Why the Rewards Outweigh the Risks for Growth by Acquisition

In Ep. 61 of the State of the Market for Law Firm Sales in 11 Minutes, Senior Attorney Match’s Jeremy E. Poock, Esq. addresses the following:

Why the Rewards Outweigh the Risks for Growth by Acquisition

 

As Poock explains, “When it comes to Growing Law Firms that are considering growth by acquisition, it's really six rewards that we're going to talk about versus three risks.

 

The 6 rewards are as follows:

 

(1) Instant client growth by succeeding to a well-established Book of Business filled with clients & referral sources.

 

(2) Adding knowledgeable & experienced lawyers and para-staff.

 

(3) Low risk earnout payments as consideration to the owner(s) of a selling law firm (percentage of revenues paid during a fixed period of time).

 

(4) Opportunities to convert decades of Subject Matter Knowledge to digital content for Multi-Channel Digital Marketing.

 

(5) Succeed to a legacy phone number(s).

 

(6) Benefit from established websites & additional digital value (egs. SEO rankings, 5-Star Google Reviews, 3 Pack results & more).

 

The 3 risks are as follows:

 

(1) Potentially overpaying a Seller if the clients from a selling law firm’s Book of Business do not retain the acquiring firm.

 

(2) Not having enough lawyers & para-staff to provide legal services to the clients of a selling law firm

 

(3) The costs of adding overhead associated with growth by acquisition (egs. salaries, benefits, additional rent, etc.)

 

Poock addresses those risks as follows:

 

• By often structuring law firm sales as earnouts, purchasers minimize their risk by aligning the consideration paid in a law firm acquisition with collections derived from a selling law firm’s Book of Business during a negotiated period of time.

 

• Key employee lawyers and para-staff at a Senior Attorney-led Firm present great opportunities for new hires for acquiring law firms because of the key employees’ experience, plus their trusted relationships with the clients of a selling law firm.

 

• In terms of adding overhead costs, Growing Law Firms recognize that any increase in overhead attributable acquiring a Senior Attorney-led firm will become offset by adding hundreds of thousands of dollars, and sometimes, millions of dollars, in new revenues.

 

In conclusion, Poock states, “The rewards absolutely outweigh the risks when it comes to growth by acquisition for Growing Law Firms.”