that apply to those contractual relationships (e.g. the Employment Standards Act if employing staff or other lawyers, the Personal Property Security Act if leasing equipment, etc.).
  • Who has the ability to enter into and will be responsible for contractual relationships with third parties, on behalf of the business entity.
  • Who owns and controls the assets of the business entity and in what proportion.
  • Who is responsible for the non-professional liabilities of the business entity (e.g. general liability may be limited for shareholder/directors of a professional corporation).
  • Who is responsible for the professional liabilities of the business entity (e.g. professional liability may be limited for the partners of a LLP).
  • If the assets of the business entity are insufficient to meet the non-professional liabilities of the business entity, whether personal assets will be at risk.
  • If the assets of the business entity are insufficient to meet the professional liabilities of the business entity, whether personal assets will be at risk.
  • Whether the business structure allows the lawyer(s) or others to enter into an employment relationship with the business entity (i.e. to receive a pay cheque that has the typical source deductions for Employment Insurance, income tax, and the Canada Pension Plan).
  • When the financial year-end should be. Business income is reported to the Canada Revenue Agency based on the calendar year. The financial year-end for the business entity will be December 31st unless the sole practitioner, partnership or professional corporation applies for permission to do otherwise.
  • Who is the taxpayer of the business entity and how taxes are paid. Whether the business structure will require the lawyer(s) involved to file a tax return for the business in addition to a personal tax return that reports income from all sources, including the business entity. Different methods of payment to the lawyer(s) involved (e.g. salary, shareholder dividends, management bonus) will be taxed differently.
  • Whether, how and to whom the business entity, or interests or shares in the entity, may be transferred or sold by the lawyer(s) involved (e.g. the ability to transfer ownership interests in a partnership or shares in a professional corporation may be restricted by the partnership agreement or the articles of incorporation).
  • What happens to the business entity, or interests or shares in the entity, upon the involved lawyer(s)’s death or insolvency (e.g. a general partnership may dissolve upon the death of one of the partners, while the existence of a professional corporation is unaffected by the death of any of its shareholder/directors).
  • Whether there are specific Law Society requirements for the business structure, practice arrangement or the individual lawyers practicing within the specific structure or arrangement [By-Law 7 under the Law Society Act]. These may include
    • requirements related to non-licensees
    • notification requirements and methods
    • applications for certificates, renewals or surrendering of certificates
    • applicable fees
  • Whether the Law Society imposes any administrative, filing or reporting requirements for the business structure or practice arrangement. For assistance, contact the Law Society’s Administrative Compliance department via the Resource Centre at 416-947-3315 or toll-free at 1-800-668-7380 extension 3315.
  • Whether there are other registration or filing requirements for the business structure or practice arrangement, which are discussed in the Business Registrations section of this Guide.
  • Whether the business structure or practice arrangement will allow you to continue to meet your professional conduct obligations, as outlined in the Rules of Professional Conduct [Section 3.3 Confidentiality, Section 3.4 Conflicts of Interest, Rules 3.6-5 to 3.6-7 Referral Fees and Division of Fees, Section 7.1 Responsibility to the Profession].
  • The professional liability insurance coverage required for each business structure or practice arrangement. Contact LawPRO® to discuss this.

Added Considerations When Entering Into an “Association”

  • Determine the responsibilities of each party in the association and clearly define them. Consider preparing a written association agreement.
  • Whether your association could be perceived as a partnership. Courts have used various tests to differentiate a true association from an apparent partnership, such as whether the parties share premises and resources, the use of a single firm name on pleadings and sharing of bank accounts. You should clearly state the association relationship on your letterhead, business cards, signage and advertising and should consider confirming this for clients in your retainer agreement.
  • Lawyers practising in association may not share trust accounts. If holding client money you must deposit it into a trust account that is in your name, or in the name of the law firm of which you are an employee or a partner [By-Law 9 under the Law Society Act].

 Added Considerations When Entering Into an Arrangement With Non-Licensees

  • Whether there are requirements to be met by the non-licensee before the lawyer may enter into a practice arrangement, including
    • the non-licensee’s “good character” (i.e. in an MDP)
    • effective control of the non-licensee’s practice of his or her profession, trade or occupation
    • the non-licensee’s provision of services to clients of the practice arrangement
    • the non-licensee’s provision of services to clients outside the practice arrangement
    • the non-licensee’s compliance with the Law Society Act, its by-laws and the Rules of Professional Conduct
    • confirmation of compliance with these requirements, in writing
      • Whether the lawyer is required to carry additional professional liability insurance for the non-licensee(s) in the practice arrangement.
      • The professional liability insurance coverage required for each business structure or practice arrangement. Contact LawPRO® to discuss this.
      • Lawyers in a multi-discipline practice or an affiliation must not allow the non-licensees signing authority on any trust accounts. If holding client money you must deposit it into a trust account that is in your name, or in the name of the law firm of which you are an employee or a partner [By-Law 9 under the Law Society Act].

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Business Registrations 

You should consider the necessary steps to ensure that your practice complies with the laws and regulations applicable to your selected business structure. You should also confirm the cost associated with any required application, registration or renewal.

Checklist


 

Federal – Business Number

  • Determine whether you require a Business Number (BN).  If you do not have any employees or do not have taxable services (i.e. professional fees) of more than the amount set out by the Canada Revenue Agency (CRA), then you will not require a BN. See the CRA website to ascertain whether you will need to apply.
  • A BN is required to open a payroll account. If you have employees, you must apply for and obtain a payroll account from the CRA to file any source deduction remittances (e.g. Employment Insurance, income tax, Canada Pension Plan) on behalf of your employees.
  • A BN is required to collect and remit the Harmonized Sales Tax (HST) to the CRA. If you practise law in Ontario and have professional fees exceeding the amount prescribed by the CRA, you must collect and remit HST.
  • If required to collect and remit the HST, consider the cost of filing the HST return yearly, monthly or quarterly. Also consider opening a separate bank account to accumulate the HST to be remitted, to avoid using the funds for other purposes. Note that once you have billed a client for services that are subject to the HST, regardless of whether the client has paid for those services, HST must be remitted per the CRA’s schedule.
  • Ensure that you apply for your BN after you have committed to opening your own practice but before rendering any accounts or hiring any employees.

Federal – Income Tax Number

  • Determine whether you require an income tax number. A BN is required to apply for one. Sole proprietors and both general and limited liability partnerships do not require an income tax number. A professional corporation, as a separate taxpayer, must obtain an income tax number. See the CRA website to ascertain whether you will need to apply.

Provincial – Business Name

  • Business name searches, registrations and renewals are administered by Service Ontario. For more information about these, see the ONe-Source for Business section of the Service Ontario website.
  • Determine whether you are required to register your business name under the Business Names Act. Individuals or professional corporations who identify their practice to the public or carry on business using a name other than their own name (e.g. “John Doe, Barrister & Solicitor”) or a corporate name (e.g. “John Doe, Professional Corporation”), such as a trade name, must register that name with Service Ontario. General and limited liability partnership (LLP) names must also be registered.
  • If you register a business name, ensure that you receive your Provincial Business Identification Number (BIN) from Service Ontario. You require this number to renew the business name you have registered with Service Ontario.
  • Ensure that your selected firm name complies with the Rules of Professional Conduct that apply to marketing [Sections 4.1, 4.2, and 4.3]. See the Law Society’s Law Firm Name Guidelines.
  • The application to register for a business name also includes sections for a Retail Sales Tax (RST) number, Workplace Safety and Insurance Board (WSIB) number, and an Employer Health Tax (EHT) number. Though it is unlikely you will need to do so, contact Service Ontario to determine whether you must apply for any of these registrations.

Provincial – Professional Corporation

  • Determine whether you would like to practise law through a professional corporation. If you incorporate, you must comply with the Business Corporations Act (Ontario), the Law Society Act and By-Law 7.
  • Before you apply for incorporation through Service Ontario, consider completing the voluntary application to the Law Society for a Corporate Name Certificate to ensure that the firm name you have selected complies with the Rules of Professional Conductthat apply to marketing [Sections 4.1, 4.2, and 4.3]. See the Law Society’s Law Firm Name Guidelines.
  • Once incorporated, ensure that you apply for and obtain a Certificate of Authorization from the Law Society to practise law through your new professional corporation. This certificate must be renewed annually.
  • Once incorporated, ensure that you also comply with the requirements of the Corporations Information Act (e.g. initial reporting, annual reporting and providing notice to Service Ontario of changes made to the professional corporation).

