So you have decided to buy a law firm.
While some have succeeded brilliantly, others have failed miserably. Building a law firm from scratch requires great dedication and hard work. It's challenging, time-consuming and stressful.
If you're interested in skipping the stress and buying a law firm instead of starting one from scratch, this is the best article you'll read today. We've carefully curated six pointers to make your acquisition successful. Read on to learn more.
The first step is to decide the type of law firm to buy.
You can buy an established law firm or a start-up law firm. Each of these options has its own pros and cons. If you buy an established law firm, you'll be able to hit the ground running, but you'll pay a higher price. If you buy a start-up law firm, you'll need help establishing the business.
Ask yourself questions like:
You also need to decide where to buy your law firm. Do you want to buy a law firm in your home state? Or do you want to expand across the country?
Ensure the firm is the right size for your needs. Once you know the type of law firm you want to buy, you can start searching for firms that fit your criteria.
The right location is crucial.
Before buying any law firm, research the demographics of the surrounding area. Ensure the firm is located in a central business district area and proximal to the target audience.
The firm must have a good reputation within the area. A firm that has been in business for several years and has a solid reputation is a great buy. With this, you'll have peace of mind you've bought a renowned firm.
Buying a law firm with the right mix of clients will make your business more profitable.
Be on the lookout for a firm with the perfect blend of corporate and individual clients. But not only that, you must ensure the firm is well-positioned to serve each client.
You can benefit from variety and buy a firm that practices different types of law, such as family law, criminal law, and business law. This gives you a higher chance of success in different arenas.
However, it's not enough to have a large number of clients alone. The clients should need the firm’s services. And if the firm has the right mix of clients, but they aren’t paying enough, you should consider increasing rates, adding new revenue streams, or offering new services too.
Know what you're getting into.
Assess the current condition of the firm and its market.
Before purchasing any law firm, check:
Also, identify the firm's:
Meet with current clients, interview past and current employees, and review existing financial statements. All these assessments will help you prepare for what’s ahead.
Once you've assessed the firm's current condition, develop a plan for growth and success.
To do this, outline your goals for the business. Determine your market segment as well.
Once you've identified your market segment, create a value proposition.
Then, you need to develop a business plan outlining your short and long-term goals for the firm if you buy it. A solid business plan will serve as a roadmap for your acquisition. It'll help you stay focused on your mission and vision while keeping you motivated.
After deciding on a law firm, negotiation comes in.
Negotiations can be tricky, so it's essential to do your homework beforehand.
Have a list of questions and a clear understanding of the firm's financial situation. Building a negotiation checklist will help you make smarter offers.
You also need to be aware of the factors that will impact your negotiations. For example, an economic downturn may increase the owner's willingness to sell. An owner may also be more open to negotiations if they are experiencing personal problems or have underperforming employees.
During negotiations try to keep your emotions at bay. Stay focused throughout the negotiation and try to put your best foot forward when an opportunity arises.
The cost of a law firm can range from hundreds of thousands to millions. The price of a law firm depends on the following factors:
… and much more.
Before buying a law firm, do detailed research and compare prices. Better still, employ a professional to help you with the firm's valuation. This way, you can ensure the price you're paying is worth it.
Thanks to the internet, there are numerous marketplaces to begin your search. Some notable ones include:
Buying a law firm helps you:
Buying a law firm isn't a spur-of-the-moment decision. It’s a significant investment, but nonetheless, a great way to grow your business and expand your law practice.
You are not only purchasing a business but also a team of employees. They may have their own ideas about what they want and expect from their jobs. And, as the owner of the law firm, there's a lot of responsibility and pressure ahead.
Assess your options and gather as much information as possible to help you make an informed decision. Have another lawyer evaluate the purchase agreement to ensure everything is in order.
On a final note, ensure you incorporate legal tech and automate your law firm so operations can run smoothly. Legal software like LawMaster puts your firm in the fast lane.
Contact us today to learn more about LawMaster.