After talking to a few friends who struck out on their own and started their own Law Practice (litigation), I have a ballpark figure on the average one-time investment and monthly expenses involved in setting up shop -
One can do without a full time office in the initial year or two, especially during this pandemic.
I just got the largest table i could find, set it up in my living room, and voila, I was up and running. Keep your outgoings low is the best mantra when you're going solo.
Clients are happy to avoid the commute if they can speak to you over Zoom, Meet etc. If you have to meet in person, you could do so at a Cafe or rent one of the meeting rooms at a coworking space.
1) Rent and power are on lower side. Can't comment on salaries. 2) Many other expenses not considered- subscriptions to journals/ reporting services, refreshments, conveyances, internet/telephone, mail id's, repairs etc, various miscellaneous expenses, 3) Buy laptops instead of desktops. You can get decent ones in same range. And for litigation, you don't need very high specs, unless you have lot of heavy excel data files etc. Also, for four persons, why you need five systems, even after assuming your peon and court clerk are also given a system (unless the steno is on your payroll and needs a system). 4) You may want to see when to go for recruitment and don't start with this much team from day one, since it may not be completely needed in beginning, unless you've good deal of work from day one.
One suggestion - just visualize yourself in office (or better, go to an operating office and just look around), you'll realize all expenses. You'll also need some funds to meet initial payroll and other costs, since your cash flows won't be in sync with outflows plus as a start up, you'll have some lean months in beginning. Please consider keeping aside six months operating costs as a reserve, which will burn through and then cash flow mismatch will come up. Of course, this won't apply if you have a steady cash flow (not billing but actual cash receipt) from day one.
1. Rent & utilities looks quite low for Fort/Nariman Point. What sort of office space are you looking at and where? If it's bare shell, have you factored in interior civil works and appliances (AC, water purifier, microwave etc) expenses?
2. Commentaries are actually a recurring expense. New commentaries cost 2.5-5k each, and most lawyers I know buy 1-2 per month to slowly build their collection. 15k will get you 3-5 new books, unless you're getting some deal to buy old ones from someone who's retiring / raddi. But you can save on bare act/commentary/database/journal expenses initially by enrolling in a library or borrowing someone's college subscription.
1. Its a cubbyhole office (can accommodate max 6 ppl) in old commercial building around the Borabazar Precint, not even proper Fort (proper Fort for High Court purpose - Homy Mody Street/Nagindas Master Road/Kala Ghoda/Horniman Circle up to Perin Nariman Street/Cawasji Patel Road). This is north of P.M. Road and closer to CST - one has to sweat it out to reach HC on foot but useful if one has a substantial practice before the M.M. Courts at Ballard Pier/CST and the Cooperative Society (Malhotra House), DRT and CESTAT !
Am not 100% sure about the Power bill and if it is low because of lower usage post pandemic. If the average domestic power bill for like a 350 sq. ft. space comes up to around 700 bucks, should 2000/- per month for a commercial connection be a reasonable estimate ? Anyway would like to know what you feel.
2. I get what you mean. But at this stage maintaining a decent set of commentaries is as much a necessity to appear decently well read (we do read them!) before posh Counsels and not look out of place. Am talking Mulla on CPC/Contracts, Indu Malhotra on Arbitration, the very basic.
1. As someone having office at Ballard Pier: Hey Borabazar is Fort only, HC/CityCivil is a 10 min brisk walk for you. I've to grab a cab which absolutely sucks at 10.40am.
Anyway, utilities also included internet and water apart from electricity. It's difficult to estimate your electricity bill. Some old buildings have old convoluted wiring, which drives up the bill due to leakage and theft. Speak to existing tenants and see how much they're paying?
