This article looks at the factors firms need to consider when opening branch offices within the US or internationally, some common barriers and issues branch offices often experience, and introduce some steps to ensure a branch office can be successful.
Reasons Law Firms Open Branch Offices
There are many reasons law firms open branch offices, whether within the country or internationally. Sometimes, it is enough to have one big client in an area to justify opening a branch office to cater to their needs. On other occasions, firms open branch offices after years of providing legal services to several existing clients in that area and seeing a real need to operate from an office space closer to these existing clients.
Before taking any steps to open a branch office, the law firm has to be well aware of its reason for opening an office in that area. The firm has to outline its reason, whether it be servicing an existing client or expecting significant growth in the market where the office would be located, to implement the right branding, recruiting, and marketing strategies for that particular branch.
The success of a branch office lies in the stance of the parent law firm towards the office. The most successful branch offices are always those established as a part of a cohesive strategy. In this, the firm has identified a need and opened a branch office to fulfill it, so the firm feels a serious commitment toward the branch and knows its purpose.
Of course, law firms generally open branch offices to increase earnings. And most firms that do this also start to earn more and new offices come with more opportunities to earn money. New locations can bring prospective clients, more partnership opportunities, and more associates. However, with a new location, the firm also needs to spend more money on offices and salaries, which can drain the firm if the office is not generating enough business.
Issues That Can Come When a Law Firm Opens a Branch Office
Issues Branch Offices Encounter
Many firms are wary before opening branch offices because they have experienced a failure of such an office or have seen other firms on the brink of bankruptcy because of bad moves when starting new law offices. Many things can go wrong with such a huge business move. But most branch offices that fail do so because the parent firm did not think this move through and what they predicted differs significantly from what they are experiencing.
Every firm that opens a new business branch does so with some expectations about the clients and the money they can generate; however, it can be detrimental if these expectations are not realistic. The firm often has some idea about what number of clients they can get in the area and maybe already have some prospective clients lined up, but many of the clients fall through or never materialize as it goes in the business. Branch offices also often do not grow overnight, and it usually takes them longer than expected to start earning money for the parent firm. If the firm is not prepared for this, it can be fatal.
Obstacles To Opening New Law Offices in the Country and Internationally
Opening a new office anywhere, whether within the country or internationally, comes with many obstacles firms might not expect.
Even if the new branch law office is in the US, it is still a new legal market with new competition that already has an established client base and is known in the area. The potential client base might be significantly smaller than expected because of the competition, and the firm should be able to adapt to these unexpected situations.
Major firms coming from one large market to another often expect to quickly become leaders in the new market. That is often not the case. Many major New York law firms went to the Los Angeles market in the 1980s expecting great success because they expected the market to pick up and become a financial center. That did not happen, and most of these branch offices failed. The same thing happened when many firms opened offices in Silicon Valley after the surge of new technology companies. While not all of these new branch offices were unsuccessful, many firms took a huge hit with this decision.
When firms branch out to international waters, there are often even more barriers than opening offices domestically. First of all, the logistics of getting an office space are often very problematic. The costs of offices are often much higher in metropolises of other countries than in the US, and many countries require a law firm to get a permit to lease a space, which can take a long time to obtain.
Foreign attorneys and partners also have different requirements for compensation and hours, which means that law firms often have to have a huge client base to be able to profit. Other countries also have different rules for foreign attorneys to work there, which firms must consider when opening offices.
Managing a Branch Office In a Different Market Can Be Difficult
Even when the parent law firm has a big brand name and a steady client base that brings in the money, it does not mean that the branch office will be without issues. Good branch management is an important factor for success, which is very hard to predict.
Branch offices are usually staffed with some attorneys coming from the home and many local attorneys. The management must work hard to incorporate different cultural habits, whether work-related or personal. This is a difficult task even for experienced leaders, so problems come very quickly when the branch office has not as skilled management. Law firms have to be very careful with this integration and be prepared that it might not go as smoothly as they expected.
Another important factor in whether a branch office will become successful is the stance of the leadership of the home office to the branch. If they do not consider the branch serious and valuable and are not committed to it, the branch obviously cannot prosper because it does not get the needed support.
How To Find the Right Team for a New Branch Office?
The legal industry is built on people and relationships between people, whether between peers, superiors, and employees or between clients and their lawyers. Finding the right people for a new office is essential for the branch to grow and find clients.
Many clients want legal services only from an office that already looks established and has many attorneys working there. Some branch offices also experience rapid growth when the legal market starts booming unexpectedly or when they manage to attract a partner that brings a lot of business. In such a case, the branch office needs to quickly find the right people to handle all the work and not lose out on a great opportunity.
When the office gets into such a situation and needs to hire new attorneys quickly, it does not have another choice but to start aggressively recruiting if it wants to grow and succeed. A few common strategies can help ensure the firm and the branch office quickly find the right people.
Relocating Attorneys From the Home Office
One of the quicker forms of staffing a branch office with attorneys with proven skills is relocating attorneys from the home office. However, this does not come without any issues.
