Is post-Covid 2021 the time to grow?
Posted on 11th May 2021 at 13:00
Market data suggests that in 2020 law firms lost, on average, up to 15% of their income but in an ever-resilient industry, there may be an opportunity to reverse that.
Be it office size reduction, staff working from home or government schemes – law firms have balanced costs and resources and hit Covid head-on by adapting well in these ever-changing times.
Whilst many firms will look to continue the squeeze, there will be some that will use this as an opportunity to thrive – and they just may be right to do so.
This is no small feat, however, especially with Brexit impacts still firmly on the horizon.
So how can they do this? We set out below just a few ways this could be possible.
Mergers Some small to medium size firms will feel that they must go niche, go big or go bust. For the former, it may be that a larger firm in the local or wider area already has that mantle in the chosen field. They may have a bigger brand, a larger building, and a seemingly never-ending marketing budget. But the smaller firm employs equally competent lawyers and support staff in that field, as well as a loyal and regular client base. So a merger feels natural, doesn’t it? Job security and reduced overheads go with this.
For those brave enough, there is expansion.
Data indicates that, given the backdrop of the last 14 months, that far more firms will be standing still than moving forward.
With this comes less competition for acquisitions, and more opportunities. It really may be a buyers-market right now – especially as many law firm owners are considering early retirement after the year they have had.
Retirement Following an acquisition, many business owners are required to stay on at the business for a defined period of time (sometimes known as a ‘Golden Handcuff’). The purpose of this is to ensure a seamless transition of change, with as little negative impact as possible. But what if you want out now? What if you want to swap your staff for your grandkids? Your clients for your golf-clubs? Many owners are exiting immediately and taking lump sums to do, or staged pay-outs – often at great expense to the acquiring firm.
Some salaried partners have held out for years for the opportunity to hold equity in the firm that they work so hard for. With the exit of some partners into retirement, there has never been a better time to do so. This is especially prevalent in firms that are not merging nor acquiring, but rather are electing to ride out the storm by ‘sitting still’ currently.
Whether your firm has associated costs with a change in working practices, staff redundancies, exiting partners, acquisition and expansion costs or if you, yourself are looking to personally finance an equity purchase then we may be able to help with terms up to 60 months.
For further details:
Speak to our head of professions, Ryan O'Dwyer - Call: 01536 529 670 | DD:01536 529 668
Ryan works exclusively with law firms and understand all aspects of the legal market and requirements.
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