Municipal – Licensing

  • Confirm whether the municipality in which you will practise requires you to obtain a licence to carry on business.

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Bank Accounts, Accounting and Other Financial Issues 

You cannot operate a law practice without the assistance of a financial institution. Your financial institution is part of the network you should build to help your business succeed and your financial advisor can be a source of information, networking contacts and advice. Because the relationship with your financial institution will likely be long-term and is vital to the success of your practice, you should spend some time considering which institution you will use for both your bank accounts and financing needs.

Checklist


 

Trust and General Accounts

  • Determine how many bank accounts you will require for your practice, including
    • general account(s) (i.e. operating or business accounts)
    • mixed trust account(s)
    • separate interest bearing trust account(s)
    • separate estate or power of attorney account(s)
    • separate electronic registration bank account (ERBA) for payment of land transfer tax and registration fees
    • foreign fund account(s) (e.g. a US dollar account)
  • For each mixed trust account you open,
    • the account must be clearly designated as a lawyer’s trust account
    • the account must be in your name or the name of your firm, partnership, professional corporation or trade name
    • the account must bear interest at a rate approved by the trustees of the Law Foundation of Ontario, per section 57.1 of the Law Society Act
    • you must report to the Law Society of Upper Canada that you have opened the account (see Report on Opening or Closing a Trust Account)
    • you must direct the financial institution to remit the interest earned on the account to the Law Foundation of Ontario (see sample Letter of Direction to a Financial Institution) and should send a copy of this to the Law Foundation of Ontario
    • you must ensure the financial institution provides the appropriate source documents for the account, per By-Law 9 (e.g. cancelled trust cheques or electronic images of cancelled trust cheques)
    • you must ensure the financial institution does not withdraw funds from the account without your authorization (e.g. service fees must be paid from the general account)

Accounting, Books and Records

  • Review the books and records requirements in By-Law 9 or see the Law Society’s Bookkeeping Guide for Lawyers  
  • Implement an accounting system that allows you, your staff or an independent bookkeeper to track and record the financial transactions of your law practice, such as
    • manual ledgers
    • “one-write” systems
    • spreadsheet software
    • general accounting software
    • legal accounting software

Financing and Credit

  • Estimate the amount of start-up financing you will require, considering one-time costs (e.g. initial purchases of computer systems or equipment) and ongoing needs (e.g. rent, utilities, annual fees and professional liability insurance).
  • Consider the financing options available to you for all or part of the capital you may require to open your law practice, including
    • personal investment (e.g. from savings, retirement or other plans)
    • money invested by friends or family
    • peer lending or investment
    • private investment loans
    • institutional loans
  • Evaluate the type of financing products that are available (e.g. line of credit, term loan, credit cards, private mortgage or institutional loans).
  • Consider assembling a competent team to advise you on financial issues outside your area of knowledge, before committing to any particular option(s) for financing (e.g. accountant, tax advisor, bookkeeper, etc.).
  • Consider using a mortgage broker or financial consultant to help you determine the financing product that is right for you and to locate a lender.
  • Determine what collateral (personal or business) will be required by the financial institution or lender to secure a loan.
  • Determine whether the financial institution or lender will require a personal guarantee from you (i.e. if operating through a professional corporation), or from a spouse or relative.
  • Determine whether the financial institution or lender will require a general security agreement on the assets of the professional business (i.e. on accounts receivable and equipment owned by the business) or on any personal assets (e.g. your house, savings or investments).
  • Consider that your financing needs may change as your law practice becomes established and it evolves.
  • Educate yourself as to what criteria the financial institution will use to evaluate your suitability for financing or credit
  • Consider tailoring your business plan to meet the financial institution or lender’s criteria, to better secure the financing you require to start your law practice and to help it grow.

Financial Institutions

  • Determine the financial institutions available in your area, such as
    • chartered banks
    • provincial savings offices
    • credit unions
    • registered trust corporations
  • Assess whether a financial institution offers other services that you may want, such as
    • convenient location(s)
    • inter-branch services
    • extended hours of operation
    • specialized department or staff contact person(s)
    • credit or debit imprint or point-of-sale machines
    • certified cheques, bank drafts, money orders
    • wire transfer or electronic funds transfer
    • electronic or Internet banking services
    • payroll and other merchant services
    • personal or business financing and credit
    • financial advice or access to financial planning advisors
  • Confirm that the financial institution will allow you to operate your general and/or trust accounts in compliance with the requirements of By-Law 9 and the Law Society Act (e.g. you are provided with the necessary source documents, the interest earned on a mixed trust account is at the prescribed rate etc.).
  • Where the financial institution you select for your trust account(s) requires from you confirmation that you are lawyer who is licensed by the Law Society and is eligible to practice law in Ontario, this may be provided by way of a photo identification card or a status letter issued by the Law Society. Visit the Law Society’s Status Letter information sheet for details about the process.
  • Consider whether one financial institution can meet your banking needs or whether you will require multiple service providers.
  • Consider whether the financial institution has a specialized department or staff to deal with small business owners or other professionals, for your convenience. If not, evaluate if you can build a direct relationship with the branch or account manager who may be able to provide personalized service and assistance.
  • Assess the cost of doing business with the financial institution (e.g. account service fees, cost of special services, parking costs when visiting, whether discounts may be offered if you use the institution for multiple accounts or services, etc.) and whether it fits within your budget.

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Insuring You and Your Practice 

In addition to obtaining and maintaining the required level of professional liability insurance, discussed in Administrative Requirements section of this Guide, selecting the appropriate additional insurance to protect you and your law practice is essential. The insurance products that best suit your needs will depend on many factors and may change as your law practice evolves. Available products include

  • business or commercial insurance, to protect you from losses that will affect the financial health of your business
  • life insurance, to provide funds in the event of your death
  • health or disability insurance, to provide funds in the event of your loss of income due to disability or critical illness
  • extended health care insurance, to pay hospital, medical or dental expenses

Consider getting advice from a qualified and independent insurance professional before you choose or change your insurance product(s) and provider(s).

Checklist


 

Business or Commercial Insurance

  • Determine what your policy should cover, considering
    • property (e.g. office space, equipment and work product)
    • crime (e.g. fraud, theft, vandalism or malicious damage)
    • practice interruptions (e.g. natural disaster, office disaster) 
    • comprehensive or commercial liability (i.e. for claims unrelated to professional services)
    • commercial automobile (i.e. if used primarily for business or is owned by the business)
  • Advise potential insurers of any special coverage requirements, such as
    • client property (e.g. original wills or power of attorney documents, valuable items)
    • electronic data (e.g. work product, precedents, accounting data)
  • Discuss whether any special endorsements or amendments to the standard policy are required for special coverage and any resulting cost.
  • Consider the deductible, the policy limit and whether premiums can be paid monthly or annually.
  • Consider whom you will designate as a beneficiary (e.g. the business entity, lawyer(s) involved in the business entity, or an outside individual).
  • If leasing or renting office space, ensure that your chosen policy meets any obligations contained in your commercial lease.
  • If using a home office, ensure that you still obtain appropriate business insurance. Failure to do so may jeopardize your home insurance policy.

Life Insurance

  • When evaluating the need for life insurance, consider your
    • estate needs (e.g. to provide income for a dependent or to satisfy any liabilities upon your death)
    • practice needs (e.g. to provide funds to transfer, sell or close a small firm left without the main practitioner, or to provide security to the firm’s lenders)
    • buy/sell needs (e.g. to provide funds to implement and buy/sell provisions contained in a partnership agreement)
  • Determine what type of policy will work for you, including
    • term insurance, which provides funds if the insured dies during the term of the coverage
    • permanent insurance, which provides funds when the insured dies
  • Consider whom you will designate as a beneficiary (e.g. the business entity, lawyer(s) involved in the business entity, or an outside individual).
  • Assess whether the policy can serve as an investment vehicle that is sheltered from taxes or from creditors or for retirement planning purposes.

