Senior Attorney Match Podcast

Why Many Senior Attorney-led Law Firms Will become Worth Less during the 2nd Half of the 2020s

In Episode 66 of the State of the Market for Law Firm Sales in 11 Minutes, Senior Attorney Match’s Jeremy E. Poock, Esq. addresses the following:

Why Many Senior Attorney-led Law Firms Will become Worth Less during the 2^nd Half of the 2020s

 

As Poock explains, today’s Senior Attorneys, who have practiced 30+ years, developed their Books of Business during the pre-Google, 1.0 Word-of-Mouth Era as Rainmaker Attorneys who handed out 100s or 1000s of business cards per year, attended multiple networking events per month, spoke in-person anywhere and everywhere, sponsored local events, and advertised in-print, on radio, sometimes, on TV.

 

Today’s Senior Attorneys developed valuable Books of Business filled with clients and referral sources as Rainmaker Attorneys.

 

In the early 2020s, though, Digital Marketing Disruption entered into the legal industry as a result of society’s digital pivot in 2020, which resulted in clients beginning to search online to find lawyers and law firms to hire, rather than asking a relative, friend, co-worker, etc. for a referral.

 

The digital pivot by clients to search online for lawyers and law firms has resulted in the rise of Digital Rainmaker law firms that embrace Multi-Channel Digital Marketing to attract the attention of today’s and tomorrow’s clients.

 

During the second half of the 2020s, those Senior Attorney-led firms that continue relying upon Word-of-Mouth for business development will unfortunately become worth less as follows:

 

1. Short-Term: A decrease in annual revenues due to originating less new clients than during today’s 3.0 Digital Era for the legal industry.

2. Long-Term: Less value of their law firms’ Books of Business due to not replenishing their Books of Business with new clients and referral sources similar to during the pre-Google, 1.0 Word-of-Mouth Era.

 

As Poock points out, despite a Senior Attorney-led firm generating less new clients, the value of their firm will become worth less, but not worthless because Growing Law Firm purchasers continue to want and need the following 3 resources that Senior Attorney-led firms offer:

 

1. New clients

2. An experienced workforce, consisting of lawyers and para-staff

3. Subject Matter Knowledge to convert to Digital Content to attract the online attention of today’s and tomorrow’s clients who search for lawyers and law firms online.

 

As Poock warns, though, “[I]f you are not replenishing your Book of Business as well as you did pre-Google, now is the right time to sell because over the course of the remainder of the 2020s, the value of Senior Attorney-led firms will become worth less, even though not worthless at this time.”

Q.2 from Ep. 29 of the Ask the Law Firm Seller Show: I Lead a Trusts & Estates Law Firm that Has Prepared 500+ Estate Plans. What Are My options?

During Ep. 29 of the Ask the Law Firm Seller Show, Jeremy E. Poock, Esq. replies to the following Question 2:

I lead a Trusts & Estates Law Firm that has prepared 500+ estate plans. What are my options?

Initially, Poock explains that the owner of a Trusts & Estates firm needs to determine what the firm has in terms of:

1. Its sources of revenues and amount of revenues per source (egs. Drafting, Probate/Trust Admin., Real Estate, etc.).
2. The firm’s client list, including updated information about names, addresses, e-mail addresses, and cell phone numbers. Importantly, for T&E firms, updating client information should include updating contact information about fiduciaries named in the firm’s estate planning documents (egs. Personal Representatives and Trustees).
3. Inventorying the number of estate plans under management, including ideally, determining how many clients have re-published their estate plans with another law firm, moved out of state, or may have already died.

Regarding sale options, Poock shares the following 3 options:

(a) Sell to or merge with a Growing Law Firm, and preferably, a Growing Law Firm that focuses on T&E or maintains a T&E department (Preferred)

(b) Pursue an internal succession plan (Potential)

(c) Maintain the Status Quo, i.e., establish no succession plan (Risky)

Poock points out that Growing Law Firms offer the preferred option because they want and need the following resources that Senior Attorney-led T&E law firms offer:

(1) New clients;

 

(2) An experienced workforce, comprised of both lawyers and para-staff; and

 

(3) Subject Matter Knowledge to convert to Digital Content to attract the attention of new clients who search online today (and tomorrow) for lawyers and law firms to retain.

 

Poock also observes the following trend that jeopardizes a particular, future value of Senior Attorney-led T&E Law Firms:

 

Digital Marketing Disruption in the legal industry means that, despite T&E law firms including a “blue back” page in their estate planning documents that lists the contact information for the law firms that prepared a given estate plan, surviving family members and fiduciaries have begun by-passing those “blue backs” in favor of asking Google or their AI thought partner to suggest the best T&E attorney near them to administer a Will or Trust.