Depending on where the branch office is located, this process can be quick and painless or extremely difficult and costly. If the law firm opens international offices, the costs of relocating the attorney and their whole family, securing visas and work permits, housing, or special perks can get very high. These are smaller when opening offices within the country; however, it can still be expensive for a firm.
When the law firm considers relocating its employee(s) to a foreign country or within their own law firm, the leadership should first find out whether there is someone in their office who have ties to the new location or who wants to move there. Having established connections in the place or having the will to develop relationships in the new area can be extremely beneficial for the development and growth of the office. Also, sending out attorneys who want to relocate will result in better morale and effort than sending someone who views it as a punishment because they do not want to move. Moreover, those attorneys who are sent somewhere where they want to go generally feel some commitment to their home office, which is always favorable.
The problem is, even if you relocate an attorney who wants to move into the location of the branch office, it does not mean that they will easily fit in or adapt to the new situation. Integrating lawyers into a new culture and environment is extremely unpredictable, and anything can happen that can make the transition harder. That is why it is usually necessary to complement existing employees from the home office with some new local talent.
Training Local Law Students and Recent Law School Graduates
Most branch offices will not be able to avoid onboarding new local talent. One type of local talent firms can recruit are law students and recent graduates coming from a local law school. One advantage of hiring people who do not have extensive experience in law practice is that the branch can train them from scratch, and they do not have bad work habits anywhere else.
The problem, however, is that new offices often do not have the time or resources to train and oversee inexperienced attorneys comprehensively. Junior associates also generally do not bring in money during the first year of employment, which can be a huge issue in a branch trying to pick up and grow.
Hiring Experienced Attorneys From the Area
Branch offices can also hire local attorneys who already have experience, whether as senior associates or in their law firm. Their recruitment does not have the same drawbacks as previously mentioned staffing options, as their onboarding does not come with the cost of relocation. Their skills and professional relationships allow them to start generating money for the branch immediately. However, the firm and the branch must first attract this local talent. Here are a few examples of a marketing strategy a law firm can choose to attract experienced candidates:
Relying on References and Contacts
When a law firm opens a new office somewhere, existing attorneys and in-house counsel usually reach out to their contacts in the area or multinational corporations in their client base and ask for references, tips, or to spread the word about the new branch around. These could be lawyers from other firms in the area and peers from law school or alumni. Some law firms might have a problem with "stealing" attorneys from other firms; however, this method can also uncover attorneys who have already decided to move or come from firms undergoing problems or dissolving.
Attorneys recruited through this method are usually very good, and firms do not tend to have major issues with them, as no one in good standing with the firm would recommend an attorney that is not skilled enough. However, if any problems arise and the attorney needs to be let go, the situation might be delicate and uncomfortable.
Utilizing Legal Recruiters
Finding the right local talent can be tricky, especially for more senior lawyers and partners. Lateral hiring has always been an issue; however, legal recruiters and recruiting firms can help with this problem.
Legal recruiters often have extensive databases they have been developing for years and have access to attorneys with the training, experience, and seniority the law firm is looking for. Law firms that are only now venturing into the market would not be able to get to these senior attorneys, so a recruiting firm can help the new office pick up. Even though using a specialized recruiter might look like an expensive strategy for recruitment, the investment returns pretty quickly when the firm finds experienced lawyers who can bring in a lot of business.
Good legal recruiters firms, such as our BCG Attorney Search, also take on a lot of responsibilities during the recruiting process, like studying the local legal market, going through the resumes, and staying in touch with the candidates. They can also help the law firm establish themselves in the new market, so choosing the right recruiter can do a lot for a new branch office.
Posting Ads for Job Positions in the Law Firm
Advertising is also a way many firms choose when hiring new lawyers. Today, most firms opt for online advertising by putting their job positions on their business website, free or paid online job boards (such as LawCrossing); however, ads in printed media are still a thing.
The problem with advertising a position is that hundreds of candidates might respond to ads in larger markets. Going through all of these responses is very time-consuming and requires a whole department of people. Apart from the cost of this, creating the ads that will attract the right lawyers and posting them is also costly, so firms have to think about whether it is cost-effective for them in their situation.
Building a Varied Team of Talented Lawyers
The groups mentioned above of attorneys bring their advantages and disadvantages to a law firm, so combining different staffing approaches is the best way for a firm to succeed. Local and foreign attorneys and experienced and less-experienced lawyers are eager to learn the law practice a bit differently and offer something the rest of them do not. This is the most effective way for firms to secure a smooth branch integration in the new space.
Conclusions
Growth and expansion are important for the success of any business, and law firms are no different. An important part of this expansion is opening new branch offices. The success of a branch office depends on many factors, but two of the most important ones are the approach the home office has toward the branch and the people the branch office chooses to hire. The home law firm has to have clearly defined goals for the branch office and be committed to it for the branch to feel equal and valued.
The law industry is also dependent on people and relationships, so hiring the right attorneys for the branch is essential. A law firm can combine staffing the branch with relocated people from the home office who already know the company culture and company goals, experienced local senior lawyers who have established connections and know the local market, and train new local talent.