Health or Disability Insurance

  • Assess your individual disability and critical illness needs, considering the needs of any dependents not covered by another plan and your practice needs.
  • Consider whom you will designate as a beneficiary (e.g. the business entity, lawyer(s) involved in the business entity, or an outside individual).
  • When evaluating disability or critical illness policies, consider
    • the definition of “disability” (e.g. does it refer to the occupation of the insured or is it based on a percentage of lost income)
    • the definition of “critical illness” (e.g. the conditions or disease included)
    • under what circumstances the disability or critical illness benefits will be payable (e.g. how long after disability or diagnosis)
    • whether benefits will be paid via lump sum or multiple payments
    • whether partial payments are available for partial disability
  • Determine whether you may change the policy’s coverage or premiums at a later date and whether premiums can be paid monthly or annually.

Extended Health Care Insurance

  • Assess your individual medical and dental coverage needs, considering the needs of any dependents not covered by another plan.
  • Evaluate whether you can afford to set up and offer a private health services plan to your employees.
  • Consider joining an existing group benefit plan with your employees. These may be available through local business associations or your Chamber of Commerce.
  • Determine whether premiums can be paid monthly or annually.

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Building Your Support Team 

At the start of your practice, you may be able to do every task yourself, both legal and administrative. However, you should plan to hire support staff as your law practice is established, to allow you to make more efficient use of your own time. Paying for the services of non-lawyer support staff may be one of the highest costs you will incur when operating your law practice. Therefore, preparing a plan to find, hire and effectively use support staff is very important.

Checklist


 

Recruitment and Hiring

  • If you are unable to hire full-time staff, but still require assistance, consider alternatives such as
    • independent contractors (e.g. accountant, bookkeeper)
    • temporary services or agencies
    • community college co-op programs
    • virtual assistants (i.e. a part-time employee or an independent contractor who provides service from his or her office using technological modes of communication and data delivery)
  • Consider whether you can afford to hire staff. In addition to salary, costs may include
    • required employer contributions (e.g. Canada Pension Plan and Employment Insurance)
    • annual vacation pay
    • statutory holiday pay
    • overtime pay
    • paid leave (e.g. for illness, compassion or bereavement, religious observances)
    • payroll administration costs
    • benefits (e.g. health or dental plans, gifts/bonuses, parking, etc.)
    • employee training and development costs
    • staff replacement during vacation or unplanned absences
  • When you are ready to hire support staff, you should
    • write a job description for the position that outlines the skills, education and designations required
    • determine what salary you are prepared to pay, reviewing the range of pay for similar positions (e.g. similar job postings, information from colleagues, etc.)
    • determine how you will find candidates (e.g. advertising in publications or online, professional referrals or an employee search company)
    • prepare for your interview(s) by developing questions that may be used for all candidates so that you can easily compare responses; ensure that your questions are appropriate and meet the requirements of the Rules of Professional Conduct regarding discrimination [Section 6.3.1]
    • schedule initial telephone interviews before personal interviews
    • ask for and check references of the candidates who have made your short list
    • communicate with your candidates throughout the process
    • remember that you are also being evaluated
  • Ensure that you understand your obligations as an employer as set out by the Employment Standards Act (Ontario) and other applicable employment legislation.
  • Prepare an offer letter or employment contract for your selected candidate that sets out the terms of employment (e.g. salary, holidays, sick time, etc.). Consider including a provision to ensure that the employee understands the lawyer’s obligation to maintain confidentiality as outlined by the Rules of Professional Conduct [Section 3.3] and confirms the employee’s obligation to maintain confidentiality over information gained through the course of their employment. See the Law Society’s sample Confidentiality Agreement.
  • Ensure you retain a signed copy of the offer letter or employment contract and provide a copy to the employee.

Training

  • Consider initial and ongoing training requirements, as well as cross-training between employees in the event of illness or unexpected departure. As firm processes change and new technologies emerge, you and your staff may require additional training.
  • Consider internal training for processes specific to your practice (e.g. your file opening, organization and storage procedures) and external training or development initiatives for more generalized skills (e.g. how to use certain software or bookkeeping principles).
  • Educate your staff on your professional responsibility requirements under the Rules of Professional Conduct, the Law Society Act, and the by-laws that must also be upheld by your employees (e.g. maintaining client confidentiality, preserving client property, books and record keeping requirements, etc).
  • Consider preparing an office manual or employee handbook as a training tool and reference for your employee(s), and to protect for you from any claims. See the Office Manual section of this Guide.

Delegation and Supervision

  • Consider that proper delegation to capable staff will allow you to devote more time to the tasks that must be completed by you and may also result in cost savings to the client.
  • Delegate tasks to staff that have been adequately trained and are competent to complete those tasks. Recognize that not all staff may be competent or suited to all tasks within your practice.
  • Understand the limits to the work that you may delegate to your support staff, including tasks that you must not delegate (e.g. providing legal advice to the client) and tasks that you may delegate, upon your prior express instruction and authorization (e.g. to take instructions from the client).
  • Consider that proper supervision requirements may differ among staff and may change as employee(s) become more competent or as you change the services you offer. At a minimum, you should ensure that you review the work done by staff during and after its completion. You are ultimately responsible for any work done by support staff.
  • Ensure that you understand your delegation, supervisory and operational obligations under Section 6.1 of the Rules of Professional Conduct and By-Law 7.1. The commentary to the rule provides examples of appropriate delegation and supervision of tasks as they relate to real estate matters (including electronic registration and title insurance), corporate and commercial matters, and wills, trusts and estates.

Communication

  • Recognize that proper training, delegation and supervision is not possible without clear and open communication between you and your staff.
  • Manage staff expectations by providing clear and advance instructions for particular tasks (e.g. when you can be interrupted, how you would like mail or telephone messages brought to your attention, how to handle “urgent” issues, etc.).
  • Schedule regular meetings or otherwise allow for you and your employee(s) to exchange feedback, to ask and answer questions, and to determine if additional training or changes to the delegation and supervision of work is required.

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Marketing Your Practice  

Marketing is a means to publicize your law practice, to attract and obtain the clients you want so that you may provide them the services you offer. You should complete market research to assess the viability of your business in the market you have chosen to serve. This information is especially important if you will be applying for financing to start your law practice. You will also need to devise a budget to implement your marketing plan.

To develop an effective marketing plan you should first identify your target client, and the services you wish to offer, discussed further in the Defining Your Practice section of this Guide. Your marketing plan should be tailored to your practice and should allow you to gain exposure to your target market at the start and throughout the evolution of your business. You should monitor your activities with respect to meeting the goals and budget of the marketing plan to determine what methods have worked well, and those that should be changed or replaced.