 

If the families of estate planning clients do not return to the original firm that drafted an estate plan to assist with Probate/Trust Administration, the future value of that firm will become jeopardized because of the expectation that surviving loved ones and fiduciaries will seek Probate/Trust administration services from the same firm that prepared a client’s estate plan.  

 

Poock concludes with offering the following suggestion to T&E law firms that have prepared 500+ estate plans and may (should) have growing concerns that families will not return to their law firms for Probate/Trust Administration of the plans that the firm has drafted:

 

Maintain contact information for clients’ named beneficiaries and fiduciaries for the purposes of:

 

(i) Establishing a relationship with the firm that prepared an estate plan; and

 

(ii) Minimizing the risk that beneficiaries and fiduciaries by-pass the firm that prepared a client’s estate plan in favor of asking Uncle Google or an AI thought partner to recommend an alternative law firm for Probate/Trust Administration services.

The Age of the Startup Law Firm Has Arrived

In Episode 65 of the State of the Market for Law Firm Sales in 11 Minutes, Senior Attorney Match’s Jeremy E. Poock, Esq. addresses the following:

• The emergence of Startup Law Firms

 

• How Law Firm Sales 2.0 will apply to the sales of Startup Law Firms

 

• The value that Senior Attorney-led Firms offer to Startup Law Firms

 

• A warning to Senior Attorney-led Firms as a result of the continuing ease for Startup Law Firms to originate new clients digitally during today’s 3.0 Digital Era for the Legal Industry

 

As Poock explains, today’s Startup Law Firms feature the following characteristics, or really, steps:

1. Introduce a product, namely, the practice area(s) of a Startup Law Firm

2. Develop a strategy to bring a Startup Law Firm’s product to market

3. Originate clients

4. Build a team

5. Grow sales/profits

6. Achieve an exit/sale

Poock also points out that Senior Attorney-led Firms offer the following value to Startup Law Firms:

 

(a) Instant client growth;

 

(b) Welcoming in the workforce of Senior Attorney-led Firms, that is, key lawyers and their support staff; and

 

(c) The subject matter knowledge that the lawyers at selling law firms have developed, which Startup Law Firms want and need to convert to digital content to attract the attention of clients who search online for lawyers and law firms to hire.

 

Poock points out that Startup Law Firms will sell their firms per Law Firm Sales 2.0, followed by Law Firm Sales 2.5, and eventually, Law Firm Sales 3.0.

 

In Law Firm Sales 2.0, Startup Law Firms will enjoy fixed payments upon their digital and brand value, plus earnout terms based upon their defined Books of Business. 

 

Looking forward to Law Firm Sales 2.5 and 3.0, Poock explains that no earnout terms will apply to those sales because of sale value tied to digital value, brand equity, and good will without any dependence upon Rainmaker Attorneys to transition their Book of Business to a purchasing law firm.

 

As a result of the arrival of the Age of the Startup Law Firm, Poock includes the following warning to Senior Attorney-led Firms:

 

It’s very important for Senior Attorneys to recognize that as Startup Law Firms continue reducing their client acquisition costs due to the ease of generating clients digitally in today’s 3.0 Digital Era for the Legal Industry, the Books of Business of Senior Attorney-led Firms will become less valuable.

 

And, to listen to the Bonus Segment to Episode 65, please listen here:

 

https://podcasts.apple.com/us/podcast/how-personal-injury-law-firms-can-develop-measure-their/id1498670329?i=1000735060815

How Personal Injury Law Firms Can Develop & Measure Their Brand Value – Bonus Segment to Ep. 65 of In 11 Minutes, Featuring Nicole Bergen, Founder & Chief Strategist for Elevate Marketing Research

During Ep. 65 of the State of the Market for Law Firm Sales in 11 Minutes, Nicole Bergen, Founder & Chief Strategist for Elevate Marketing Research, joins to address the following 2 questions:

 

Question 1: What do you recommend for PI firms seeking to develop & measure their firm's brand value, including how to score high on Elevate’s Brand Report Card?

 

Question 2: What are your thoughts about how a PI firm's brand value can enhance a PI firm's value when planning for a sale exit strategy?

 

When developing brand for a Personal Injury Law Firm, Bergen emphasizes the need to focus on what is important to the consumer, urging listeners to consider advertising as “Me-vertising,” i.e., what is in it for me, the consumer – the client?

