Download Describing your Firm`s business opportunities

Disclaimer
These guidelines for preparing a business plan are based upon the guidance
published by Business Link.
The Solicitors Regulation Authority (“SRA”) Code of Conduct 2011 provides
Outcomes-Focused Regulation (OFR), based on ten mandatory Principles, a
series of mandatory Outcomes and various Indicative Behaviours which are not
mandatory but which constitute suggested guidance. The 2011 Code therefore
offers Firms greater flexibility in respect of their relationship with their clients and
how they manage their businesses.
The Code also requires each Firm to place more emphasis on the particular
needs of individual clients and to consider its practices and procedures in light of
its individual profile regarding, for example, work-type and risk.
The following documentation must be carefully tailored to meet the needs of your
Firm.
This is an example document. In view of the above statement, Aon UK Limited
expressly disclaims any liability to your Firm and any other person in connection
with this document and any consequences of anything done or omitted to be done
wholly or partially in reliance upon this document, and does not provide any
warranty representation or guarantee as to the accuracy, performance,
completeness or suitability of this document, and your Firm’s use of it is entirely at
your Firm’s own risk. It is your Firm's responsibility to ensure that the document’s
contents meet your Firm’s specific requirements.
To remove Watermark prior to your use, go to Page Layout or Design /
Watermark and click on “Remove Watermark”.
Business Plan Guidelines
It is essential that Firms have realistic working business plans, not only at the start-up of a new Firm, or
when a Firm wishes to expand and might wish to attract external funding, but also for the purposes of the
stability of the business thus enabling the Firm to provide continuity of service on behalf of its clients. It
might also be considered that the business plan contributes to complying with the principle of acting in
the best interests of clients embodied in the 2011 Code, as well as being a mandatory requirement of
Lexcel. Therefore a Firm’s business plan can also be considered to be part of the Firm’s compliance
plan required by the 2011 Code.
A business plan is a written document that describes a business, its objectives, its strategies, its target
markets and its financial forecasts. There are many benefits to be gained from creating and managing a
realistic business plan as part of the management of a Firm including:

Helping to spot potential pitfalls before they occur.

Structuring the financial side of a Firm efficiently.

Focussing efforts on developing a Firm’s business.

Acting as a means of measuring a Firm’s success.
The business plan should provide details of how a Firm is going to develop its business, when it is going
to happen, who has a part to play in implementing the plan and how the finances will be managed.
Clarity on these issues is particularly important if a Firm is to use the business plan to raise finance.
Overall, the business plan should include:

An executive summary.

A description of business opportunities.

Markets and competitors.

A sales and marketing strategy.

Details about the Firm’s management team and other personnel upon whom the success of the
plan depends.

Operational resources such as premises and IT systems.

Financial forecasts.

Risk analysis, contingency and succession planning.
Organising the plan so that it has maximum impact is of paramount importance even if it is only intended
for internal use.
A number of precedent documents that can be used to support the business plan drafting and/or
presentation are available from aonrm.com. The following represents an indication of those that might
be of use, although we would urge you to review all of the precedent documents available.