Checklist


 
  • Recognize that Section 4.2 of the Rules of Professional Conduct defines “marketing” to include advertisements and other similar communications in various media, such as
    • firm name, including trade names
    • signage, business cards and logos
    • letterhead (both paper and electronic versions)
    • pamphlets and announcement cards (both paper and electronic versions)
    • website and other Internet advertisements
  • Consider designing and obtaining business cards as a first step, which can be used while you devise your marketing plan.
  • Consider the available means to market your practice to your target client, including
    • enrollment in a lawyer or legal services referral service
    • advertising in a directory, in print or electronic form
    • direct marketing via pamphlets, leaflets, mail, facsimile or e-mail
    • networking by participation in civic or community events, local business or trade fairs or speaking engagements (see the Networking section of this Guide for details)
  • Ensure that the marketing means you select to offer and market your services comply with the requirements of Sections 4.2 and 4.3 (e.g. the marketing is demonstrably true, accurate and identifiable, etc.) and the limits of Section 4.1 (e.g. the marketing does not amount to coercion, duress or harassment, etc.) of the Rules of Professional Conduct.
  • Where you use technology to market your services, ensure it is used in a manner that meets your professional obligations under the Rules of Professional Conduct. See more information on managing technology in the Practice Management section of this Guide.
  • Evaluate the goals you would like to achieve with your marketing strategy both at the start of your practice and as it evolves (e.g. an initial goal may be to build your client base to a certain level, with subsequent goals to increase that client base or narrow it).
  • Of the services you offer, determine which you would like to market or advertise.
  • Consider the suitability of marketing methods available to your practice and services and whether they will reach and attract your target market (e.g. advertising in print, by television or radio, website, e-mail, etc.).
  • Consider your comfort level when evaluating what marketing methods will work best for you and your practice (e.g. whether or not to include your photograph in your marketing).
  • Consider outsourcing parts or all of your marketing efforts if you do not have the skill or knowledge to implement them yourself (e.g. designing a website may be beyond your own capabilities).
  • Prepare a budget for the cost of using various marketing methods.
  • Determine what benchmarks you will use to measure whether your marketing plan is succeeding (e.g. number of clients, income generated, referrals generated, recognition of your practice, etc.).
  • Include a timeframe to measure progress against those benchmarks.
  • Prepare a marketing plan that includes a description of
    • the type of client who is likely to use your services
    • the potential size of the target market in your geographical area
    • your direct and indirect competition, if any
    • the major trends presently affecting your marketplace
    • what makes your services unique (i.e. reasons why clients would choose your services over those of your competition)
    • your pricing strategy (e.g. type of fees you will charge, methods of payment you will accept, discounts you may offer for volume or certain clients, value billings, accepting Legal Aid Ontario certificates)
    • how you will offer your services
    • how you will communicate and promote your services to your target market (e.g. brochures, websites, advertising, etc.)

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Networking 

Not to be confused with marketing, networking refers to building relationships with others. Networking may lead to increased business for your law practice and can help you to avoid isolating yourself, to the detriment of your health and your business. Networking can also provide broader benefits, which may include the opportunity to connect with

  • mentors, to assist or to guide you in your practice
  • mentees, to share the benefits of your own experience
  • other professionals, to exchange services or referrals 
  • prospective employees, to help support your practice
  • prospective employers or clients, to engage your services
  • your community, to build friendships and support

Though the benefits of any particular networking relationship may not be immediate, any lawyer opening a law practice should consider networking to increase their visibility both professionally and personally.

Checklist


 
  • Consider prospective contacts for your network, including
    • continuing legal education or professional development initiatives, as a speaker or participant
    • friends, family and neighbours
    • volunteer, association and religious affiliations
    • former professors and classmates
    • sports team and health club members
    • colleagues of personal and other contacts
    • former and existing clients
  • Consider using the goods and services offered by those in your network and referring others to do the same.
  • Re-evaluate your methods as you become more comfortable with networking.
  • Schedule time to develop and maintain your network.
  • Recognize that there are concerns that relate to the personal and professional use of social media sites. Review LawPRO®'s article Social Media: Pitfalls to Avoid.

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Mentoring 

Mentoring is an integral part of the legal profession. A mentor can provide you with the necessary support, guidance and insight that your family, friends and staff may not be able to offer while you open and build your law practice. Whether for a short or long-term relationship, a mentor may offer you advice on

  • specific or complex legal procedures
  • strategy or tactical issues
  • ethics and professional responsibilities
  • business or practice management issues
  • career and professional development
  • health and wellness issues

The right mentor can assist you with the practice of law and may also help to reduce potential claims or complaints. The benefits of a relationship with a mentor can be immediate and enduring, and any lawyer opening a law practice should consider connecting with a mentor.

Checklist


 
  • Determine what assistance you would like from a mentor.
  • Consider that multiple needs may require more than one mentor.
  • Consider sources of prospective mentors, including
    • former law professors or articling principal(s)
    • previous and current colleagues or peers
    • organized mentoring programs or initiatives
  • Consider mentoring programs or initiatives offered by
    • Law Society of Upper Canada
    • Legal Aid Ontario
    • local, provincial and national law associations (e.g. Ontario Bar Association)
    • community or volunteer associations (e.g. Pro Bono Law Ontario)
    • associations based on area of law (e.g. Advocates’ Society, Ontario Trial Lawyers Association)
    • associations based on demographics (e.g. Arab Canadian Lawyers Association, Canadian Association of Black Lawyers, Women’s Law Association of Ontario)
  • More information about the mentoring programs available for Ontario lawyers is available online and in the Resources section of this Guide.
  • Evaluate what type of mentor relationship will best suit your need(s), considering formal and informal arrangements that may span a particular
    • substantive or procedural inquiry
    • matter or file
    • area of law
  • Consider initially meeting with a prospective mentor in person to ensure that your respective personalities and mentoring styles are compatible.
  • When establishing a mentor relationship, set boundaries by discussing
    • the scope of the relationship
    • the goals or expectations of the relationship
    • how to deal with confidential information
    • how to avoid conflicts of interest
    • methods of interaction and communication
    • the time available for the relationship
    • how to deal with obstacles or problems
    • when to evaluate the relationship
    • how to provide feedback about the relationship
    • when and how the relationship will end
  • When participating in a mentor relationship ensure that
    • you independently verify any advice, suggestions or recommendations offered to you
    • your mentor does not communicate with your clients in any way that might form a lawyer-client relationship
  • Recognize that a mentor relationship may evolve or become obsolete.
  • Consider outlining the terms of your mentoring relationship in a written agreement. Formalizing your relationship may reduce your mentor’s professional liability concerns.

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Administrative Requirements 

When opening your own law practice you are required to meet the Law Society’s administrative requirements to maintain your licence to practise law. Each year, you must

  • detail any changes to your status or contact information [By-Law 8]
  • pay an annual fee, due January 1st each year [By-Law 5]
  • submit the Annual Report, due March 31st each year [By-Law 8]
  • maintain appropriate professional liability insurance [By-Law 6]
    (individual policy or exemption status will dictate due dates)
  • meet other requirements related to business structure [By-Law 7],

bankruptcy or insolvency, and offences [By-Law 8]

Checklist


 

Law Society Annual Fee

  • Advise the Law Society of your current status to ensure that your Annual Fee Invoice will be accurate. Where there are multiple changes to report or there are other lawyers affected by the change (e.g. you have formed a partnership), consider documenting these in a letter to the Law Society. See the Notice of Change of Information and Letter to Law Society of Upper Canada, which are included as appendices to this Guide.
  • Advise of any changes in status (e.g. not practising for at least one calendar month) so that your annual fee may be adjusted, as necessary. Note that practising law part-time does not affect your annual fee to the Law Society.
  • Ensure the Law Society has your current contact information so that you will receive your Annual Fee Invoice. The Annual Fee Invoice is usually sent in early December each year.
  • Ensure that you meet the payment deadline of January 1st. If payment is not received within 60 days of the deadline, a $100.00 late fee will be applied.
  • Budget for the cost of your annual fee and ensure that you can make payment by an accepted method (i.e. cheque, money order, bank draft, credit card, debit card, internet or telephone banking, payment via the Law Society’s website).
  • Consider enrolling in the Law Society’s Pre-Authorized Payment Plan to spread the payment of your annual fee over the calendar year. Note that there is an additional administrative fee to use this payment option.

Law Society Annual Report

  • Ensure the Law Society has your current contact information, including telephone/fax numbers, and mailing/email addresses for your business and home.
  • Ensure that you e-file a completed Annual Report via the Law Society Portal by March 31st each year. Failure to do so results in a $100.00 late fee as well as the potential for your license to be subject to administrative suspension.
  • Whether you are completing all sections of the report or you have the input of others (e.g., accountant or bookkeeper), ensure that the information you provide on the Annual Report is complete, true and accurate. Filing a false or misleading report to the Law Society is professional misconduct.

LawPRO® Professional Liability Insurance

  • Determine the type of errors and omissions insurance coverage you require (e.g. standard, innocent party, excess, run-off, real estate). This will depend on your chosen business structure, your areas of practice and whether you practise law part-time.
  • Ensure that you review the deductible options and amounts before selecting an option and policy.
  • Determine the premium amount under your selected policy. This will depend on the deductible option selected.
  • Determine if you must pay real estate or civil litigation transaction levy surcharges and file appropriate transaction forms quarterly. If not, you must file the annual exemption form by the prescribed deadline.
  • Contact LawPRO® customer service to review and discuss insurance coverage, options, premiums, filings and relevant deadlines.

