Law Firm Valuation Factors and Trends that Matter

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While most businesses earn good value from the profits they make, things aren’t the same for law firms. Factors that influence a law company’s valuation include professional skills, reputation, client relationships, licenses, price sensitivity, and the intangible asset base. However, things change with time and these trends influence how a law firm is evaluated.

  • Connectivity: The Internet and technology have significantly influenced how people and businesses connect. Thus, connectivity options for clients, advisors, practitioners and other staff members drive the valuation of a law firm.
  • Social Media: Social platforms like Facebook and LinkedIn have become essential tools of marketing for businesses. Thus, a social presence will also be a crucial factor in deciding how a legal business is valued among clients and peers.
  • Global Marketplace: With internet users on the rise, consumers aren’t restricted to choosing professional services locally. Thus, a law firm that can establish a stronghold across the globe will be valued higher.
  • Putting an End to the Monopoly: Until the recent past, law firms and services have been available offline only. Although lawyers went online, it was only for getting leads and reservations. But certain online platforms have started offering interactive practices, taking business away from those traditional lawyers. In short, law firms will have more competition and standards to achieve a specific business valuation.
  • Ownership: Similar to the above point, monopoly is also losing its value in the ownership segment. Today, nonlawyers also own law firms and build their value based on other business factors.

Thus, achieving high business valuations for law firms will be more difficult in the future considering the changing times and ways of offering legal services. It’s always good to have valuation experts by your side to keep an eye on what’s changing and what you should do.