23 May How to Buy Your New Law Firm
When you decide to branch out on your own and start a law practice, you have two options. You could start from scratch and build your new law firm from the ground up, or you could get a head start on running your law practice and buy an existing firm. Buying a law firm has some advantages, including starting with an existing client base and more predictable costs. But how do you buy a law firm and make it a success as your new law practice?
Is it Legal to Buy a Law Firm?
While buying a law practice was illegal for many years, in 1989, California was the first state to make the sale of a law firm legal. This helped to make the transference of a firm’s clients, files, and ‘brand’ more transparent and equal for both small and large firms. Now buying a firm is a viable option for those looking to start their practice.
Why You Should Buy a Firm
Buying a firm has some distinct advantages over building a firm from the ground up. Some of the benefits of buying a firm include:
- You get an instant workload.
- You have reasonably predictable costs and revenue from the start.
- You get access to a pre-built referral network.
- You already have a full book of high quality, verified clients.
- Marketing systems may already be in place, and the ‘brand’ is already built.
How to Buy a Law Firm
Because the marketplace for buying law firms is still quite immature, it can be quite difficult to navigate the process of buying a law firm, especially when you’re just starting out on your own.
You want to look for a firm that’s practicing in the same area of law that you want to practice in and whether it’s in a location that appeals to you. You want to consider the workload that the firm is currently maintaining and whether that matches your needs. You want to take time to review the firm’s financials and its potential for future growth and a continuing client base.
Finding a Firm to Buy
Finding firms available for purchase could be the hardest aspect of buying a law firm. However, they certainly do exist as lawyers with established firms look to retire, relocate, or move to a different area of practice. Online sources are popular, as well as word of mouth. One lawyer even bought his law firm through Craigslist! However, one of the safest and easiest ways to find law firms for sale is through a consultant. A professional legal business consultant can collect options and help advise on the best choice for you.
Valuing a Firm
Placing a value on a law firm is hard. Determining the value depends on the practice type, gross revenue, as well as predicted future income. No one method of determining a firm’s value is failsafe and navigating this aspect of buying a law firm is highly variable. This means it’s essential to put time and effort into researching and evaluating the firm you want to buy. Meeting with a professional law business consultant can help you understand the ingredients that go into successful law practice and the aspects that add or detract from the value of a firm.
Buying a law firm can be a great way to shortcut the hassle and cost of setting up your practice from scratch but be sure to do your research so that your investment pays off into a thriving, long-term business that meets your goals.