Other Requirements

  • Ensure that you comply with additional yearly filing requirements if you practise law through a professional corporation, a multi-discipline practice or if you choose to affiliate with non-licensees.
  • Ensure that you meet additional reporting requirements in the event that you become bankrupt or insolvent, or are charged with and/or convicted of an offence.

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Practice Management 

Though this Guide was designed to assist lawyers to open a law practice, lawyers should also recognize what is required to operate that practice successfully on an ongoing basis. Proper practice management can help you fulfill your service obligations and responsibilities, and assist you to avoid future complaints and claims.

To open and operate a successful practice you should set up systems to effectively manage

  • client service, relationships, expectations and communications
  • client files, including checking for conflicts, organization and storage of files
  • financial obligations, cash flow, bookkeeping and financial reporting
  • your time, including time planning, docketing and reminder systems
  • the use of technology in your practice

The Law Society’s Practice Management Guidelines were developed to provide guidance on the areas of ongoing practice management outlined above.

Checklist


 

Managing Client Service and Communication

  • Implement systems that allow you to manage the client relationship and client expectations at all stages, including
    • initial screening or consultation
    • engagement, limited engagement or non-engagement
    • implementation (i.e. where you complete the services and tasks of the retainer)
    • disengagement (e.g. upon the completion of the retainer, termination or withdrawal)
  • Consider creating procedures, checklists and drafting documents to confirm
    • proper screening of prospective clients (i.e. to determine who the client is, any third or instructing parties, to check for conflicts of interest and to identify and/or verify identity in accordance with Part III of By-Law 7.1)
    • your engagement, limited engagement or non-engagement (e.g. via engagement letter or retainer agreement, limited engagement letter or retainer agreement, or non-engagement letter)
    • the terms of any engagement, including the tasks to be completed, the client’s responsibilities, fees and disbursements, billing, payment and consequences of non-payment, potential withdrawal or termination, and file transfer
    • your client communication policy, including manner and frequency of communications, who will and the time required to respond, with special considerations for the client’s age, education, health, sophistication and capabilities, and contingencies for dealing with difficult clients
    • when and why the retainer ended and by whom, whether before the completion of the matter or when the retainer has been completed (e.g. disengagement or termination letter, or a reporting letter to the client)
  • For details, review the Client Service and Communication Guideline.

File Management

  • Implement file management systems to
    • store and retrieve key information regarding clients and related and opposing parties
    • check for conflicts of interest
    • determine applicable limitation periods and other deadlines
    • fulfill all undertakings, trust conditions and other obligations
    • manage experts or other third party service providers
    • manage the documents and precedents used in your practice
    • open and maintain active client files for individual matters
    • close, retain or dispose of closed file contents
  • Consider creating or drafting a
    • file opening procedure that dictates when to open a new file and when to assign a distinct file name and a new open file reference code
    • file management system (electronic or otherwise) to identify, organize, store and track information, documents, evidence and property relating to each file
    • file notation system to confirm in writing the content of every communication from the client and other parties, by way of dated note or memorandum to file
    • file organization protocol that sorts file contents according to class or type of document (e.g. communications, substantive memoranda and investigations, original documents, retainer letter, etc.)
    • file closing procedure that dictates, upon a review of the file, when to close an active file and assigns to each file a new closed file reference code
    • file content protocol that outlines which file contents will be returned to the client, copied, retained, or destroyed upon file closure
    • file retention and destruction protocol that outlines how long closed files will be retained, when the closed file will be subsequently reviewed and ultimately destroyed, in a manner that maintains client confidentiality in accordance with Section 3.3 of the Rules of Professional Conduct
    • file storage system that separates active files from closed files, both for electronic and paper files, in a secure manner
  • For details, review the File Management Guideline, File Opening Checklist, and Electronic File Management Podcast.
  • More information on managing closed client files can be found in the Guide to Retention and Destruction of Closed Client Files for Lawyers.

Financial Management

  • Implement financial management systems to assist you to
    • manage financial obligations, those incurred on behalf of clients and your own
    • manage the cash flow of your practice (e.g. via your fees and billing practices)
    • comply with the financial transactions and record keeping requirements of By-Law 9
    • satisfy other reporting and compliance requirements that relate to the above
  • To fulfill financial obligations, consider using procedures that allow you to
    • record and fulfill the financial obligations you have undertaken on behalf of clients (e.g. procuring a medical-legal report or the services of a third party)
    • confirm, in writing, when you will not be responsible for payment of financial obligations incurred on behalf of the client
    • determine how you may assist to make satisfactory arrangements for payment of the client’s outstanding financial obligations, where the client has failed to fulfill them
    • disclose to any successor lawyer or paralegal the details of any outstanding financial obligations relating to the client
    • record and fulfill the financial obligations related to your practice (e.g. annual fees, professional liability and other insurance premiums, costs or expenses related to your office or your employees, etc.)
  • To manage cash flow, consider creating fee and billing procedures that outline
    • the type of fees you may charge (e.g. hourly rate; a block, fixed or flat fee; fees by stages; a contingency fee)
    • potential disbursements and how they will be paid (e.g. will advance funds be provided by the client or will the lawyer front the cost)
    • how and when estimates of fees and disbursements will be provided to the client and how changes to estimates will be communicated
    • whether a money retainer is required and any future need for replenishment
    • the preparation and delivery of interim and final statements of account, including details to be included, billing frequency and delivery method
    • payment options and the consequences of late or non-payment by the client, including a collection protocol and interest on overdue accounts
    • limited or restricted practices concerning fees (e.g. when a contingency fee may be used, referral fees or fee splitting among licensees)
    • that fees and disbursements, and the above details, will be disclosed to clients in a timely fashion in accordance with Rule 3.6-1 of the Rules of Professional Conduct, and should be confirmed in writing (e.g. via engagement letter or retainer agreement)
  • You must use systems and procedures that allow you to comply with the financial transactions and record keeping requirements of By-Law 9, which include
    • proper handling of and record keeping for client money and other property
    • restrictions on and additional records required when handling cash
    • proper use and record keeping for general account(s)
    • proper use and record keeping for trust account(s), including monthly trust reconciliations and comparisons
    • proper appropriation and other withdrawal or transfer of funds from trust
    • restrictions on sharing trust account(s) and those authorized to withdraw from trust
    • restrictions on financial institutions that may be used for trust account(s)
  • You should create other financial transaction and record keeping policies that outline
    • methods for depositing funds to trust, including limitations on credit cards and automated banking machines (ABMs)
    • proper clearance periods for funds received in trust prior to disbursement
    • proper handling of unclaimed trust funds or funds that are in dispute
    • methods for detecting and correcting errors in your general account(s) and trust account(s), and in your books and records
    • internal controls for you to supervise and review the application of your financial transactions and record keeping processes, to reduce the risk of errors or fraud
  • You must use systems and procedures that allow you to satisfy other reporting and compliance requirements related to proper financial management, which include reporting to the
    • Law Society of Upper Canada (via the Annual Report) details regarding the operation of and records maintained for your trust and general accounts, among other information
    • Canada Revenue Agency (CRA) any income (personally or through a professional corporation) and remitting to them any income tax payable and any Harmonized Sales Tax (HST) collected on your fees and disbursements on behalf of the CRA
  • For details, review the Financial Management Guideline.
  • More information on books and records requirements can be found in the Bookkeeping Guide for Lawyers.

Time Management

  • Implement time management systems, including a
    • time planning system to allocate blocks of time to specific tasks for each day, week, month and year and to record your plans using “To Do” lists, diaries and calendars
    • centralized reminder or “tickler” system to flag limitation periods or other deadlines, to alert you to review them and to remind you of upcoming steps in any client file
    • time recording or docketing system to record the services and tasks completed for each file, the time spent for those, to produce interim and final statements of account and to produce time data to help you manage time spent on your practice
  • For details, review the Time Management Guideline.

