Founder Guide · Updated 18 May 2026
How to Start a Law Firm in Australia, 8-Step Guide
To start a law firm in Australia you need an unrestricted practising certificate, a firm structure, ABN and GST registration, Professional Indemnity Insurance through your state scheme, a compliant trust account, and practice management software. This action-ordered guide walks through all eight steps, from admission to your first CPD year.
In this guide
- 1. Admission and a current practising certificate
- 2. Choose your firm structure
- 3. ABN, GST, and tax registrations
- 4. Professional Indemnity Insurance (PII): through the state scheme
- 5. Set up your trust account (and appoint an external examiner)
- 6. Practice management software
- 7. Referrer networks and the first matters
- 8. Plan your CPD year one
Admission and a current practising certificate
Before you can hold yourself out as a legal practitioner, let alone open a firm, you must be admitted to the Supreme Court in your state and hold a current practising certificate (PC) issued by the relevant regulatory authority. In NSW and VIC, the Legal Profession Uniform Law applies; other states retain their own Legal Profession Acts. Most PCs require at least 2 years of supervised practice before you can hold an unrestricted PC and supervise others, which is the practical pre-condition to running a principal practice.
Supreme Court admission
Apply through the state admission body (LPAB in NSW/QLD, VLAB in VIC, LPEAC in SA, LPB in WA). Requires LLB/JD + PLT (typically GDLP).
Practising certificate
Issued annually by the state Law Society or Bar (NSW Law Society, LIV, QLS, Law Society of SA, Legal Practice Board WA). PC class governs scope (employee, principal, barrister).
Supervised practice
Minimum 2 years supervised practice (full-time equivalent) before you can hold an unrestricted PC and supervise junior solicitors or operate as a sole principal.
Fit and proper person
Annual PC renewal asks suitability questions, disclosures around bankruptcy, criminal history, prior discipline must be made honestly. Concealment is itself a discipline matter.
Choose your firm structure
Australia recognises several lawful structures for private legal practice. Each has different liability, tax, and regulatory consequences. The Incorporated Legal Practice (ILP) has been the dominant new-firm structure since the early 2000s, it offers Pty Ltd-style limited liability while allowing legal practice. Your choice will be one of the first conversations with your accountant and your state regulator.
Sole practice (unincorporated)
Cheapest setup. Unlimited personal liability. Pay tax through your individual tax return. Suitable for solo principals with strong PII and conservative cashflow.
Incorporated Legal Practice (ILP)
Pty Ltd company that practises law. Requires a Legal Practitioner Director (LPD), the senior solicitor responsible for compliance. Notify the state regulator on commencement and within 14 days of any director change.
Partnership (unincorporated)
Two or more legal practitioners. Each partner is jointly and severally liable for partnership debts and other partners' professional negligence. Document the partnership agreement carefully, exits are where firms fracture.
Multi-disciplinary practice (MDP)
Permitted in most states under Uniform Law / state Acts where non-lawyer staff or partners deliver services alongside legal services. Increased disclosure obligations to clients.
ABN, GST, and tax registrations
Like any AU business, your firm needs an Australian Business Number (ABN), Tax File Number (TFN), and, if turnover hits $75,000, GST registration. Most legal practices register for GST from day one because commercial clients expect tax invoices and the GST input tax credits on rent, software, and counsel fees are not trivial. If you incorporate, the company is a separate taxpayer with its own ABN and TFN.
ABN
Free, 15 minutes online via abr.gov.au. Required to issue tax invoices and open business bank accounts (including trust accounts).
GST registration
Mandatory above $75,000 annual turnover. Add 10% to fees on tax invoices. Lodge BAS quarterly (or monthly if turnover >$20m). Disbursements with embedded GST are passed through carefully, get this right or you'll over-charge clients.
PAYG withholding
Required the moment you have an employee paralegal, secretary, or solicitor. Withhold tax from salaries and remit via the BAS.
Workers compensation
State-specific scheme (icare in NSW, WorkSafe Victoria, WorkCover QLD). Premium based on payroll. Compulsory for any employer including casuals.
Professional Indemnity Insurance (PII): through the state scheme
Every legal practice in Australia must carry Professional Indemnity Insurance. Crucially, in most states this is not a free market, your PII is acquired through the state's compulsory scheme insurer (LawCover in NSW, LPLC in Victoria, Lexon in Queensland). The premium is calculated by your firm's gross fees, claims history, and area of practice. You cannot trade without it, and your PC renewal each year requires evidence of cover.
LawCover (NSW)
Compulsory scheme for NSW law practices. Quoted annually based on gross fees and practice areas. Conveyancing and litigation attract higher loadings.
