HOW TO SET UP IN BUSINESS AS A PARALEGAL PRACTITIONER
By Amanda Hamilton, NALP
More and more Paralegals are setting themselves up in practice in order to offer vital legal services direct to consumers.
With solicitors and barristers charging upwards of £150 per hour, many people are now turning to Paralegals who can do much the same as a solicitor or barrister (with e few exceptions) but for a fraction of the cost. Paralegals are currently a growth area with lots of demand for their services.
Now is a good time to set up your own Paralegal practice – but before you do so, here are some dos and don’ts!
The following advice and suggestions may assist in helping you to avoid the most common pitfalls and also may help you to decide whether to proceed towards a career as a professional paralegal.
Paralegals are not statutorily regulated and therefore you may come up against people who tell you that anyone can call him/herself a ‘Paralegal’ and it is not necessary to gain any training or qualification to carry out paralegal services.
This is technically true, but in practice, it’s not accurate. However, remember that you are up against a mountain of competitors who will probably be far more qualified than you. Why? Maybe because they have a law degree but cannot afford to proceed towards gaining the professional qualifications to become a solicitor or barrister. It may be due to cost, lack of training contracts or pupillages, which pushes them to work as paralegals either as a stepping stone to becoming a solicitor, or, as time goes on, persuades them that maintaining status as a Paralegal is just as worthwhile.
Bear in mind that you will be handling delicate legal matters for your clients and therefore you will have to consider the possible consequences if something were to go wrong. Gaining knowledge of academic Law and practice is essential to give you and your client confidence.
So the very first thing you need to do is gain a paralegal or legal qualification or at the very least get some paralegal training and then, as much experience as possible. This does not have to be with a solicitor or barrister, because nowadays you can gain the relevant legal experience by working in a variety of different employment environments. Examples could be: local authorities, national health service, charities, housing associations, HMRC, Crown Prosecution Service and company in-house legal departments. In fact anywhere which has an element of legality to the work that you do.
Choosing your field
Once you have gained some knowledge of law and legal procedure and have gained three or more years’ relevant legal experience, you need to decide whether you wish to specialize in one area of law or would like to be a general practitioner. Clearly, you must have gained relevant legal experience in all these areas first. For example, you may have worked in a human resource department of a company and have studied Employment Law – this then may well be the area of law in which you wish to practise.
Alternatively, you may have gained your experience in a busy small solicitor’s firm dealing with an assortment of legal matters or cases involving for example, criminal law, small monetary claims, consumer rights, matrimonial matters etc. and, as a consequence, you may decide that you wish to become a general practitioner.
Now for the hard part: setting up in practice
Remember that your clients are consumers of legal services. They want to know that the person offering legal assistance is qualified and competent to do so. It would also help if you were a member of a membership body such as NALP which has been a Paralegal organisation for thirty years and is well established in the legal sector.
Membership of such a body will give you kudos and confidence and will, more importantly give your potential client confidence that you know what you are doing. Membership is also confirmation that you have been vetted by the organization and have to abide by its rules, and can be sanctioned if something goes wrong.
Licence to Practise: being a member of NALP entitles you, subject to the requisite qualifications and/or experience and fulfillment of eligibility criteria, to apply for a Licence to Practise in the areas of law in which you can provide evidence of experience. Again, this means that NALP has done its due diligence on you and thoroughly vetted you and your credentials.
Eligibility Criteria to gain a Licence to Practise:
1. Qualifications – you must have a minimum Level 3 qualification and a minimum of three years’ experience
2. Experience only – you may not have qualifications but can provide evidence of a minimum of five years’ experience
3. Professional Indemnity Insurance (PII): covering you for the work that you do.
So, you have your Licence to Practise. Now what do you do?
You should ensure that there is no inference in any marketing for your business, whether via a website of Facebook Page, that you are a solicitor or barrister. This is what is known as ‘Holding Out’ and is illegal. So, in all your marketing you have to make it clear that you are a paralegal and not a solicitor or barrister. Even if you do not mention this specifically, you may be held accountable if consumers can make an assumption.
You must also be very much aware that there are certain activities you are unable to perform. You must know these ‘reserved activities’ (as defined by S12 of The Legal Services Act 2007) back to front and ensure that you do not undertake such activities, making it clear in any contract for services with your client, what this means, and what these activities are. For example, you cannot buy and sell property for a client. This requires the services of a solicitor or Licensed Conveyancer who is regulated through the Council for Licensed Conveyancers (CLC)
Apart from the ‘reserved activities’, you can operate in much the same way as a solicitor, e.g. you can operate as a Paralegal Firm and have partners.
Sole practitioner, partnership or company?
So, you’re ready to start…but do you carry on your business in your own name, in partnership with other paralegals or incorporate as a limited company and use another name?
This is entirely up to you, but beware: There are duties you have to comply with if you set up your business as a company. For example, you need to submit company accounts each year, and this may be burdensome (especially if you are just starting out) and costly. For this, you need to employ an accountant and probably a bookkeeper.
As a sole practitioner, you can work under your own name and do not have such legal obligations. However, you would need to submit your annual tax return each year and be subject to income tax on your earnings.
The advantage of setting your business up as a limited company is that your financial obligations may be limited if something goes terribly wrong.
For further advice and assistance on the financial aspects of setting up in business, it is recommended that you get independent financial advice.
Finally, setting up your own Paralegal practice can be very rewarding – but do make sure you follow the advice above to give both your clients and yourself the expertise, confidence and protection that you and they deserve.