Managing Technology

  • Implement policies and procedures regarding the use of technology in your practice, which may include tools used to
    • network with colleagues and other professionals
    • make available, market and provide legal services (e.g. websites)
    • research the law and legal procedure
    • manage or organize information (e.g. database or conflict-checking systems)
    • serve and communicate with clients (e.g. e-mail or Voice Over Internet Protocol)
    • organize or manage your time (e.g. calendaring or scheduling tools)
    • manage finances and financial records (e.g. time docketing or accounting systems)
    • manage your files (e.g. document and case management tools)
  • You should create additional policies that
    • ensure technology is used in a manner that complies with the Rules of Professional Conduct (e.g. competence, confidentiality or avoidance of conflicts of interest)
    • prevent misuse, inappropriate or illegal use of any technology (e.g. spamming or software piracy)
    • outline the required training needed to use any particular technology
    • describe security measures to be taken when using any technology (e.g. passwords, encryption, firewalls, virus protection and surge protection)
    • summarize back-up and disaster recovery plans to prevent or deal with the loss, theft or destruction of electronic data related to any technology
    • provide for the regular review of any technology used in your practice, to ensure efficiency and avoid obsolescence
    • outline internal controls for you to supervise and review the use of any technology in your practice, to reduce the risk of data loss and other errors
  • For details, review the Technology Guideline, Technology Practice Tip Podcasts, and Sample Online and Social Media Policy.

Other Considerations

  • When implementing systems for your practice, consider how they will interact and whether one system can integrate multiple practice management needs (e.g. calendaring, task tracking, time docketing and billing).
  • Consider scheduling regular reviews of your practice management systems, policies and procedures to ensure their continued usefulness to your practice (e.g. to assess whether a policy or system is still appropriate, to make changes, to replace, or to discard if no longer required).
  • Consider creating contingency plans to address planned and unplanned absences from practice and other practice interruptions (see the Contingency Planning For Your Practice section of this Guide and the Contingency Planning Guide for Lawyers).
  • Consider documenting the policies, processes and procedures of your law practice in an office manual (see the Office Manual section of this Guide).

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Contingency Planning for Your Practice 

Your duty of competent representation includes the obligation to take appropriate steps to safeguard your clients’ interests in all circumstances. Failure to properly plan or prepare for both anticipated and unexpected absences from your practice or other practice interruptions may expose your clients to significant legal consequences or prejudice, and may subject colleagues or family members to financial and emotional stresses associated with preserving, transferring or closing your practice.

Ideally, you should have in place contingency plans to help you manage your practice during unforeseen business interruptions, planned and unplanned absences. Such plans should enable you to protect your client’s interests by ensuring continuity during a business interruption or your absence. You should also have plans that allow for others to oversee the sale, transfer or closure of your practice, in the event you are unable to return to the practice of law.

Your contingency plans should be put in place as soon as possible after opening your practice, and should be reviewed regularly to ensure their continued utility. For guidance on how to properly assess your practice vulnerabilities and to anticipate and plan for events that may disrupt your practice, review The Contingency Planning Guide for Lawyers, prepared by the Law Society. The Guide provides detailed information about key steps to be taken in planning for the disability, death, or other unexpected absence of a lawyer in private practice. The Guide also provides several practical resources to encourage and assist lawyers to prepare contingency plans, including checklists of issues to consider, sample power of attorney documents, and sample last will and testament clauses. LawPRO® has also prepared Managing Practice Interruptions resources. An introduction to the information contained in the Law Society and LawPRO® resources has been provided below.

Checklist


 

Planned Absences

  • Consider creating plans to assist you to manage your practice during any planned absence, including
    • vacation
    • parental leave
    • medical leave
    • other leave of absence
  • Consider drafting a limited power of attorney for your practice that grants another named lawyer the authority to act on your behalf and to access your general and trust account(s) to continue with your practice during your planned absence. See The Contingency Planning Guide for Lawyers for more detailed information, including the Checklist of Issues to Consider When Preparing Continuing Power of Attorney for Property Documents and the Sample Continuing Power of Attorney for Property for Law Practice.
  • Consider whether the power of attorney document should include specific terms that clearly outline the attorney’s authority and responsibility regarding your practice.
  • Confirm with your financial institution(s) whether a power of attorney for your general and trust accounts must be in any particular form, or if additional or different documentation is required.
  • Consider including in your retainer agreement or engagement letter a clause that confirms arrangements have been made for another lawyer to assist during a planned absence from your practice, and that the client’s signature is deemed to be consent to permit the assisting lawyer to access, accept or transfer the client’s file.
  • Where you do not have arrangements for another lawyer to assist you during a planned absence, consider contracting a practice locum through the Law Society’s Contract Lawyers and Paralegals List.

Unplanned Absences

  • Consider creating plans to assist you to manage your practice during an unplanned absence or departure from your practice, including your
    • personal difficulties
    • illness
    • incapacity
    • disability
    • death
  • Where you are experiencing personal difficulties (e.g. stress or depression, mental health and wellness, addiction), consider contacting the Member Assistance Program at 1-855-403-8922.
  • Consider drafting a power of attorney for property for your practice that grants another named lawyer the authority to act on your behalf and to access your general and trust account(s) to continue with your practice in the event of your illness, incapacity or disability, with terms that allow that lawyer to arrange for and oversee the sale, transfer or closure of your practice in the event you are unable to return to the practice of law. See The Contingency Planning Guide for Lawyers for more detailed information, checklists, and sample documents, including the Checklist of Issues to Consider When Preparing Continuing Power of Attorney for Property Documents and the Sample Continuing Power of Attorney for Property for Law Practice.
  • Consider whether the power of attorney document should include specific terms that clearly outline the attorney’s authority and responsibility regarding your practice.
  • Confirm with your financial institution(s) whether a power of attorney for your general and trust accounts must be in any particular form, or if additional or different documentation is required.
  • Consider including in your will a clause that addresses how your practice should be sold, transferred or closed in the event of your death. Consider appointing a lawyer as the estate trustee or a co-estate trustee to oversee the conclusion of your practice. See The Contingency Planning Guide for Lawyers for more detailed information, checklists, and sample documents, including the Checklist of Issues to Consider When Preparing Wills and the Sample Last Will and Testament Clauses.
  • Consider including in your retainer agreement or engagement letter a clause that confirms arrangements have been made for another lawyer to assist during an unplanned absence from your practice, and that the client’s signature is deemed to be consent to permit the assisting lawyer to access, accept or transfer the client’s file.
  • Where you do not have arrangements for another lawyer to assist you during an unexpected absence, consider contracting a practice locum through the Law Society’s Contract Lawyers and Paralegals List.

Arrangements With Replacement Lawyer(s)

  • Consider entering into a reciprocal arrangement with another lawyer or lawyers, wherein you will act as each other’s attorney, estate trustee or co-estate trustee, for purposes of continuing or concluding the law practice.
  • To find a replacement lawyer for your contingency plans, consider
    • current and former employers, partners or associates
    • current and former mentors, colleagues or peers
    • lawyers with whom you practise(d) in “association”
    • lawyers with whom you share(d) office space
  • The replacement lawyer
    • should be informed and familiar with your practice, staff and management systems
    • must be entitled to practice law (e.g. his or her licence is not suspended or in abeyance at the time he or she is needed to assist you)
    • must carry appropriate professional liability insurance (e.g. standard or specific coverage, such as for real estate, at the time he or she is needed to assist you)
    • must check for conflicts of interest prior to taking on matters from your practice
  • To ensure that a replacement lawyer has all the necessary resources to take your place, consider taking the following steps
    • your employees, family, and other relevant persons know of your arrangement with the assisting or “buddy” lawyer
    • your practice is organized at all times
    • contact information is readily accessible
    • client files, funds and property are secure and accessible
    • client files are organized and contain a summary of tasks completed and next steps
    • calendaring, reminder and docketing records are current and accessible
    • billing and financial records are current and accessible
    • additional finances are available to continue, transfer or close your practice
  • Consider confirming the arrangement(s) with any replacement lawyer(s) by way of an agreement signed by the participating lawyers. See The Contingency Planning Guide for more detailed information, checklists, and sample documents, including the Sample Law Practice Coverage Agreement between Planning Lawyer and the Replacement Lawyer.