LPLC (VIC)
Legal Practitioners' Liability Committee. Compulsory for Victorian incorporated and unincorporated practices. Premium-based with claims history loading.
Lexon Insurance (QLD)
Compulsory single-insurer scheme administered through QLS. Cover renews 1 July aligned with PC renewals.
Other states
WA: Law Mutual (administered by Law Society WA). SA: Professional Indemnity Insurance Scheme via Law Society SA. TAS, ACT, NT: scheme insurers via the relevant Law Societies.
Top-up / excess cover
Scheme cover often has a per-claim limit (e.g. $1.5m to $2m). Larger commercial practices buy private top-up cover for higher limits, common above 5 fee earners.
Set up your trust account (and appoint an external examiner)
If you will receive trust money, almost any conveyancing, family law, or commercial practice will, you must open a statutory trust account at an approved Australian deposit-taking institution (ADI) and notify the regulator. Trust money is the #1 source of severe professional discipline in Australian legal practice. You must appoint an external examiner annually, reconcile monthly, and report breaches immediately. Get this wrong and you risk PC suspension or strike-off.
Approved ADI
Each state regulator publishes a list of approved banks. Your trust account must be at an approved ADI in the practice state, in the firm name + 'Trust Account'.
External examiner
Annually appointed (typically a qualified accountant or chartered accountant with trust account audit experience). Must lodge an examiner's report by the state deadline (usually 31 May).
Monthly reconciliation
Trust ledger reconciled to bank statement monthly. Disparities investigated and resolved promptly. Most practice management systems automate this.
Statutory deposit / fidelity fund
Most states require a small statutory deposit when you open trust. Fidelity funds (NSW Solicitors' Fidelity Fund, etc.) protect clients against trust account defalcation, funded by an annual levy.
Notification on opening
Notify the regulator (Law Society / Council) within the prescribed time of opening or closing a trust account, and on appointing or changing the external examiner.
Practice management software
Practice management software (PMS) is the operating system of a modern law firm, matter management, document automation, time recording, billing, trust accounting, and conflicts checking. Australian operators have a half-dozen serious choices. Pick early and migrate later is painful; pick well and you save 10 to 15 hours per fee earner per month.
Smokeball
Australian-founded, strong document automation, integrated time recording. Popular with small-to-mid firms doing conveyancing, family, wills/estates.
LEAP
Long-standing AU PMS, deep precedent libraries, integrated trust, infinite law firm types. Often used by firms migrating off paper.
ActionStep
AU/NZ workflow-driven PMS. Strong for firms with repeatable matter pipelines (conveyancing, immigration, family).
Affinity
AU PMS focused on commercial and litigation practices. Strong reporting and matter analytics.
Clio
Global market leader (Canadian), strong API ecosystem and integrations. AU-localised trust accounting is available but verify against state rules.
Procurement checklist
Confirm: AU data hosting, trust account compliance per your state, time recording for cost disclosures, integration with Xero/MYOB, e-signature, secure client portal.
Referrer networks and the first matters
The first 10 matters are the hardest because you have no reputation independent of your old firm. Most successful new firms launch with a thin book transferred from prior clients (subject to no-poaching clauses and ethical obligations), then build through structured referrer networks. Don't rely on a website alone, most legal work is referred, not searched.
Counsel relationships
Junior and senior barristers refer instructing solicitors to one another for matters that conflict their preferred firm. Worth a coffee with 5 to 10 barristers in your practice areas.
Accountants and financial planners
Steady source of structuring, estate, family law, and commercial matters. Build a referrer list of 10 to 15 trusted accountants in your suburb.
Real-estate agents (conveyancing)
If you do conveyancing, 2 to 3 active agency relationships in your suburb can drive 30 to 50 settlements/year. Disclose any referral fees transparently in writing.
Google Business Profile
Essential for inbound family, criminal, immigration, employment, and personal injury enquiries. Reviews matter. Verify business address and practising areas.
Bar association directories
List your firm on relevant state Law Society and special-interest association directories (e.g. Family Law Section, Society of Notaries).
No-poaching constraints
Check your prior employment contract for restraint clauses. They are not always enforceable but are often litigated, get advice before any active solicitation of old clients.
Plan your CPD year one
Continuing Professional Development (CPD) is compulsory for every Australian solicitor and barrister. Most jurisdictions require 10 CPD units per year, with mandatory categories spanning ethics, practice management, professional skills, and substantive law. Your first CPD year as a principal is also your first year wearing the practice management hat, choose courses that double as business education.
10 units minimum
Most states require 10 CPD units / year. Each unit is typically 1 hour of accredited activity.
Mandatory categories
Typically: ethics + professional responsibility (1), practice management + business skills (1), professional skills (1), substantive law (remainder). Categories vary slightly by state.