 

As Bergen states, “If you can't answer that question, you're not developing a brand. A brand is the answer to that question.”

 

Bergen also describes aspects of Elevate’s Brand Report Card, including suggesting that Personal Injury Law Firms identify their Unique Selling Point (USP) and structure “Me-vertising” with a focus on 1 or 2 USPs, followed by measuring how a USP performs in the marketplace to attract more clients based upon that USP, i.e., its brand.

 

Bergen suggests that PI firms consider the following:

 

“How can you demonstrate empathy to the consumer?”

 

When discussing how brand value can enhance a Personal Injury Law Firm’s value in contemplation of an exit/sale or to bolster investment, Bergen points out that data analytics can support a PI law firm’s brand value.

 

Poock adds that demonstrating brand value will also result in adding a separate line item to the sale of Personal Injury Law Firms, in addition to determining a multiple of EBITDA.

 

As Poock states, “[W]hen firms can have and present data analytics that show that “Me-vertising” is translating into sales because of brand value, that's going to add additional zeros . . . could be a lot of zeros, by the way, when you are taking on, as Nicole is saying, an investor, or when you are selling your Personal Injury Law Firm.”

Q.1 from Ep. 29 of the Ask the Law Firm Seller Show: My lease terminates 1+ years from now. Shouldn’t I wait until 12-24 months before my lease expires before considering selling my law firm?

During Ep. 29 of the Ask the Law Firm Seller Show, Jeremy E. Poock, Esq. replies to the following Question 1:

My lease terminates 1+ years from now. Shouldn’t I wait until 12-24 months before my lease expires before considering selling my law firm?

Poock begins by sharing a checklist relating to “Now is the Right Time to Sell Because . . . .”

 

That checklist features the following:

 

1. Life Event (egs. age, health, spouse’s retirement, etc.)
   
   
2. Low probability of selling to an internal successor
   
   
3. The arrival of growth by acquisition
   
   
4. The need to spend more time outside of “the office”
   
   
5. Not generating as much business as yester-year
   
   
6. Upcoming lease renewal
   
   

As Poock points out, “[W]e consider the lease as a deal term.”

 

Reasons why include the following: (i) The possibility of a diminishing Book of Business by a selling law firm if that firm does not adopt Multi-Channel Digital Marketing in today’s 3.0 Digital Era for the legal industry; (ii) The possibility of a Random Tuesday event that would cause the value of a law firm to diminish significantly (egs. unexpected departure of a key employee lawyer; unforeseen physical or mental health event, or pre-mature death of a law firm owner); (iii) The value of lost time, especially after realizing the importance of time during the post-Covid 19 Era.

 

Poock also explains that Growing Law Firms present the common purchasers of Senior Attorney-led firms because Growing Law Firms want and need the following 3 resources that Senior Attorney-led firms offer:

 

1. Clients and referral sources, i.e., a Book of Business;
   
   
2. Talented and experienced lawyers and para-staff; and
   
   
3. Subject matter knowledge to convert to digital content to attract the attention of new clients who search online for lawyers and law firms to hire in today’s 3.0 Digital Era for the legal industry.

 

Poock concludes by advising, “If you're considering selling your law firm, even if your lease may not terminate for more than one year out, we recommend that you really consider pursuing [a] sale. And, please consider your lease as a deal term to negotiate with a growing law firm that wants and needs what you have.”

Poock’s Post from Ep. 29 of the Ask the Law Firm Seller Show: How the One-Two Punch of AI + Google Continues to Decrease the Relevancy of Yester-Year’s Rainmaker Attorneys

During Ep. 29 of the Ask the Law Firm Seller Show, Jeremy E. Poock, Esq. shares the following Poock’s Post:

How the One-Two Punch of AI + Google Continues to Decrease the Relevancy of Yester-Year’s Rainmaker Attorneys

 

Poock begins by reminiscing about the Pre-Google “Age of the Rainmaker Attorneys” who built their Books of Business in-person and via Word of Mouth, including: (i) Handing out 1k+ business cards per year; (ii) Leading in-person speaking engagements as often as possible (CLEs, Chambers of Commerce, etc.); (iii) Attending and sponsoring charity events, including placing full page ads in event tribute books; (iv) Investing in print ads in newspapers, journals, legal directories, White Pages, Yellow Pages, etc.; and (v) “Working the room” at networking events.

 

Post-2020, though, Business Development for lawyers and law firms has pivoted digitally, including the following “One-Two Punch” of AI, plus Google:

 

Potential clients consult with AI (egs. ChatGPT, Perplexity, Gemini, Claude, and more) to inquire about lawyers and law firms capable of addressing their particular issues, followed by researching those firms via Google . . . doing so while by-passing yester-year’s Rainmaker Attorneys.