Practice Interruptions

  • Consider drafting plans that outline how your practice will be managed if disrupted by
    • natural disaster (e.g. ice storm, snow storm, or regional flood)
    • office disaster (e.g. office fire or flood, building collapse)
    • civil action or unrest (e.g. strike or protest)
    • construction or renovation (e.g. office, building or surrounding area)
    • power or communications failure (e.g. prolonged blackout or phone system outage)
    • technology failure (e.g. by physical damage or viral contamination)
    • theft, vandalism or malicious damage (e.g. of equipment, premises or data)
    • fraud (e.g. theft of your identity or client funds)
    • departure of key employee(s)
    • law office search or seizure
  • Plans that deal with practice interruptions may include information about
    • your emergency response team, evacuation plans, drills and first aid training
    • temporary or alternate office space
    • alternate communications channels
    • replacing inventory or equipment, on a temporary or permanent basis (see Law Office Inventory Checklist)
    • contact lists for clients, opposing legal representatives and courts
    • contact lists for employees, landlord or property manager, financial institution(s), accountant or bookkeeper, insurers, third party suppliers, etc. (see Law Office List of Contacts)
    • data backups, “restores” and off-site storage of duplicate electronic data
    • off-site storage of copies of practice-related documents (e.g. partnership agreement or minute book, power of attorney, lease, business insurance policy, inventory list, blank general and trust cheques, etc.)
    • proper storage of client property, client documents and client files (e.g. in a fireproof safe or fireproof cabinet)
    • remote or backup access to your calendar and reminder system
    • remote or backup access to your financial records for general and trust account(s)
    • availability of additional funds, credit or cash flow to continue running your practice (e.g. via business insurance policy or a line of credit)

Impact on Annual Fee and Professional Liability Insurance

  • Where your absence from practice is for longer than one calendar month, you may be eligible for a pro-rated reduction in your annual fee to the Law Society for that (or those) month(s), and a refund of any overpayment. For information, contact the Law Society’s Resource Centre at 416-947-3315 or toll-free at 1-800-668-7380 extension 3315.
  • Where your absence from practice is due to maternity, parental or adoption leave, you may be eligible for financial benefits through the Law Society’s Parental Leave Assistance Program. For information, contact the Law Society’s Resource Centre at 416-947-3315 or toll-free at 1-800-668-7380 extension 3315.
  • Where your absence from practice is due to medical reasons, you may be eligible to apply for an exemption from the requirement to pay the annual fee to the Law Society during your absence. For assistance, contact the Law Society’s Administrative Compliance department via the Resource Centre at 416-947-3315 or toll-free at 1-800-668-7380 extension 3315.
  • Your absence from practice may also impact your professional liability insurance coverage needs. Contact LawPRO® at 416-598-5899 or toll-free at 1-800-410-1013 to determine if a change is required and you are eligible for a pro-rated refund of any overpayment of premiums.

Other Considerations

  • When devising your contingency plans, consider whether one comprehensive plan can integrate multiple needs (e.g. one evacuation plan for natural and office disasters).
  • Consider scheduling regular reviews of your contingency plans and any related documents (i.e. insurance policies, power of attorney or will) to ensure their continued usefulness to your practice (e.g. to assess whether it is still appropriate, should be changed, replaced, or discarded if no longer required). Reviews should also be completed when there is a change in circumstance that affects you or your practice, such as a change to your
    • practice structure (e.g. an “association” with another lawyer becomes a partnership)
    • relationship with any replacement lawyer(s) or their ability to assist (e.g. his or her incapacity or death)
    • staff, their job descriptions or responsibilities
    • practice areas or the types of legal services you provide
    • practice management systems (e.g. calendaring and reminder system or document management system)
    • office technology (e.g. hardware, firm website, communication systems)
    • office space
  • Consider documenting the contingency plans for your law practice in or as an appendix to your office manual (see the Office Manual section of this Guide). Where appropriate, store a backup copy of your contingency plans off-site.
  • To plan in advance for the eventual sale or transfer of your practice, consider reviewing the Succession Planning Toolkit.
  • To prepare for the eventual closure of your practice, consider reviewing the Guide to Closing your Practice.

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Office Manual 

Ideally, the policies, processes and procedures of your practice should be documented in an office manual as soon as possible after opening your practice. An office manual may be used to train new employees and support staff, may help ensure consistency in your processes and may assist another lawyer to manage your practice during both expected and unexpected absences. You should do a regular review of your systems and office manual to ensure their continued usefulness, as your practice changes or grows. Though the detail and depth of your office manual will reflect the nature and size of your law practice, an overview of the information you should consider including in your office manual has been provided below.

Checklist


 

Introduction

  • Include an introduction to the office manual that explains
    • the purpose of the manual
    • proper use of the manual (e.g. who should use it, and how)
    • feedback on the manual (e.g. how to provide, and to whom)
    • reviews, amendments and updates to the manual
    • forms, templates and appendices included in the manual

General

  • Provide general information about you and your practice, such as
    • a brief biography about you
    • a short history and profile of the practice
    • a statement of purpose or a “mission statement” for the practice
    • practice areas and the legal services you offer
    • the business goals for the practice (e.g. referring to any business plan, annual budget or marketing plan for the practice)
    • the practice structure, including satellite offices or “associations” with others
    • management and supervisory structure, if applicable

Staffing and Employment

  • Outline policies and procedures for staffing and employment issues related to lawyer and non-lawyer staff, including
    • job descriptions
    • recruitment policies (e.g. advertising, interviewing and hiring)
    • employment offer letters and contracts
    • probationary status and probation periods
    • training and development, both internal and external
    • performance and salary reviews
  • Include other employment related information, such as policies for
    • hours of work and overtime
    • statutory holidays and religious observances
    • sick days
    • vacation
    • leaves of absence
    • employment benefits (e.g. medical or dental)
    • travel and other expenses
    • payroll

Office Administration

  • Outline office administration policies for
    • office hours, lunch and break periods
    • access to and security of office premises
    • occupational health and safety
    • discrimination and harassment
    • use of meeting or conference rooms
    • office inventory and supplies
    • office equipment use
    • service providers and contractors
    • recycling and conservation
    • office dress code
    • petty cash
  • Include office administration procedures that relate to
    • acceptance or admission of service
    • incoming e-mail, mail, facsimiles and couriers
    • outgoing e-mail, mail, facsimiles and couriers (e.g. including use of digital signature, confidentiality disclaimer, firm letterhead, facsimile cover sheets, etc.)
    • incoming telephone calls, messages, voice mail and return calls
    • collect or long distance telephone calls
    • telephone system and directory
    • practice website and office intranet
    • internet and social media use

Practice Management

  • Review the Practice Management section of this Guide for more information on the policies, processes and procedures to implement and include in an office manual.
  • Outline your policies for communicating with clients, as well as
    • the public
    • opposing or involved parties
    • other lawyers or legal representatives
    • representatives of the courts or tribunals
    • business contacts, service providers and contractors
    • the Law Society of Upper Canada
    • LawPRO®
  • Include filing systems policies and procedures for opening, closing, organizing, storing, destroying or retaining files and file contents.
  • Describe financial management policies and procedures, including those for
    • financial obligations, yours or those undertaken on behalf of the client
    • recording disbursements and fees incurred on client matters
    • preparation and delivery of client bills or statements of account, interim and final
    • payment options, interest on and collection of overdue accounts
    • financial transactions and record keeping for both general and trust account(s)
    • reporting to the Law Society of Upper Canada and the Canada Revenue Agency (CRA)
    • internal controls
  • Outline policies and procedures that relate to time management, such as the proper use of time calendaring, reminder and recording systems.
  • Describe policies and procedures for the proper and prohibited use of technology in your practice, including e-mail and Internet policies, security, backup and disaster recovery, and internal controls.

Contingency Plans

  • Consider documenting the contingency plans for your law practice in or as an appendix to your office manual.