From my experience starting out, a few suggestions for your consideration:
1. Think about whether you can afford to scale up the office expenses a bit more - if you can get to the 40k range. It will help. I started in a 14k office in Perin Nariman Street (towards the CST end) and I moved in six months to a 30k one. I started in attorney practice and realised that once I got a decent client I could not really have them come to the broken down building... From your post, it seems you are starting as an attorney/on-record rather than as counsel (if counsel, then you also want an office somewhere where attorneys will not find it all too inconvenient to brief you at the last minute...). Another option for you is (if you have a budget around 25-30k) is to go for a business centre. There are plenty in Fort. One counsel I know started out with a cubbyhole for 18k and now has two rooms in the business centre. Some law firms have started their Mumbai offices in business centres (before moving to larger spaces). If you have a team of 2-5, it can be very convenient. Justice Srikrishna was (at least pre-pandemic) running his very extensive arbitrator practice from a business centre premises. Very convenient. More expensive that the pure rentals, of course: but it is something where clients can come, there is a decent reception, electricity and cleaning is paid for etc... Also, your refundable deposit amount will be 3 months (and not 6 months) so less one-time.
2. Do you absolutely need a junior? If it is just for getting dates when you are stuck or something, or doing basic first drafts in some matters, you might instead simply brief junior counsel on matter to matter basis. The absolute juniors in counsel practice charge really low. And if you brief them in their first year, when five years later they get clients approaching them, they won't forget that you assisted them when noone else did and refer chaps to you...
3. Why 5 desktops?? Two laptops (or one laptop + one desktop) is more than enough. One for your own work use; one for general office use (to be shared by the rest of the office).
4. You do not need a peon and a court clerk. You can engage court clerks on a matter-to-matter basis (for 3-5k, they will handle filing, removal of objections etc), and that clerkage can be expensed to clients directly together with court fees.
5. Speak with one of the photocopiers nearby and get them to give you bulk discounts for routine printing - many will give you a bulk discount but also give you matter-wise bills: extremely helpful for expensing out. But buy a scanner nonetheless: way too expensive to scan outside. And have the peon operate the scanner and raise "bills" on you (for 50% of the outside scanning charges) so you can expense that out to the client (and recover your scanner investment).
I'm a corporate lawyer but even I know that court clerks know much more than junior lawyers. Some of them demand even 25-30k. You do stay without a junior lawyer but not a court clerk in litigation
Justified. At the same salary, a Court Clerk probably is a black belt in what he is expected to do, while the junior is taken in as a white belt. Put other ways, the clerk would likely have several years of experience, while the junior advocate will have none.
Expenses
Books
Bare Acts – Rs. 3500
Commentaries – Rs. 15,000
(leatherbound volumes)
Stationery
Letterheads – Rs. 2,000
Envelopes – Rs. 2,500
Stamps/Seals & Inkpads – Rs. 500
Stationery (Printing paper/Ledger paper), Pens – Rs. 3,500
Computer hardware
Printer cum Copier – Rs. 9,000
Office Furniture & fixtures (chairs, desks, sofas, ACs, cabinets etc) – Rs. 59,000
Scanner – Rs. 5,000
Desktop PCs (Rs. 30,000 x5) - Rs. 150,000
OFFICE PREMISES
One time Security Deposit & Brokerage for rented office = Rs. 200,000/-
------------------------------------------------------------------------
TOTAL = Rs. 450,000/-
Monthly Outgoings
Rent (Bombay) - Rs. 22,000
Power - Rs. 2,000
1 Peon salary - Rs. 10,000
1 Court Clerk salary - Rs. 20,000
1 Junior Advocate salary - Rs. 20,000
Printer refills - Rs. 1,500
Stationery refills - Rs. 3,000
Postal Costs - Rs. 5,000 (for service, recoverable from client)
Steno/Typing fees - Rs. 9,000
--------------------------------------------------------------------
TOTAL = Rs. 92,500/-
This is what the first time outlay and monthly outlay of a small, modest Litigation practice in Mumbai looks like.
I just got the largest table i could find, set it up in my living room, and voila, I was up and running. Keep your outgoings low is the best mantra when you're going solo.
Clients are happy to avoid the commute if they can speak to you over Zoom, Meet etc. If you have to meet in person, you could do so at a Cafe or rent one of the meeting rooms at a coworking space.
2) Many other expenses not considered- subscriptions to journals/ reporting services, refreshments, conveyances, internet/telephone, mail id's, repairs etc, various miscellaneous expenses,
3) Buy laptops instead of desktops. You can get decent ones in same range. And for litigation, you don't need very high specs, unless you have lot of heavy excel data files etc. Also, for four persons, why you need five systems, even after assuming your peon and court clerk are also given a system (unless the steno is on your payroll and needs a system).