Annual Risk Management Review Agenda ARMR 201701

Approved List of Third Parties - QMC/ALTP 201701

Business Continuity Plan – Refer to Law Society Practice Note

Client Satisfaction Survey - CSS 201701

Data Protection Policy - DPP 201701

Information & Communications Technology (ICT) Usage Policy - ICTUP 201701

List of Referral Organisations - LRO 201701

Notice of Right to Cancel (Distance) - NRCD 201508

Notice of Right to Cancel (Excursions) - NRCE 201508

Model Cancellation Form - MCF 201701

Outsourcing Guidelines - Refer to Law Society Practice Note

Outsourcing Agreement Clauses - OAC 201701

Register of Interests - ROI 201701

Risk Log - RL 201701

Social Media Guidelines - Refer to Law Society Practice Note

Terms of Business - TOB 201701
Executive summary
The executive summary is often the most important part of a Firm’s business plan. Whereas the
executive summary will be positioned at the front of the document, given that it is a summary, it makes
sense to draft it last.
It is possible that the executive summary will be the only part of the business plan read depending upon
the plan’s purpose and its target audience. If, for example, it is intended to raise capital for a new startup Firm, or to encourage funding for an existing Firm that wishes to expand, the bank or other institution
might take a decision on whether to pursue the matter on the basis of the executive summary alone.
What is an executive summary?
An executive summary is a synopsis of the key points of the Firm’s entire plan. It should include
highlights from each section of the rest of the document. Its purpose is to explain the basics of a Firm’s
business in a way that both informs and interests the reader. If, after having read it, the reader
understands the Firm’s business and wishes to know more, then the executive summary has achieved
its objective.
What an executive summary is not?
An executive summary is not a brief description of a Firm’s business operations; it is a synopsis of the
Firm’s entire plan. Neither should it be an extended table of contents; a Firm should ensure that it
focusses upon the highlights of the plan rather than restating the details of the plan’s contents.
Describing your Firm’s business opportunities
The plan must clearly describe what services the Firm does or intends to offer, whether the plan is being
developed for internal or external purposes such as attracting third party funding or both. This part of the
plan sets a vision for the Firm’s business and includes what it is, what it does, what it has to offer and the
market that it wishes to serve.
This section of the plan should start with an overview of the Firm’s business, including:

When it started or intends to start trading and the investment and the progress made to date.

The type of legal sectors the Firm practices.
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Any relevant history e.g. if the Firm’s business was expanded through acquisition, details of the
acquired Firm, what they achieved with it and any succession responsibilities that have been
assumed.
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The current legal structure.
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A vision for the future.
The plan should then describe the Firm’s products and services as simply as possible, defining:
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What makes it different?
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What benefits it offers.
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Why clients would instruct your Firm rather than your competitors.

The key features and success factors of the legal profession and the sectors your Firm serves
within it.
It should be kept in mind that the person reading the plan may not understand your Firm’s business,
products and services, therefore jargon should be avoided. A Firm might consider asking a reliable third
party who is not involved with the Firm or the legal profession to read this section of the plan to make
sure they understand it.
Markets and competitors
In this section, a Firm should define its market, its position in it, and outline who its competitors are. In
order to do this, a Firm should refer to any market research it has undertaken. Firms need to
demonstrate that they are fully aware of the marketplace they intend to operate in, and that they
understand any important trends and drivers.
Firms should also be able to show how their businesses will be able to attract clients despite competition
in their chosen marketplace. Key areas to cover should include:

The chosen market, its size, historical data about its development and any current issues
including its public funding status.

The target client base, who they are and how it is known that they will be interested in your Firm’s
products and services.

Competitors, who they are, how they work and the share of the market they hold.

Future trends, anticipated changes in the market and how you expect your Firm and your
competitors to react to them.
It is important to know a competitor’s strengths and weaknesses compared to your Firm’s and it is good
practice to analyse this commercial feature. Firms should bear in mind that markets are not static;
clients’ needs and competition can change. Therefore, as well as showing an analysis of the
competition, Firms should also demonstrate that they have considered alternative business scenarios.
Marketing and sales
This section should describe the specific activities a Firm intends to use to promote and sell its products
and services. It’s often the weak link in business plans, so it’s worth spending time on this section to
make sure that it’s both realistic and achievable. A strong sales and marketing section means a Firm will
have a clear idea of how it will promote and distribute its products and services.
Strong sales and marketing plans will demonstrate that a Firm has a clear idea of how it will distribute its
products and services. In so doing, this section of the plan will need to provide answers to the following
questions:

How does your Firm plan to position itself and its products and services in the marketplace? Is
this documented in a formal marketing plan?

Who are your Firm’s clients? Include details of existing clients, those that have expressed interest
in your Firm’s products and services, and explain how your Firm plans to go about attracting new
and repeat clients.
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What is your Firm’s pricing policy? Include details of fixed fee or time-based fee structures.

How will your Firm promote its products and services? Identify your promotional processes, e.g.
direct marketing, advertising, PR, e-mail, social marketing etc. Has consideration been given to
which promotional methods will be the most effective and most appropriate for the Firm’s target
market?

