Price is certainly a key factor when buying anything, including a law practice. However, buying a law practice is about more than price for the purchasing lawyer. In fact, there are numerous considerations for any lawyer considering buying a law practice.
Lawyers who want to buy a practice are thinking about what they are going to get. They're afraid that the clients won't stay with them once they buy the practice, and they're afraid of buying a pig in a poke.
Two issues of particular concern to buyers involve branding and mobility of clients. Buyers are asking themselves the following questions:
"Will the brand of the practice transfer to me, or should I rebrand?"
"Will the clients stay with me?"
Branding
Branding is always important in marketing. We all know that - from Kodak to Xerox to Ford to O'Melveny and Myers to Gibson Dunn & Crutcher, branding is important.
The buying lawyer can assume the brand of the selling lawyer. Alternatively, the buying lawyer can create a whole new brand.
Creating a whole new brand is not as difficult as it sounds, and many lawyers choose this option because they feel that the brand of the selling lawyer is a personal name and that if the selling lawyer is going to retire from the practice, that brand doesn't transfer over.
I disagree that a brand doesn't transfer. However, I think that you can also create a new brand that works in the legal profession - unless, that is, you've got a practice that is 100 or 150 years old. In general, the idea of a brand is not so well entrenched yet that you will have trouble retaining the client's help when you buy a new practice.
Mobility
One of the things that makes law practice sales more difficult today than in the past is mobility. You've got mobility of lawyers, but you've also got mobility of clients.
This means that lawyers who are buying a practice are going to want to make sure that they're getting what they think they're getting. In other words, they will want to make sure that the clients of the selling lawyer stay with the practice, and that requires some astuteness that buying lawyers didn't need in the past.
In the past, it was always assumed that the client wouldn't go anywhere, that the client would stay with the office. Today, that's not necessarily true. For the most part, I think it still is true, but it should not be taken for granted. To make sure that the clients don't switch law offices when the practice is sold, the buyer has to walk in and establish a new relationship with the client. The buyer has to show the client that there is a transition from the seller to the buyer that works. And the buyer has to be no less amenable, no less likeable, than the selling lawyer; otherwise, the clients won't stay. But if the buying lawyer is as good and as likeable as the selling lawyer and creates a bond with the clients, the clients will stay despite their capacity for mobility.
Conclusion
For buyers considering purchasing a practice, concerns extend beyond mere price points. Branding and mobility are two of those concerns. As a seller, you should be aware of these issues so that you can address them with potential sellers and maximize your sale.
Edward Poll, J.D., M.B.A., CMC, is a law practice management thought leader and contributor to this publication. His website is at www.lawbiz.com.
Published: Thu, Dec 10, 2015
