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How to set up a legal firm according to bar council ruling

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Hannah Nasir

on 23 March 2014

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Transcript of How to set up a legal firm according to bar council ruling

Accessibility of your office
Population density
Factors to take into consideration when deciding a location for your firm:
How to set up a legal firm
according to
Bar Council ruling

Presented by Hannah Nasir & Partners
Halimaton Saadiah
Julia Farhana
Najwa Arifah
Noor Hannah
Khairul Ikhwan
Choose your
law practice name

What is a law firm?
Ruling 7.06: Setting up a new firm
Proposed name
Proposed address
Proposed date of commencement
Telephone, facsimile number
& email address of the new firm
Ruling 7.06(3)(a)
Letter of Objection
Ruling 7.06(3)(b)
Letter if no objection
Refer to the
Start Up Checklist:
this presentation

Ruling 7.06(3)(c)
Record in the System
Section 78(a) LPA
Mandatory PII Scheme
Every good law firm needs a name, but...
In identifying the firm's names, the following Rules must be referred to:
Ruling 2.01(1):
Variant spelling
Ruling 2.01(4):
Ruling 2.02:
Vernacular language
Ruling 2.03:
Decide on the legal form of your law practice --
Solo vs Partnership
Going Solo?
...Or finding a Partner?
Here are some things you may want to consider...
Develop and Implement a Business Plan
Prepare a budget for financial obligations
Rent for the firm
i.e. RMX + utility bills (monthly)
Salaries: may differ between SP, Partners, fresh graduates, receptionist/secretary, para-legal officer and law clerk
Insurance: either for the building alone or together with its contents
Tax planning
Consider statutory or legislative requirements
Legal Profession Act
-Section 78, 79, 94(3)(d)
Solicitors' Account Rules 1990
-Rule 7, 8(2), 11(6), 13 and 14
Accountants' Report Rules 1990
Solicitors' Account (Deposit Interest) Rules 1990
-Rule 2, 4(b) and 3
STEP 10:
Insurance planning
Now that you've decided
to establish a legal firm...
What's the next best course of action?
Law firms, like any other business, require special planning
Hence, a business plan is needed
...So that you can come out on top.
Sample business plan?
Meeting Bar Council requirements
There are several regulations one
needs to abide by in order to set up a legal firm in Malaysia.
These regulations have been administered by our Malaysian Bar Council
Firm Name
Business Hours
Name Card

At least 5 days
a week
description of position not allowed

employees with name card, no position stated

phone & fax number

current Office bearers/Bar Council members & State Bar Committees cannot state firm name in namecard
only colors signifying legal firm allowed
name on letterhead & stationery
name of sole proprietor/partner must be
stated on letterhead
description not allowed on letterhead
use of logo, elaborate/decorated script only
allowed if compatible with dignity of legal
Chinese seal allowed if related to firm name
Chinese character not allowed to be put in
Name of the firm

Hannah Nasir & Partners (R2.01(1)&(4), 2.02 & 2.03)


AL 707, Bangunan Akademik 2, Universiti Teknologi
MARA, 40460 Shah Alam, Selangor

Commencement Date
3rd March 2014

Telephone Number


Facsimile Number

(707) 888-1111

Email Address

Details of Hannah Nasir & Parner
It's all about location

Requirements under Bar Council Ruling
Maintaining an
Sharing office
Advocate &
Solicitors may
practice from his
own residence
1. Partners

2. Accountant's report

3. Operating hours
Where an Advocate and Solicitor shares an office or premises with another person (whether an Advocate and Solicitor or not), the office or premises must be partitioned off with separate and distinct entrances, with no connecting door between the two offices or premises. This Ruling shall not apply to Advocates and Solicitors who are partners of the same law firm.

An Advocate and Solicitor may operate his practice from his residence.


i) Person in charge of Advocate and Solicitor’s office
No law firm shall be manned solely or left under the supervision of a person not holding a valid practicing certificate.

ii) Unauthorised Person not to perform duties of Advocate and Solicitor
Unauthorized Persons not permitted to carry out the duties and functions of an Advocate and Solicitor in his firm.

iii) Opening a new branch office
No Advocate and Solicitor shall open a branch office without providing the Bar Council with full particulars in writing in compliance with Rule 59 of the Etiquette Rules and without obtaining the written approval of the Bar Council.


Not to carry on practice in client’s office

Bar Council Ruling prohibitions:
Office Accounts
and Records
Rules Applicable for Solicitor's Accounts:
1. Section 78 and 79 of LPA

2. Solicitors Account Rules 1990

3. Accountant's Report Rules 1990

4. Solicitors' Account (Deposit Interest) Rules 1990

(i) Client Account Receipt Book
It is used to identify the particulars of the client, the reference number and the particular matter for which payment was received. The amount that was paid, the purpose and the date is also important.

(ii) Day Book/Cash Book
The book is used to record the amount of payment received whether by cheque or cash and the receipt written out.

(iii) Disbursement Record
Disbursement may be drawn directly from the client account or from the office account first and then recouped. This is for the payment that the client supposed to pay for example the payment of stamp duty or to pay the vendor the balance of the purchase price.

(iv) Client Ledger
An account book of final entry, in which the business transactions are recorded
General Insurance Coverage?
Business property & outdoor sign
Business income
General liability
Equipment breakdown
Medical payments
Office Space
STEP 11:
Permits, licenses, etc.
1. Using a personal name or a trade name.

