There’s little doubt that the attraction of buying an established practice is appealing on multiple fronts, but they can prove to be more trouble than what they’re worth if you don’t nail a few things at the front end.
The Big Problem
If you’re buying a simple practice, or close enough to it, and the brand equity is predicated on the principal (which nearly always is the case, unless it’s a highly transactional practice like conveyancing) good luck trying to extricate strong client and referral relationships from him or her.
Yep, I know your rebuttal! The owner of the firm is going to work diligently and proactively on shoehorning all those relationships.
In my experience it rarely happens. Once the acquisition has occurred invariably their mind is on tapping out and they’ll be wanting to do it sooner once you start re-positioning the practice. It’s akin to you buying a house from someone and they continue to live in it with you while you renovate around them, maybe changing everything and anything! It no longer feels like home and there is this quiet passive aggressiveness that stirs up within them and their co-workers and before you know it you have two camps, the in and the out and you now have to manage it, along with everything else.
How Do You Get Around It!
I’ve seen some acquisitions work well but they tend to be those when the acquirer buys the practice because it’s a successful practice and wants to keep it that way by disturbing little! In these cases, the firm is usually not a sole practice, but rather 3 or more lawyers and the brand equity doesn’t sit with one or two of them directly. In other words the brand equity of the legal practice transcends the people within it.
However, by and large most acquisitions don’t look like that! Instead they’re the legal practice that has been built up and around the key person or people of influence in the firm.
If this is the path you’re about to tread, here are some recommendations to make it work better than it will without them.
Do Some Positioning Work
Prior to the acquisition, do your best at understanding how the brand is currently positioned, its personality and its voice. Now, I know you may be thinking, “well, this is hardly Qantas or Delta,” but forget the size, the firm’s success thus far has been built on an amalgam of positioning, personality and voice and it’s crucial you understand it, because if you disregard it and pull the cord out of the plug, you risk a disaster.
If the law firm is “Stacey Smith Lawyers” or “Smith, Jones & Associates” and it’s a small practice, it’s likely that the brand has been predicated on the person’s personality and voice, and positioning has just happened as a derivative of the practice areas the firm works. If Stacey Smith has long been the rainmaker or the quiet diligent family lawyer, the success of the firm belongs to her, unless of course, as previously alluded to, it’s a commoditised or highly transactional law firm in which personality really doesn’t count.
Have a Brand Strategy Before Acquisition
In my experience, law firms build the parachute after jumping from the plane when it comes to brand strategy. In other words, they’ve gone berserk on the due diligence etc but fail in their own mind how they’re going to transition the brand from what it is to what it needs to become. Underpinning this are all the necessary steps to get there, not to mention against likely resistance from the people who belong to the firm that has been acquired. In this respect, I’d highly recommend you do some team and culture work!
We can gear you up with experts in this regard with proven track records of change management, among other things!
Get Some Real KPIs that Support the Strategy
Most acquisitions have a set agreed time that the previous principal/owner is going to exit and that’s it. Invariably there is a conversation that goes with it that identifies the functions of this person up to the time of exit. It likely won’t pan out how you had planned. For this reason having a set of KPIs to keep the former principal on track will prove helpful. This is particularly the case in those firms when the brand equity belongs to the principal and the success of the acquisition will derive from the continuation of those key referral relationships.
Think long and hard about this before the acquisition and in particular the preparedness of the former principal to work with you on this front.
Get Brand Help When Considering the Acquisition
We share very close relationships with all the law firms we work with, for many, over numerous years. Once or twice, despite the closeness of the relationship, we learn of the acquisition after it’s done and dusted and then are brought on to dress things up. It’s not ideal!
If you’re considering acquisition of another practice, get us on board when you’re considering it. This way you’ll benefit from our multi-dimensional lens that we’ll look at the practice. In particular, its brand, its positioning, the depth of its marketing channels, and a bunch of practical things like its SEO footprint and if there is an ads campaign running, a determination of its traction. These indicators are essential!
Our industry is changing rapidly forcing legal practices to look at growing market share sometimes in other directions. If you’re considering acquisition as a strategy to fulfill this objective or others, let’s talk!