Do you intend to have arrangements with third parties who introduce business to you and/or with
whom you share your fees? If so, how will your Firm comply with its obligations under Chapter 9
of the Code of Conduct?
The Firm’s management team and other key personnel
Your Firm’s business plan needs to set out the key skills, background and structure of both its
management team and key staff. It should identify the strengths in the Firm’s team and the Firm’s plans
to deal with any obvious weaknesses.
The management team
For Firms seeking to demonstrate competency to third parties, their management team can be a decisive
factor. Business plans should explain who is involved in the management team, their roles and how they
fit into the overall management structure. In view of this, Firms should include a CV or paragraph on
each member of the management team, outlining their background, relevant experience and
qualifications.
If the Firm’s business plan is aimed at satisfying external funders, it needs to demonstrate that the Firm’s
management team has the right balance of skills, drive and experience to enable the Firm to succeed.
Key skills include sales, marketing and financial management as well as the ability to perform casework.
Potential external funders will also want to be convinced that a Firm’s team are fully committed to
achieving the objectives in the business plan. Proof of this, for example, might be setting out how much
time and money each person will contribute, or has already contributed to the business and the salaries
and benefits each plans to draw.
Staff
Firms should give details of their staff in terms of total numbers and by department. The plan should
specify what work is planned to be undertaken internally and if the Firm plans to outsource any work.
Other useful figures might be sales or profit per employee, average salaries, employee retention rates
and productivity. The plan should also outline any recruitment or training plans, including timescales and
costs.
Operations and resources
A business plan should outline a Firm’s operational capabilities and resources and any planned
enhancements. The main areas to focus upon are:
Premises
The questions the business plan should address are:

Do you have any business property?
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What are your Firm’s long term commitments to the property?
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Is it owned or rented?
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What are the advantages and disadvantages of its location?
Providing services to clients
The questions the business plan should address are:

Does the Firm’s current level of competence and capacity align with existing and forecasted
levels of demand, or will additional fee earners be required?
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Does the Firm need to undertake all activities required to provide services to clients, or would it
be cheaper and more effective to outsource some of these activities?

If the Firm does intend to outsource any components of the legal services it provides, how will the
Firm control the quality of the outsourced activities and comply with the regulatory framework for
outsourced activities?
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How modern are the Firm’s current facilities?
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Does the Firm’s facilities cope with current levels of demand? How well does the Firm think that
its current facilities will cope with forecasted levels of demand?

If the Firm feels that its facilities will need to be enhanced to cope with forecasted demand what,
if any, investment will be needed?
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Over and above outsourcing components of the Firm’s legal activities, what other suppliers will
the Firm need?
Systems, procedures and quality assurance
This section should describe the Firm’s approach to the management of its work, not in terms of the legal
advice it provides, but in terms of how its systems and procedures govern the delivery of the services it
provides. Questions to be addressed include:

Has the Firm got established procedures for case-work allocation, case management and the
control of third parties such as barristers and other experts?
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Has the firm got established systems for the supervision of case-work?
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What approach does the Firm take towards quality assurance?
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Has the Firm got established procedures for complying with the Solicitors’ Accounting Rules?
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How well does the Firm feel its current systems and procedures will cope with forecasted
demand?
Information technology
As IT is becoming a key factor in the successful delivery of legal services, Firms should:

Set out their strengths and weaknesses in this area.
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Outline the reliability of these systems and plans for future development.
Financial forecasts
The business plan will need to provide a set of financial projections which translate what has been said
about the Firm’s future development into numbers. The plan should carefully consider:

How much capital is needed if the Firm is seeking external funding?
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What security can be offered to lenders?
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How the Firm plans to repay any borrowings.
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Sources of revenue and income.
Financial planning
The forecasts should run for the next three years and their level of sophistication should reflect the
complexity of the Firm’s business. However, the first twelve months should have the most detail
associated with them. The assumptions that lay behind the projected figures should be fully explained,
both in terms of costs and revenues, so that third parties can clearly understand the thinking behind the
numbers. Forecasts should include:

Fee income: The total amount of fees the Firm expects to realise from each category of law.

Cash-flow statements: The cash balance and monthly cash-flow patterns for the first 12 – 18
months. The aim is to show that the Firm will have enough cash to remain viable, therefore, the
amount and timing of expenditure such as salaries must be shown.

Profit and loss forecast: A statement of the trading position of the Firm and the profit it expects
to make, given projected fee income and the associated costs and overheads.
Risk analysis, contingency and succession planning
In addition to financial forecasts and planning, the business plan should also include an analysis of the
risks the Firm could be faced with and contingencies and insurances the Firm has considered to counter
these risks. Examples of risks that should be considered and recorded in a Risk Log or SWOT analysis
include:
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Actions by competitors.
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Commercial issues, such as pricing of services and resources.
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Business continuity such as Locum cover and/or operational failures such as IT.
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Succession planning through restructuring, run-off etc.