I am the managing partner of a sixteen attorney insurance defense firm in Kansas City. Several of our insurance company clients have advised us that they are willing to send us cases in Texas. We have decided that we would like to establish an office in Texas. Our plan is to hire three lateral attorneys with seven to twelve years experience with Texas based insurance defense firms. We are not certain as to the best city to establish this office. We are thinking it should be a central location. We would appreciate your thoughts.
Unlike many states that have one or two major cities Texas has several including Austin, Dallas, San Antonio, Houston, Ft. Worth, El Paso, Corpus Christi, and others. Austin, Dallas, San Antonio, and Houston are all desirable locations for branch offices. Austin is more centrally located if your goal is to service the entire state.
I think it would be risky to simply try to guess as to the appropriate location. Your clients may have law firms they are using in certain areas of the state and may be looking for you to serve a need in a particular area of the state. They may not be willing to pay your travel expense if you are on the other side of the state. If this is the case this is the area that you need to be. I suggest that you have a discussion with each of these clients and ask them where their cases are concentrated and where they would like to see you have an office. This should dictate the office location. Hopefully, each of these clients are on the same page. If each of these client’s cases are concentrated in different geographical areas ask your clients whether they are willing to pay for travel related expenses from a central location. This should guide your location decision.
I would also make sure that these commitments are solid from each of these clients. I would get commitments from each client as to the types and number of cases they envision sending to you so you can properly assess the profitability of establishing a branch office. Do some research on the availability of experienced lawyer talent in the area. I would also give some thought as how you plan to integrate these Texans into your firm and culture. See my prior blog on branch offices.
John W. Olmstead, MBA, Ph.D, CMC
I am a partner in a fourteen attorney firm in Chicago's western suburbs. We have five equity partners and nine associates. We are currently leasing office space that we have outgrown. As we are approaching the end of our lease we are considering buying our own building. We would appreciate your thoughts?
I find that many firms have difficulty dealing with all of the moving parts of buying and building out a building and the distractions and time that it takes away from the law practice. Owning your own building can provide numerous financial and tax advantages and If you decide to go this route hire professionals to help expedite the process and a real estate building management company to manage the building when it is completed.
I strongly suggest that you create a separate entity that will own the building and separate building ownership from the law firm ownership structure. I suggest that participation in ownership of the building be optional for law firm equity partners that want to invest in the building.
It is hard enough for new partners to fund their capital accounts or buy-ins without having a mandatory building buy-in. Recently I have seen a few merger and lateral partner opportunities go south as a result of buildings, real estate, and mandatory buy-ins.
John W. Olmstead, MBA, Ph.D, CMC
Our firm represents general business clients in Cleveland, Ohio. We have 37 attorneys. Currently we have only one office at the present time. As part of our planning process we have been discussing whether we should open a branch office in another major city in Ohio. What issues should we be thinking about?
Branching is being incorporated into more firm strategic plans. However, often the results do not meet firm expectations considering the time, effort and investment made. Overhead increases, anticipated opportunities do not materialize, management becomes more complex, resources are spread too thin, and the firm loses sight of its common identity.
Branching can be risky due to the dollars and managerial time investment. However, there can be significant benefits as well.
The starting point is to avoid knee jerk reactions such as branching because other firms are doing it, assuming that clients want you to have a presence in another geographical area, etc. Do your homework and build a business case for the branch office. Here are ideas to get you started:
1. Ask your clients what they think about the move. Is the move important to them?
2. Determine your objectives for the branch office. For example:
a. It meets the firm's strategies outlined in the firm strategic plan
b. Geographic expansion
c. Client requirements
d. Defensive measures
e. Convenience office for client meetings
3. Obtain and analyze quantitative data.
a. Client information obtained from meetings and surveys
b. Information concerning referral sources
c. Competitor analysis
d. Business growth market research
Build your business case (a business plan for the branch office if you will) and make sure that a branch office makes business sense for your firm. Create a pro forma budget and review the financial impact. If a branch office makes sense begin thinking about implementation issues such as staffing, actual location, management, etc.
I am a solo attorney in private practice. I have been practicing for two years. The bulk of my practice is in the wills, trusts and estates area. I occasionally handle real estate transactions as well. I work from a home in office and meet clients in their homes at night. I have given thought about moving to an office outside the home, but even if I did I think I would still end up meeting clients in their homes at night. My clients seem to really appreciate this and as a result I have yet to walk away from a potential client's home without a signed retainer agreement. What are your thoughts on home offices?
Sounds like working from home has worked well for your practice and it has caused you to deliver personal attention to your clients which is so necessary in your practice area. I opened my consulting practice 25 years ago and had the overhead of an office and staff from day one. So much has changed since then. Now I have both – small office in St. Louis and home offices that the rest of us work from remotely – Less staff – and less space. We have downsized our office dramatically over the years and now primarily use it for client meetings/presentations when needed. Our infrastructure – phone systems, files, copiers, file servers, and people are primarily housed out of remote home offices. More and more of our work is being delivered remotely/virtually using GoToMeeting and other such tools.
Take a hard look at your purpose and cost for the office and then go from there. Also, consider that sometimes we have to spend money to make money. The increased visibility than the office may give you generate more revenue than its cost? Also, as you get busier and need to boost up infrastructure – staff, systems, etc., you may need a place to house the infrastructure. If you just need a place for client meetings occasionally you might be better off having a virtual office suite arrangement where you pay and use a space as needed with some of the companies that provide such as service. If you have a Regus in your area – you might look into that option. http://www.regus.com/
John W. Olmstead, MBA, Ph.D, CMC