 

The rise of Digital Rainmaking in the mid-2020s, as part of today’s 3.0 Digital Era for the legal industry, includes the following results for those Senior Attorney-led firms that do not adopt Multi-Channel Digital Marketing to supplement their Word of Mouth business development efforts:

 

1. The decreasing relevancy of yester-year’s Rainmaker Attorneys in favor of the rise of Digital Rainmakers;

 

2. A decrease in revenues for Senior Attorney-led firms that do not adopt Multi-Channel Digital Marketing to supplement old school Word of Mouth rainmaking; and

 

3. A decrease in law firm value among Senior Attorney-led firms that do not replenish their Books of Business during today’s 3.0 Digital Era as well as during the pre-Google Word of Mouth Era.

 

Poock also points out the following:

 

Despite the ongoing disruption to business development that today’s 3.0 Digital Era presents, law firm purchasers want and need the following 3 resources that Senior Attorney-led firms offer:

 

1. A selling law firm’s Book of Business;

 

2. Talented lawyers and support staff; and

 

3. Subject matter knowledge to convert to digital content to attract the attention of potential clients who search online for lawyers and law firms to retain.

 

That stated, Poock raises the following forecast for Senior Attorneys to consider:

 

Once “Digital Rainmaker” law firms can generate new clients for less cost than purchasing a Senior Attorney-led firm’s Book of Business, the market value for those Books of Business will decrease.

 

As Poock states, “We strongly believe that Law Firm Sales 1.0 will come to an end at some point, but that's not going to be in the 2020s . . . I think it's going to be in the in the 2030s, because when law firms can generate new clients for less money than the fee sharing [per] Law Firm Sales 1.0, [they will not] . . . need Senior Attorney-led firms’ Books of Business as much as they do now.”

 

And, as Poock states in conclusion: “Hence why we strongly recommend for those law firms that are committed to Word of Mouth, as compared to today's, Digital Era for generating clients digitally, that now is the right time to consider selling your law firm.”

Q.2 from Ep. 28 of the Ask the Law Firm Seller Show: I enjoy practicing law, but I am tired of managing “the office.” What options do I have?

During Ep. 28 of the Ask the Law Firm Seller Show, Jeremy E. Poock, Esq. addresses the following question:

I enjoy practicing law, but I am tired of managing “the office.” What options do I have?

In response, Poock explains that Senior Attorneys often share the following common complaint: That they have grown tired with managing “the office;” not that they want to necessarily sell their law firms or retire, but instead, that they are literally tired of running “the office,” including the responsibilities associated with making payroll, paying monthly rent, hiring/firing, dealing with the copy machine, and much more.

In terms of options, Poock describes the following 3 options:

Option 1 – The Non-Option: Poock explains that even though Senior Attorneys want their key employee lawyers to assume more management duties as a pathway to purchasing their law firms, the vast majority of key employee lawyers want a “Reliable, Predictable, and Safe” job rather than succeed to owning their boss’ law firm.

Option 2 – The Preferred Option: Joining a Growing Law Firm presents the preferred option to solve the issue of Senior Attorneys becoming tired of managing their small business law firms because Growing Law Firms want and need the following 3 resources that Senior Attorney-led firms offer: (1) Instant client growth; (2) Talented lawyers and support staff; and (3) Treasure chests of subject matter knowledge to convert to digital content to attract the attention of today’s legal consumers (clients) who search online when considering to hire a lawyer or law firm.

For those Senior Attorneys who join a Growing Law Firm and continue practicing, Poock explains the following sequence of events that occurs:

Transforming from “Tired to Inspired to Retired”

After joining a Growing Law Firm, Senior Attorneys often become inspired after removing the yoke of managing their offices and having the time to: (1) Focus on portions of practicing law that they enjoy; (2) Choose the clients whom they personally represent; (3) Publish digital content, including podcasts, post to social media, record YouTube videos, and more; and (4) Spend more time outside of the office without the proverbial shackles of the office constraining their freedom while away.

Inspiration also includes benefiting from transferring the trust of a Senior Attorney’s clients to attorneys at the firms that they join, together with sharing their career’s worth of knowledge with lawyers at the firms that they join.

