State of the Market for Law Firm Sales in 7 Minutes: The Top 4 Trends for Law Firm Sales in 2024 – Part 1 of 2

In this Part 1 of the Top 4 Trends for Law Firm Sales in 2024, Senior Attorney Match’s Jeremy E. Poock, Esq. shares the following trends for Law Firm Sales in 2024, plus a prediction for the Personal Injury Law industry:

 

Trend #1: Law Firm Sales 1.0 will continue in 2024

As Poock explains, we foresee the continuation of Law Firm Sales 1.0 in 2024.

“The key feature of Law Firm Sales 1.0 is that the payment terms are based upon earnout terms, as compared to significant consideration paid at a closing table because the buyers are typically more prepared to pay earnout terms [based upon the] personal goodwill nature of the Book of Business that Senior Attorneys are selling,” Poock states.

Poock also points out the following 2 warnings for Senior Attorneys who will pursue Law Firm Sales 1.0 type sales in the mid-2020s:

Warning #1: Would-be Internal Successors do not want to purchase the small business law firms that their Senior Attorney bosses have developed for the following 4 reasons: (i) Today’s Senior Attorneys hired their now would-be Internal Successors as key employees, and they want to remain employees; (ii) They went to law school and not business school; (iii) They cannot afford to purchase a small business law firm; and (iv) They assume that their Senior Attorney bosses will never retire.

Warning #2: In today’s 3.0 Digital Era for the Legal Industry, those Senior Attorneys who do not keep pace with digital marketing to attract new clients will not replenish their Books of Business as much as they did in yester-year, which means that their practices will not offer as much value to Growing Law Firm buyers later in the 2020s.

 

Trend #2: Law Firms Sales 2.0 Will Gain Momentum in 2024

As Poock explains, “A huge differentiator between Law Firm Sales 1.0 and Law Firm Sales 2.0 is the introduction of fixed pricing. That is, we're not just selling in Law Firm Sales 2.0 the Goodwill of a Senior Attorney’s practice. What is also for sale is the Digital Value and the Brand Awareness that law firms continue to develop.”

As Poock also points out, “[W]hen law firms have the data analytics to support . . . Brand Equity, they are going to be receiving fixed prices at closings that not only will buyers be prepared to pay, but banks will be lending on. And, we're going to see this more and more throughout the mid-2020s.”

 

Poock concludes this episode with the following prediction for the Personal Injury Law industry for 2024 and throughout the mid-2020s:

 

“If you are a Personal Injury law firm and if you have developed significant Digital Value and Brand Awareness, our prediction is that we are going to see significant 8-figure and maybe even 9-figure sales, let alone, 7-figure sales on Personal Injury law firms because buyers are going to be very interested in that Brand Equity that that these types of firms continue to develop, and banks will lend on them as well, as well as the introduction, interestingly, in the mid-2020s of the growth - the introduction and growth of Alternative Business Structures.”