2. Business name application must be according to Rules 15, Rules of Business Registration 1957.

3. Business Registration can be made for a period of one year and not more than five years.

4. Registration must be made within 30 days from the date of commencement of business.

5. The registration can be done at any SSM counter or through e-Lodgement services

6. Complete Form A
How to register for
Fee Requirement:
Trade Name: RM 60 per year

Personal Name: RM 30 per year

Branch: RM 5 per branch

STEP 13:
Human Resource
1. Inform Bar Council of intention to recruite new partners in writing.

2. The letter should contain:
a. Name of the new partner/s & Bar Council membership number
b. Date of appointment of the new partner/s.
c. Branch of office that the new partner is going to be attached to

3. Bar Council will investigate whether
a. Whether the new partner has been adjudicated a bankrupt
b. Whether the new partner/s has been subjected to Disciplinary Board.

4. If step 3 is not complied with, the bar council will not permit the admission of the new

5. If step 3 is positive, the Bar council will issue the law practice with a leter of no objection.

6. Upon approval, the new partner/s will be recorded in Bar Council Membership Department
System accordingly.

Appointment of New Partners:
1. Notify the Bar Council

2. For consultants: Bar Council must approve them first before they can become a consultant

3. Letter of notification to the Bar Council should contain:
a. The name of legal assistant or consultant
b. The effective date of employment
c. If there is more than one office branch, which branch
shall the legal assistant or consultant is based

4. Duty to inform the PII Scheme Insurance Broker
Appointment of legal assistants/consultants
Withdrawal of Partners:
1. There must be a notification from the law firm (In writing)

2. The partner that is going to withdraw from the firm must notify the Bar Council.

3. Membership Department then must
record the update of the law firm.

1. The Bar Council must be aware of the withdrawal of the partner and the law firm together with the outgoing partner is required to prepare the Bar Council with an Accountants Report until the outgoing partner withdrew.

2. If the outgoing partner is in charge of a particular branch, Order 59 Legal Profession (Practice and Etiquette) Rules 1978 needs to be complied with.

3. If only one partner remains, the status of the firm should be changed to “sole proprietor”

4. Inform Bar Council whether they cease to practice or continue to practice in another law firm.

5. PII Insurance Scheme Broker will also be notified.
Other Requirements:
STEP 12:
Using a Bookkeeper
What is a bookkeeper?
A bookkeeper helps you manage your office stress by...
Being responsible for day to day
posting of transactions for your trust
and general accounts.


Payment of client’s disbursements
and office accounts

Preparing financial statements

Monitoring cash flow for the
Bookeeping System

e.g. Credit Card payment receipt
A copy of a receipt is kept in a client’s file and the other receipt is given to the client. A photocopy is also given to the administrative lawyer for recording.

STEP 14:
Office Management & Policies
Office Policies:
1. Disciplinary Action

2. Employee Benefits

3. Family and Medical

4. Employee Conduct

5. Equal opportunity

1. Office Machine Servicing

2. Office Security

3. Office Procedures

Office Management:
STEP 15:
Office Equipment
A good legal office requires:
Office furniture (Desks, chairs, etc.)
Business support equipment (Copier, document binder)

IT Equipment (Computer, printer, scanner, fax-machine)

IT Software (office processing, accounting, document management, file management)

STEP 16:
What services should your firm subscribe to?
Water utilities

Electricity utilities

Internet utilities

Telecommunication utilities (phone, fax, email, PDA)

Subscription to research and resource services (i.e. LexisNexis, MLJ, LawNet)

STEP 17:
System for trust accounting, billing, payroll, etc.
Account tracking, accounting integration, billing & invoicing, client database integration, expense tracking

Account tracking, accounting integration, billing & invoicing, expense tracking, general ledger
STEP 18:
Marketing your firm
Financial Summary & Marketing Budget

Situation Analysis

Strategic Objective

Marketing Strategy

Promotional Marketing Mix

Develop a Marketing Plan
a. Benefits of setting up a legal firm?
• Independence and flexibility
• Personal fulfillment
• Power
• Money

b. Why is it important to establish your law firm properly?
The name plate to be put in the main
entrance of the residential premises if the
office is located there, or

To be put at any road leading to or on any
road in the vicinity of the law firm

Cannot put any arrow or any sign
indicating the direction unless it is difficult
to find the law firm without having put
such arrow or sign.
Practice and Etiquette Rules 1978
-Rule 52
Publicity Rules 2001
-Rule 4 and 48
Limited Liability Partnership
Main act:
Limited Liability Partnership 2012

Partnership + Company

Partnership :

Company :
Limited liability

Options with regard to the office:
The lowest cost option is through getting a minimal level of office services that provide meeting space, phone service and mail collection
Another choice is to share office space with an existing firm or group of solo practitioners.
(Bar Council Ruling No. 7.03)

The third option is to lease your own space, hire employees and set up firm-wide systems. You might end up being the one who leases an office to another lawyer to defray costs.

Bank Accounts & Records
i) Bank account
ii) Records
Law firms need to establish 2 types of bank accounts:
Firm bank account
Client trust account
Types of Insurances:

i) Personal Indemnity Insurance

ii) General Insurances

Professional Indemnity Insurance:
A requirement under the Bar Council Ruling
Section 78(a) under Legal Profession Act
Bar Council
Ruling No. 7.06(3)(b)

is a form of
liability insurance
that helps
protect professional advice- and service-
providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit.

malpractice insurance,
errors and omissions (E&O) insurance

Full transcript