Law firm start-ups, then and now

The contrasting experience of two technology law firm start-ups in 1994 and 2014 highlights the massive evolution of legal practice in the last 20 years.

Law firm IT and regulation have both changed out of all recognition over the past two decades. The first has become a lot more flexible, better and cheaper; the other, much more formal and granular.

In the first 18 months after the launch of Kemp & Co in 1997, we spent £75,000 on IT equipment, £50,000 on other office equipment and £75,000 on IT services. At £200,000 in total, this was around 40 per cent of non-people, non-property capex and opex over the 18-month period.

Not to get too back in the day about it, but this was when a 56,000 modem and an ISDN line was pretty standard for Internet connectivity; email was still pretty new (we only got ours working the night before launch); a 144MHz processor was standard for PCs on desktops; and Exchange 5.5 and Windows NT gave you for the first time a pretty decent small office client/server network.

But every time you did a server upgrade (which was every 18 months or so if you wanted to keep up), even in a tiny office you spent around £30,000 – new software version, new servers, backup software, uninterrupted power supply, out of hours installation, the list went on and on.

On the other hand, the regulatory side of things now seems incredibly informal and light in retrospect: a two-line letter to the Law Society saying could I put up my brass plate please, and an equally short response saying yes, and did I know that my first £1m of compulsory PI insurance was £500 as an incentive for new firms to set up?

Today, it’s the other way round. Setting up our IT at Kemp IT Law in 2014 has been a real eye-opener. I know it’s preaching what we practise, but you really can do so much more for so much less. We lucked out working with the same IT crowd who launched us in 1997, Stuart Osborn and Simon Kentish at Volodi, and they did us proud (again).

This time, initial capex was £17,000, and running costs are £1,000 a month, so £35,000 over 18 months all up in 2014/5 as against £200,000 in 1997. Capex in 2014 has covered:

building and configuring our domains (private and public cloud sites at and;
security hardware (routers) and software (Mimecast);
main and backup for each of fast broadband lines, laptops and multi-function printers (no more separate faxes, copiers and scanners); and
mobile, laptop and desktop comms.
Opex covers subscriptions, line and mobile monthly costs and support.

Conversely, as with regulation the world over since 2008, the SRA side is now much more formal and much less light. Instead of a two-line letter, we had three 30-page forms to complete (firm, COLP and COFA authorisation applications) along with business plan (25 or so pages) and budget cashflow, P&L and balance sheet, around 130 pages counting other bits and pieces like insurance details.

Counterintuitively, this was actually a good experience. Having to write it all out concentrates the mind and focuses you on all aspects of the business model and risk; the SRA was helpful and good to deal with; and the whole process took a little over two months from application to authorisation.

So the story is that whilst the business platform side has got so much easier – and you can say the same for marketing, information resources, capacity and premises – the regulatory side has got more detailed and the bar a lot higher.

And that doesn’t strike one as being a bad trade off.

Read the original article at The Lawyer


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