One of the common concerns senior lawyers we speak to have when looking to make a lateral move to another firm is the question of what their perceived value will be to a new firm and how to formulate a target list of firms who will place the highest value on their practice.
So how can you go about making a realistic assessment of what your practice is worth to another firm?
What’s the Practice Mix?
Looking at any new firm, one of the first and easiest assessments you are likely to make is going to be about what they actually do, in terms of legal work.
You’ll then be thinking about how your practice will fit into that existing mix (if at all!), will it complement that mix or perhaps is it a “gap” the firm has been seeking to strategically fill (something that is often not easily ascertainable without a knowledgeable recruiter who has a level of trust with their client to have that insight into a firm’s strategy)?
For example, if you’re looking at a new firm that is a specialist commercial litigation firm, and you are a general commercial practitioner, is that going to work? Is the disruption created by adding in a commercial practice to a pure litigation firm going to be worth their while in terms of culture change, practice change, habit change and perspective change? Alternatively, is a commercial practice actually a “gap” for the firm and they have just been waiting to find the right practice to “bolt on” with overflow work to support you coming from their litigation clients.
Sometimes, though, the obvious “peanut butter and jelly” combinations are not the only ones to consider. Many successful firms we work with have uncommon mixes of criminal and commercial, or property and family, or a desire to add a practice to the firm which will bring about an uncommon mix.
So don’t necessarily rely on preconceived notions of which practice areas go well together, or indeed which practices will obviously work best for yours. Rather ask the more targeted and situational question: how could their existing clients/staff/self/practice be supplemented by, and benefit from, my own?
One obvious benefit in any firm is the opportunity for cross referrals. And while practice mix is a major component of that, it’s not the only part.
In fact, one of the biggest components that affects cross referrals inside firms is simply the willingness of partners to cross refer, as we have referred to in past blogs, whether the Partners “hunt as a pack” and promote cross referrals.
Since we’re focused on the value you offer to them, the question is: what can you bring to the cross-referral table?
Do you have clients with legal needs that go beyond what you can offer but which the new firm does? Do you have a sharing mentality and culture that you will bring which encourages cross-referrals at every level? Are there some opportunities, panel arrangements, interstate work with your clients which you can’t currently service in your firm or relationships that you can confidently say will bring value to the new firm which they don’t already enjoy?
Your Clients, Prospects… and Theirs
What are your marketing goals and how do they interact with the marketing goals of the new firm?
Are there existing aligned opportunities which you can explore together?
In essence, will your strategic direction and targeting supplement or compliment the new firm’s? Is that going to add value to their existing efforts or simply duplicate them?
We touched on this above, but consider the geographic restrictions of the firm. Are they presently limited to a city or state in their practice areas? Might they benefit from clients or industries that operate nationwide?
Do you have expertise, clients, connections or prospects in other cities or states that can give the firm a springboard to branch out with? Is that something they are interested in doing?
Beyond the client base, might you be able to train the new team in interstate or national areas of law that they previous have not been able to operate in, which might allow a smaller or mid-size firm to grow its national presence?
Different areas of law carry with them inevitably differing profit margins.
For example, commercial leasing and property services are often extremely cost competitive, requiring a firm to offer fairly low prices and high leverage for that practice area. However, the service itself is often an essential part of a full service commercial practice.
Higher profit areas might include some insolvency practices, mergers and acquisitions or the like although, of course, profit is often down to a team-by-team assessment.
What kind of profitability does your practice carry? Is it in a high profit area compared to the existing services? Would the implementation of your highly profitable practice help to improve the overall profitability of the firm?
This can be a highly attractive component to any practice move, so ensure that you have a good handle on the real numbers associated with your own practice and how you might be able to offer real hip-pocket value to a new partnership in this way.
Will Your Practice Thrive There?
These aspects are really just different ways of slicing up the same question, which is this: will your practice thrive in the new environment, from both your perspective and theirs?
Value is ultimately about demonstrating that your addition to the new practice will create a highly profitable, highly functional practice that everybody enjoys turning up to each day.
If you can do that, you’re well on your way to finding and describing the value that your practice would bring in the event you decided to take it somewhere else.
If you feel your current firm isn’t the right platform for your practice but are unsure of where the best fit for your practice lies, we are happy to work with you to develop a strategy and assess the options. Don’t hesitate to reach out and we’d be happy to help you formulate a plan.