Why Do Solicitors Attract Such Low Multiples When Selling Their Law Firms?

It genuinely upsets me that often a solicitor who has worked so hard all of their life to build a practice, suddenly finds when trying to sell it that the multiple they are likely to receive when they sell their law firm is nowhere near as much as they had hoped.

Selling Your Law Firm For The Maximum Price
Selling Your Law Firm For The Maximum Price

Why does this happen and what can they do about it to improve the turnover multiple that they will be offered when selling their law firm?

First, it is worth thinking about a term which emanates from the legal profession; goodwill.

Goodwill used to refer to the fact that a solicitor with a lot of wills in his basement was guaranteed a good income in the future from all of the probate that would naturally flow from these wills.

Ouch – what happened to that?

A simple thing, sadly.

The world changed and most solicitors did not.

People stopped feeling obliged to go back to the solicitor that their family had always used and decided they could go where they wanted to.

This had been going on for some years, but the internet rapidly accelerated this process when it became so easy to suddenly find another solicitor to handle the probate from these wills.

But we can use the term Goodwill and still attain good multiples for the sale of your law firm. Now, however, you actually have to do a little bit of work to gain that Goodwill rather than simply expect it to land in your lap.

However, you do not have to do a huge amount of work and more importantly, nearly all of it can be outsourced so that it takes place with or without you, meaning that selling your practice becomes even more attractive.

If a prospective purchaser is met with one firm that has no Goodwill because each year the work just ‘falls in’ off the street, whilst at the same time is introduced to another firm that has shown a steady and consistent rise in new instructions for a few years (or even a few months if you follow my system) then which one is going to be more attractive to them?

It is obvious is it not?

Suddenly the owner of the firm with three or four automated marketing systems and evidence that income is rising and will continue to do so because each system is automated or outsourced is in a very strong position.

That position does not only make his law firm more attractive to the purchaser, it also means it is going to attract a much higher multiple when assessing the sales value of his or her law firm.

If you are thinking of selling your law firm now or even some years into the future, now is the time to put in place these systems to ensure that you attract the multiple that you deserve for your efforts.

If you looking to sell your firm now, what can you do to maximise the value of your law firm?

Whichever position you find yourself in, enter your details below now to find out about how to ensure that you receive the best offers for your law firm.

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Case Study

Beating the big boys whilst spending a fraction of their budget

We focus on accident claims, and it’s vital for us to have a strong web presence, which we didn’t have before Nick got involved.

As a result we had to buy in leads from other sources, reducing our profit margins and making us reliant on other companies to generate revenue.

We did have a company working on our Adwords and website, but the truth of the matter is that they weren’t getting the results we needed them to get – we only had a handful of clients coming in from those efforts, making us highly reliant on buying in the leads from elsewhere.

And then I came across one of Nick’s books, was impressed by what I read and got in touch with him.

The rest – as they say – is history.

We started working together with a clear brief: Nick’s job was to help us bring in more self-generated work, so we could stop relying on buying leads.

He started by working on our website, making it more accessible and easier to navigate.

Next he overhauled our Google Adwords, which the previous company had been running fairly unsuccessfully.

Adwords is hugely challenging in our sector, with some very big players bidding on some of the most common keywords, making it very difficult for any smaller firms to get a look in, and I’ve got to be honest and say that I didn’t know how Nick was going to make it work.

But he did, by analysing very closely what people were looking for and tailoring our Adwords efforts towards them.

It worked! We were competing with the big boys whilst spending a fraction of their budget, and the amount of work we got in was tremendous – we jumped from just a handful of leads and clients a month to 500 leads and 150 clients, every single month, all from our online efforts.

Nick didn’t just work on the lead generation side of things either – he helped us with the client conversion process too, training our team, making our sales calls better and improving our onboarding process to avoid drop-offs due to ‘cooling off’.

Now we don’t buy in any work at all, our pay-per-click efforts do a sterling job, and the large client database that Nick has helped us build has allowed us to increase the amount of work we do by a factor of ten, in just three years.

I’m one extremely satisfied client, and despite the dramatic differences Nick has been able to make in the time we’ve been working together, things are still improving thanks to his guidance and support.

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