Law firms looking to expand into new markets must determine the best strategy. Some start from scratch, open a satellite office and attempt to grow it. Others seek to buy existing law firms and put them under their umbrella. The potential pros and cons of each strategy are below.

Does Buying Existing Law Firms Make Sense?

One of the most common ways some law firms expand into new markets is to buy an existing law firm. In many respects, most law firms consider purchasing an existing law firm the go-to way to grow. Many assume they can buy the firm and hit the ground running.

One pro of this approach is that the existing law firm probably already has clients. When the law firm has clients already, it may feel that it can begin making a profit on the new venture relatively quickly, as opposed to starting a new office with no clients.

Another pro is that the law firm may already have a brick-and-mortar office, employees, and the equipment to run it. Thus, the law firm may not have to invest much time and money in locating an office, getting the equipment and supplies, and interviewing staff.

Lastly, many law firms assume their lawyers have built positive goodwill in the community. With this goodwill, many theorize that repeat clientele and referral-based businesses will readily come to the firm.

What Are the Cons of Buying an Existing Law Firm?

While buying an existing law firm may have some pros, there are also cons that law firms must consider. One is the price to buy the existing law firm. If an existing law firm is looking to buy at a reasonable or below-market price, it may be attractive to purchase the existing office. But with many existing law firms, they may be looking for a high or top dollar price to sell. For many law firms, buying out an existing law firm can be substantially more expensive than simply opening a brand-new office.

Another con is that many law firm employees conduct themselves similarly. When another law firm buys them out, it might be unrealistic to expect the employees to instantly integrate into that purchasing firm’s way of doing things. For this reason, starting anew with employees who are trained in the purchasing firm’s processes can be more manageable.

Third, while an existing law firm might have an existing brick-and-mortar office and equipment, most law firms can just as easily purchase or rent the same space or equipment at a similar price. By not purchasing an existing law firm, the law firm is also not signing onto another law firm’s debt, leases, or contracts.

Lastly, while a prior law firm may have some reputation within the community, there is little telling whether that reputation is good or bad or worth purchasing. For many law firms, it might make sense to open a new expansion based on their enterprise goodwill.

While some law firms may want to consider buying an existing law firm, many ought to open a brand new office, rent space, hire new employees, and open the expansion without purchasing an existing one. To open a new office, most law firms can start with single-attorney executive space, market appropriately, and get larger space once there are enough clients for that to make sense.