And, upon retirement, Senior Attorneys who join Growing Law Firms benefit as follows: (1) Financially by selling their law firms; and (2) By ensuring their legacy, which includes (i) The peace of mind by knowing that their clients will continue to benefit from ongoing, competent and zealous representation; and (ii) The satisfaction that their key employee lawyers and para-staff will continue to have “Reliable, Predictable & Safe” jobs because Growing Law Firms often hire the staff of a Senior Attorney-led firm as part of a sale or merger. 

Option 3 – Become a Referring Attorney: Especially relevant for solo Senior Attorneys who may want to continue practicing while reducing the exhaustion of running their offices, Poock explains the following option: Start referring less desirable or more time consuming matters to third party lawyers and law firms in consideration of referral fees per Rule 1.5 of the Professional Rules of Conduct in the given state where a Senior Attorney practices.

Q.1 from Ep. 28 of the Ask the Law Firm Seller Show: What are several top mistakes to avoid before selling a law firm?

During Ep. 28 of the Ask the Law Firm Seller Show, Jeremy E. Poock, Esq. addresses the following question:

What are several top mistakes to avoid before selling a law firm?

 

In response, Poock explains the following Top 5 Mistakes to Avoid before Selling a Law Firm:

No. 1: Wait too long to sell

No. 2: Assume that “Internal Successors” want to buy

No. 3: Underestimate Google & AI for Post-2020 Business Development

No. 4: Overlook converting Subject Matter Knowledge to Digital Marketing Content

No. 5: Hope that tomorrow will continue like today

Guest Appearance during Ep. 28 of the Ask the Law Firm Seller Show: Tim McKey, CPA, CEO of Vista Consulting Team: 3 Tips for Strategic Planning to Sell a Plaintiff Contingency Law Firm

During Ep. 28 of the Ask the Law Firm Seller Show, Tim McKey, CPA, CEO of Vista Consulting Team, joins to address 3 Tips for Strategic Planning to Sell a Plaintiff Contingency Law Firm

 

McKey initially explains that Vista Consulting Team provides strategic consulting to Plaintiff contingency law firms, assisting clients with systemizing their businesses per Vista’s tagline: The business resource for Plaintiff law firms.

 

McKey then shares the following 3 tips for strategic planning to sell a Plaintiff contingency law firm:

 

Tip No. 1: As McKey says, “The best thing you can do to prepare your firm to be sellable is to be profitable.”

 

Underlying that tip relates to law firms knowing their numbers.

 

Examples of numbers to know include: (a) Gross revenues vs. Net Revenues; (b) The EBITDA for your firm; (c) Average fee per case; (d) Case acquisition costs; (e) Number of open cases, together with estimated values of those cases; and (f) Average time on desk to resolve cases, including differentiating between pre-lit. and litigation matters.

 

Tip No. 2: Know the value of your firm per 1 or more recognized methodologies of valuation.

 

Tip No. 3: Have efficient, effective, and documented operations within your firm, including (a) A methodology for internal reports that hold teams at a firm accountable; and (b) A means to make sure that a firm does not need its founder/rainmaker for the firm to operate.

 

McKey and Poock also discuss their thoughts about what buyers want/need when purchasing Plaintiff contingency practices, including strategic purchasers who seek to purchase more than one law firm, usually, in anticipation of a future roll-up type transaction.

Mini-Podcast: Recap for Why the Rewards Outweigh the Risks for Growth by Acquisition

As a recap for why the rewards outweigh the risks for growth by acquisition, Senior Attorney Match’s Jeremy E. Poock, Esq. summarizes the following 6 rewards that growth by acquisition offers to Growing Law Firms:

(1) Instant client growth by succeeding to a well-established Book of Business filled with clients & referral sources.

 

(2) Adding knowledgeable & experienced lawyers and para-staff.

 

(3) Low risk earnout payments as consideration to the owner(s) of a selling law firm (percentage of revenues paid during a fixed period of time).

 

(4) Opportunities to convert decades of Subject Matter Knowledge to digital content for Multi-Channel Digital Marketing.

 

(5) Succeed to a legacy phone number(s).

 

(6) Benefit from established websites & additional digital value (egs. SEO rankings, 5-Star Google Reviews, 3 Pack results & more).

 

Poock also summarizes the following 3 risks:

 

(1) Potentially overpaying a Seller if the clients from a selling law firm’s Book of Business do not retain the acquiring firm.

 

(2) Not having enough lawyers & para-staff to provide legal services to the clients of a selling law firm

 

(3) The costs of adding overhead associated with growth by acquisition (egs. salaries, benefits, additional rent, etc.)

 

In conclusion, Poock states, “The rewards absolutely outweigh the risks when it comes to growth by acquisition for Growing Law Firms.”