Practical Legal Education for principals
If you are a new principal in NSW or VIC, a separate Practice Management Course (PMC) may be required before opening or within a defined window of opening.
Recordkeeping
Keep your CPD register (date, activity, units, category) for 5 years. Audit risk is real, Law Societies sample CPD compliance annually.
Pitfalls to avoid
Rookie mistakes new principals make
Skipping the Practice Management Course
NSW and VIC require new principals to complete a Practice Management Course. Many lateral hires assume their prior experience is enough, it isn't. Book the PMC the moment you decide to open your firm.
Treating trust like an operating account
Trust money is the client's money. Withdrawing trust funds before they are properly earned and authorised, even briefly, is a deemed defalcation. Set up your billing workflow so a fee transfer only ever follows a delivered bill and a client authority.
Under-quoting PII at startup
Scheme PII premiums scale with gross fees. New firms get the minimum-fee premium, which is non-trivial. Build the PII line into your cashflow model from month one, don't be surprised by a $8k to $15k renewal in year two.
No conflict checking process
From day one, every new matter intake should hit a conflict check against your full client list and your principal's prior firm history (within ethical limits). Practice management systems automate this; spreadsheets don't.
Related free resources
Reference
Admission by State
PLT, supervised practice and PC requirements across NSW, VIC, QLD, SA, WA, TAS, ACT, NT.
Compliance
Trust Account Rules
Uniform Law and state Acts, external examiners, monthly reconciliation, breach reporting.
Reference
CPD by State
10 units, mandatory categories, recordkeeping and audit obligations.
Frequently Asked Questions
How long does it take to set up a law firm in Australia?
From decision to first client matter, plan for 8 to 12 weeks. The longest items are the PII scheme application (4 to 6 weeks), the trust account opening (2 to 4 weeks), the practice management software migration if you're bringing matters with you (4 to 8 weeks), and the regulator notifications (instant to 2 weeks depending on state). Don't try to compress this, taking shortcuts on PII or trust setup creates risk that lasts decades.
Do I need to be a partner first, or can I open straight from senior associate?
You can open as a sole principal as soon as you hold an unrestricted practising certificate (typically after 2 years supervised practice as a solicitor). Most successful new principals open after 5 to 10 years experience because they have a referrer network and the soft skills to manage a P&L. Going earlier is legal but riskier, your scheme PII premium will reflect the limited experience.
Sole practice or ILP, which is better?
An ILP (Pty Ltd structure) offers limited liability protection for non-professional debts (think a landlord dispute or a supplier claim) and a cleaner separation between firm and personal finances. It does not shield the Legal Practitioner Director from professional negligence, PII does that. Most new firms incorporate from day one because the marginal cost (ASIC fees ~$300/year, accountant cost ~$1,500/year) is small relative to the structural benefits.
How much capital do I need to open a law firm in Australia?
Solo principal, residential-conveyancing focus, working from home: $15,000 to $30,000 covers PII, trust setup, practice management software, marketing, and 3 months of personal living costs. Solo principal with a small commercial office: $50,000 to $100,000. Two-partner commercial firm with paralegals and CBD office: $150,000 to $300,000. The biggest cash burn is rent + salaries through the ramp-up period, payment of fees often lags 30 to 90 days after work is done.
Can I run a law firm part-time?
Yes, subject to your PC class (some restricted PCs limit you to employee work). Many sole practitioners run a part-time firm alongside another role, academic work, in-house counsel, or as-required mentor for another firm. The key compliance items (PII, trust, CPD, fit-and-proper) apply at the same level whether you bill 20 hours a week or 50.
Do I need to be a member of the Law Society / Bar Association?
Membership is technically separate from holding a practising certificate, but in most states the regulator IS the Law Society (or works closely with it), so practitioners are de facto members. Bar membership is required to practise as a barrister. Both bodies offer CPD, mentoring, special-interest sections, and professional support that's worth the membership fee for any new principal.
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Reviewed by Bishal Shrestha
About the author
Bishal Shrestha
Founder & CEO, OneBookPlus
Bishal spent a decade running digital projects for Australian small businesses before founding OneBookPlus. He writes and maintains these pages, and publishes what OneBookPlus does not do alongside what it does.
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More in this guide
Related resources
Legal Profession Admission by State
NSW LPAB, VIC VLAB, QLD LPAB, supervised practice rules, practising certificates by jurisdiction.
Read Legal Profession Admission by StateComplianceTrust Account Rules for Lawyers
Trust money handling under the Uniform Law / state Legal Profession Acts, audit cycle, trust statements.
Read Trust Account Rules for LawyersOperator GuideCPD Requirements by State
10 units/year minimum, mandatory categories (ethics, practice management, substantive law, skills).
Read CPD Requirements by State