LAW IN PRACTICE (ETHICS AND SKILLS)

UNIT 10

ESTABLISHMENT OF A LAW FIRM

The establishment of a law firm in Nigeria is primarily governed by the legal practitioners act (LPA) and the rules of professional conduct (RPC) 2007 which regulate the practice of law in Nigeria. There are specific requirements, ethical considerations, and regulatory processes involved in setting up a law firm. These includes the following:

  1. Qualifications and registration requirements: Before setting up a law firm, the individual must be qualified to practice law in Nigeria. See section 2 of the legal practitioners act which states that a person is qualified to practice law if they are called to the Nigerian bar and enrolled as a legal practitioner at the supreme court of Nigeria. See the case of Olujinmi v. Akeredolu (2014) where the supreme court reiterated that only those duly called to the bar and whose names are on the roll of legal practitioners can legally practice law in Nigeria.
  2. Business structure of a law firm: In Nigeria, law firms can be structured in different ways, including sole proprietorships or partnerships. However, incorporation under the companies and allied matters act (CAMA) as a limited liability company is prohibited for law firms because legal practice is viewed as a profession and not a business enterprise. See rule 5(1) of the rules of professional conduct (RPC) which explicitly prohibits lawyers from practicing under the guise of a company or corporation. Lawyers are only allowed to practice under a business name or as a partnership.
  3. Registration of a business name: After satisfying the qualification requirements, a lawyer or group of lawyers must register their law firm as a business name with the corporate affairs commission (CAC). The registration of a business name is required under the companies and allied matters act (CAMA) 2020. The business name can be registered as an individual name (for sole proprietorship) or as a firm name (for partnerships). The steps to register a law firm's business name includes the following:
    1. Conduct a name search with the CAC to ensure that the proposed firm name is available.
    2. Submit an application for business name registration with all necessary documents, including the completed forms, a copy of the lawyer's call-to-bar certificate, and the enrollment certificate from the supreme court.
    3. Pay the registration fee.
  4. Office location and infrastructure: The physical office of a law firm must meet specific professional standards. See rule 11 of the RPC which provides that a lawyer should maintain an office that is properly staffed and equipped to provide legal services. The office should also uphold confidentiality, professionalism, and ensure clients can be received in a formal setting. See the case of Okike v. LPDC (2005) where the supreme court held that maintaining a professional office was essential for the proper conduct of legal business, as it enhances trust and competence.
  5. Use of letterheads and stationery: A law firm must follow the guidelines regarding the use of professional letterheads and other stationery. Furthermore, all lawyers in the firm must be clearly identified, and there should be no misleading information. See rule 36 of the RPC which states that a lawyer’s letterhead must include the following:
    1. The name and designation of the lawyer,
    2. The address of the law firm,
    3. The lawyer's qualifications, and
    4. The supreme court enrollment number.
  6. Ethical considerations for advertising and solicitation: The ethical rules surrounding the establishment of a law firm also extend to advertising and solicitation. See rule 39 of the RPC which prohibits advertising that is misleading, exaggerated, or that amounts to direct solicitation of clients. See the case of N.B.A. v. Ikeja Branch (2000) where the court held that law firms must comply with ethical advertising standards and avoid any form of aggressive solicitation that could undermine the dignity of the profession. Law firms are allowed to market their services through the following:
    1. Simple publications like a business card,
    2. Legal directories,
    3. Websites that provide general information.
  7. Partnership agreements: In cases where two or more lawyers are establishing a law firm as a partnership, it is crucial to have a written partnership agreement. See section 1 of the partnership law of Lagos state which provides that partnerships are based on the mutual agreement of parties and are governed by the terms stipulated in the partnership deed. This agreement should cover essential aspects of the business such as the following:
    1. Profit-sharing arrangements,
    2. Roles and responsibilities of each partner,
    3. Conflict resolution mechanisms, and
    4. The procedure for admitting new partners or handling withdrawals.
  8. Liability and insurance: A significant aspect of setting up a law firm is ensuring proper insurance coverage, particularly professional indemnity insurance. See rule 22 of the RPC which states that every legal practitioner should maintain insurance to cover liability for any negligence or malpractice claims. This insurance provides protection in the event a client sues the law firm for professional misconduct or incompetence. See the case of Aondoakaa v. Ajibode (2016) where the court highlighted the need for legal practitioners to adhere to professional standards and protect their clients' interests, as failure to do so could lead to liability claims.
  9. Taxation and financial records: A law firm is required to maintain proper financial records and comply with tax obligations. See section 85 of the personal income tax act (PITA) where a law firm must file annual tax returns and pay relevant taxes on its income. For partnerships, taxes are paid based on the share of income attributable to each partner. Moreover, all law firms must maintain proper accounts to record fees, retainers, and client funds in compliance with rule 23 of the RPC. Separate accounts must be kept for client monies.
  10. Continuing legal education (CLE) requirements: To maintain professional competence and ensure the growth of their law firm, lawyers are required to participate in continuing legal education (CLE). See rule 11 of the RPC which encourages legal practitioners to stay updated with the developments in law and see also the case of Nwosu v. LPDC (2018) where the court emphasized that legal practitioners who fail to stay updated with legal knowledge may fall short in providing competent legal services, thus affecting the firm's reputation.

CONCLUSION

The establishment of a law firm in Nigeria involves more than merely registering a business name. It encompasses adhering to strict ethical regulations, meeting professional standards, and maintaining a high level of competence and integrity. The legal practitioners act and the rules of professional conduct provide clear guidelines for the successful setup and operation of law firms, ensuring the legal profession in Nigeria retains its dignity and accountability.