4) You may want to see when to go for recruitment and don't start with this much team from day one, since it may not be completely needed in beginning, unless you've good deal of work from day one.
One suggestion - just visualize yourself in office (or better, go to an operating office and just look around), you'll realize all expenses. You'll also need some funds to meet initial payroll and other costs, since your cash flows won't be in sync with outflows plus as a start up, you'll have some lean months in beginning. Please consider keeping aside six months operating costs as a reserve, which will burn through and then cash flow mismatch will come up. Of course, this won't apply if you have a steady cash flow (not billing but actual cash receipt) from day one.
2. Commentaries are actually a recurring expense. New commentaries cost 2.5-5k each, and most lawyers I know buy 1-2 per month to slowly build their collection. 15k will get you 3-5 new books, unless you're getting some deal to buy old ones from someone who's retiring / raddi. But you can save on bare act/commentary/database/journal expenses initially by enrolling in a library or borrowing someone's college subscription.
Am not 100% sure about the Power bill and if it is low because of lower usage post pandemic. If the average domestic power bill for like a 350 sq. ft. space comes up to around 700 bucks, should 2000/- per month for a commercial connection be a reasonable estimate ? Anyway would like to know what you feel.
2. I get what you mean. But at this stage maintaining a decent set of commentaries is as much a necessity to appear decently well read (we do read them!) before posh Counsels and not look out of place. Am talking Mulla on CPC/Contracts, Indu Malhotra on Arbitration, the very basic.
Anyway, utilities also included internet and water apart from electricity. It's difficult to estimate your electricity bill. Some old buildings have old convoluted wiring, which drives up the bill due to leakage and theft. Speak to existing tenants and see how much they're paying?
2. Makes sense. Go for it man, all the best!
From my experience starting out, a few suggestions for your consideration:
1. Think about whether you can afford to scale up the office expenses a bit more - if you can get to the 40k range. It will help. I started in a 14k office in Perin Nariman Street (towards the CST end) and I moved in six months to a 30k one. I started in attorney practice and realised that once I got a decent client I could not really have them come to the broken down building... From your post, it seems you are starting as an attorney/on-record rather than as counsel (if counsel, then you also want an office somewhere where attorneys will not find it all too inconvenient to brief you at the last minute...). Another option for you is (if you have a budget around 25-30k) is to go for a business centre. There are plenty in Fort. One counsel I know started out with a cubbyhole for 18k and now has two rooms in the business centre. Some law firms have started their Mumbai offices in business centres (before moving to larger spaces). If you have a team of 2-5, it can be very convenient. Justice Srikrishna was (at least pre-pandemic) running his very extensive arbitrator practice from a business centre premises. Very convenient. More expensive that the pure rentals, of course: but it is something where clients can come, there is a decent reception, electricity and cleaning is paid for etc... Also, your refundable deposit amount will be 3 months (and not 6 months) so less one-time.
2. Do you absolutely need a junior? If it is just for getting dates when you are stuck or something, or doing basic first drafts in some matters, you might instead simply brief junior counsel on matter to matter basis. The absolute juniors in counsel practice charge really low. And if you brief them in their first year, when five years later they get clients approaching them, they won't forget that you assisted them when noone else did and refer chaps to you...
3. Why 5 desktops?? Two laptops (or one laptop + one desktop) is more than enough. One for your own work use; one for general office use (to be shared by the rest of the office).
4. You do not need a peon and a court clerk. You can engage court clerks on a matter-to-matter basis (for 3-5k, they will handle filing, removal of objections etc), and that clerkage can be expensed to clients directly together with court fees.
5. Speak with one of the photocopiers nearby and get them to give you bulk discounts for routine printing - many will give you a bulk discount but also give you matter-wise bills: extremely helpful for expensing out. But buy a scanner nonetheless: way too expensive to scan outside. And have the peon operate the scanner and raise "bills" on you (for 50% of the outside scanning charges) so you can expense that out to the client (and recover your scanner investment).
But at this stage, you can do with a not-so-good-but-decent clerk also. So, yeah.