Professional Responsibilities

  • Consider including policies that relate to your professional responsibilities outlined in the Rules of Professional Conduct and the By-Laws, such as
    • client identification and verification of identity [By-Law 7.1]
    • maintaining client confidentiality [Section 3.3]
    • proper handling of client property and funds [Section 3.5 and By-Law 9]
    • managing conflicts of interest [Section 3.4]
    • preventing unauthorized practice of law or provision of legal services [Section 7.6]
    • proper supervision and delegation [Section 6.1 and By-Law 7.1]
    • managing articling and law students [Section 6.2]
    • abstaining from sexual harassment [Section 6.3]
    • avoiding discrimination [Section 6.3.1]
    • dealing with client claims and complaints [Sections 7.1 and 7.8]
    • acting with courtesy and civility [Section 7.2]
  • Consider including procedures that relate to your administrative responsibilities to the Law Society and others, including your requirement to pay the annual fee, submit annual filings and maintain adequate professional liability insurance through LawPRO®.

Other Considerations

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Preparing a Business Plan 

A business plan is a document that contains a formal statement of business goals and the plan for reaching those goals. It may also contain background information about the organization or the team attempting to reach those goals. There is no fixed content for a business plan.

The business plan for your law practice should be tailored for your intended audience. If the plan is for your purposes only it will contain less detailed information than if it is to be used by a bank for purposes of financing, or by another party for some other purpose. Where possible, your business plan should include a budget and estimated costs for starting your practice, and for maintaining your practice into the future.

When you are implementing your completed business plan, you should regularly review it to determine if you have met the goals outlined in your plan. If you are not meeting your goals, you may need to update the plan and amend your original strategies. The process of reviewing and updating your plan as your goals are met or change is one that will continue as long as you operate your own practice. The level of formality involved in the review and update process will be determined by the needs of your audience. See the Developing a Law Firm Business Plan sample document included in this Guide.

Checklist


 
  • When preparing a business plan for third parties, such as a financial institution, ascertain whether they have a preferred format or template available. 
  • Use plain language and concise ideas to ensure that your business plan is easy to read. 
  • Use appendices if you include tables, charts, graphs, illustrations, financial statements, résumés, etc.
  • Create a professional document that is properly printed, indexed and bound.
  • Prepare a Cover Page, outlining
    • title
    • name of law practice
    • address of the law practice
    • key contact people and contact information
  • Create a Table of Contents, for your audience’s ease of reference.
  • Draft an Executive Summary that briefly outlines the most important points of your business plan. Consider drafting this after the remainder of you plan is complete, and include
    • a description of your law practice
    • the goals and strategies for your practice
    • partners, associates and other key staff
    • practice areas and areas of specialization (if applicable)
    • the unique characteristics of your practice
    • the types of clients your practice will serve
    • practice economics and profitability
    • financing requirements
  • Outline the Market for Legal Services, describing in detail the
    • need for legal services in the local economy
    • marketing plan for your practice
    • practice areas, specialties and ancillary services offered
    • start-up and growth strategies for your practice
  • Include a section for Market Research and Analysis, that details
    • current and potential clients of your practice
    • market size and trends
    • competition with other law firms or legal service providers
    • future practice areas
  • Create a Marketing Plan, describing in detail the
    • overall marketing strategy for the practice
    • billing rates and alternate billing policies
    • client service initiatives
    • advertising and solicitation plan
  • Include a section for Firm Economics that describes
    • start-up expenses
    • billing summaries
    • expense summaries
    • total expenses
  • Include a section on Business Environment and Firm Personnel, outlining
    • backgrounds, responsibilities, qualifications and résumés of the lawyers involved in managing the practice
    • ownership structure (e.g. sole proprietorship, partnership, etc.)
    • information on the team of professionals you have gathered to advise you (e.g. accountant, corporate lawyer, IT specialist, etc.)
    • human resource and staffing needs
  • Formulate a Financial Plan, outlining
    • projected financial performance, including a pro forma income statement, pro forma balance sheet and cash flow statement (see Fee Projections Worksheet, Cash Flow Worksheet and Profit and Loss Statement)
    • financing requirements (if any) and repayment proposal, including personal wealth statements of the business owner(s)
  • Include a Conclusion that restates your aims and objectives and, if your audience is a financial institution, explain why you are an excellent candidate for financing. 

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List of Resources 

General Guides and Resources


 

Law Society of Upper Canada

Bookkeeping Guide for Lawyers

Client Identification and Verification Requirements for Lawyers

Contingency Planning Guide for Lawyers

Equity Model Policies, Publications and Reports

File Opening Checklist

Guide to Closing Your Practice for Lawyers

How-To Briefs

Practice Management Guidelines

Research Guides

Sample Confidentiality Agreement

Succession Planning Toolkit

LawPRO®

E&O Insurance

Lending Library

Managing Finances of Your Practice

Managing Practice Interruptions

Other

Business Development Bank of Canada, Start or Buy a Business

Canada Business Network, Starting a Business

Canadian Bar Association, Solo & Small Firm Lawyers

Ontario Government, Small Business: Advice, Support Services, Regulations

Contains entrepreneurial self-assessment tools or resources.

‡ Contains a business plan outline or template.

Technology resources

American Bar Association, Legal Technology Resource Center

Law Society of Upper Canada, Technology Practice Tips Podcasts

LawPRO®, Managing Privacy and Security of Electronic Data

LAW.COM, Law Technology News

 

Business Structure, Arrangements and Registrations Resources

Canada Revenue Agency, Businesses

Service Ontario, ONe-Source for Business

 

Insurance Resources

Canadian Bar Insurance Association

Insurance Bureau of Canada

Insurance Canada

Insurance Information Institute

 

Marketing and Networking Resources

Canadian Bar Association, National Magazine Online Supplement: Marketing

Canadian Bar Association, National Magazine Online Supplement: Networking

LawPRO®, Technology Articles and Tips

LawPRO® Magazine, Social Media: Pitfalls to Avoid  

 

Mentoring Resources

The Advocates’ Society, Mentoring Series

Arab Canadian Lawyers Association, Mentorship Program

Canadian Association of Black Lawyers, Mentorship

Law Society of Upper Canada, Mentoring Initiatives

LawPRO®, Managing a Mentor Relationship

Legal Aid Ontario, Mentoring at LAO

Ontario Bar Association, Mentorship

Women’s Law Association of Ontario, Mentoring Program

 

Websites

Canada Revenue Agency

Law Society of Upper Canada

LawPRO®

Legal Aid Ontario

Member Assistance Program

Service Ontario, ONe-Source for Business 

 

Telephone Numbers

Canada Revenue Agency, 1-800-959-5525 (for business-related inquiries)

Law Society of Upper Canada, 1-800-668-7380 ext. 3315 or 416-947-3315

LawPRO®, 1-800-410-1013 or 416-598-5899

Legal Aid Ontario, 1-800-668-8258 or 416-979-1446

Member Assistance Program, 1-855-403-8922

 

Rules, Regulations and Statutes

Law Society Act

Rules of Professional Conduct

By-laws pursuant to the Law Society Act

By-Law 5: Annual Fee

By-Law 6: Professional Liability Insurance  

By-Law 7: Business Entities  

By-Law 7.1: Operational Obligations and Responsibilities

By-Law 8: Reporting and Filing Requirements

By-Law 9: Financial Transactions and Records

Accessibility for Ontarians with Disabilities Act

Business Corporations Act (Ontario)

Business Names Act

Corporations Information Act

Commissioners for Taking Affidavits Act

Employment Standards Act

Human Rights Code

Notaries Act

Occupational Health and Safety Act

Partnerships Act

Personal Property Security Act

Forms

Report on Opening or Closing a Trust Account

Sample Letter of Direction to a Financial Institution

Notice of Change of Information

 


1 The information contained in this guide is not a substitute for the lawyer’s own research, analysis and judgment. The Law Society of Upper Canada does not provide substantive legal advice or opinions.

2 Documents reprinted with the permission of David Epperson, Mitchel L. Winick, Veronica Bell Gilbert, and Jonathan E. Smaby, Opening and Managing a Law Practice, 3rd edition, published by the Texas Center for Legal Ethics and Professionalism