Corporate law includes those laws, rules, regulations and practices that govern the formation and operation of corporations.1 This section of law is aimed at regulating the legal entities that exist to conduct business. Corporate law protects the rights and obligations of the people involved in forming, owning, operating and managing a corporation.
This Pre-feasibility document provides details for setting up a Small Size Corporate Practicing Law Firm (herein referred as corporate law firm). The proposed firm has a 100% capacity of handling 440 cases per year during 280 operating days in a year. During the first year of operation, the capacity utilization is assumed to be 60% which translates into 264 cases per year.
The Corporate Law Firm may be established in major cities such as Karachi, Lahore, Islamabad, Quetta, Peshawar, Hyderabad, Faisalabad, Sialkot, Multan, Gujranwala, Rawalpindi, etc. These cities are preferred because majority of businesses exist in these cities. Additionally, legal professionals also prefer to practice in big cities. However, there is a market for corporate law firm in smaller cities as well, where small and cottage businesses also need opinion on their legal issues.
The proposed project has a total investment of PKR 5.25 million. This includes capital investment of PKR 4.65 million and working capital of PKR 0.60 million. This project is financed through 100% equity. The Net Present Value (NPV) of project is PKR 13.92 million with an Internal Rate of Return (IRR) of 46% and a Payback period of 3.10 years. Further, the proposed project is expected to generate Gross Annual Revenues of PKR 8.31 million in 1st year after coming into operations, Gross Profit (GP) ratio ranging from of 52% to 74% and Net Profit (NP) ratio ranging from 3% to 34% during the projection period of ten years. The proposed project will achieve its estimated breakeven point at capacity of 54% (238 cases) with breakeven revenue of PKR 7.48 million.
The proposed project may also be established using leveraged financing. At 50% financing at a cost of KIBOR+3%, the proposed unit provides Net Present Value (NPV) of PKR 16.07 million, Internal Rate of Return (IRR) of 46% and Payback period of 3.09 years. Further, this project is expected to generate Net Profit (NP) ratio ranging from 8% to 34% during the projection period of ten years. The proposed project will achieve its estimated breakeven point at capacity of 59% (261 cases) with breakeven revenue of PKR 8.20 million.
The proposed project will provide employment opportunities to 12 people. High return on investment and steady growth of business is expected with the professionals having some prior experience and expertise in the related field of business. The legal business status of this project is proposed as “Partnership Concern”.