Avoiding Buyer’s Remorse: Ask the right questions.
As we approach the end of another calendar year, there is an upsurge almost everywhere in the world of small law firms looking for possible merger or acquisition opportunities.
The short-term motivations and long-term objectives of these explorations vary, but there are several questions that any law firm receiving an overture from another firm or prospective lateral partner should ask first, before entering into serious negotiations.
Having solid, fact-based answers to these questions will help you to avoid wasting time and management attention, as well as possible disappointment, on overtures that look promising on the surface but lack the underlying foundations needed for success.
When a small or midsize law firm receives a call or email from another practice suggesting a merger or acquisition, the first reaction often mixes curiosity, a little bit of self-flattery, and caution. The best first response — after We’re honored that you contacted us — is not to rush into confidential discussions or exchanging in-depth spreadsheets, but by asking clear, basic questions grounded in an objective evaluation process.
Is this an opportunity or a distraction?
Many law firms miss good opportunities or are distracted by vague ones Every law firm—no matter its size—should have a standard approach for receiving, considering, and responding to overtures to merge with or acquire another practice. This protects the firm’s interests, ensures better decision-making, and helps identify whether the proposal truly supports long-term performance and profitability.
But even before you and the other firm dive into the details, there are at least five threshold questions you should ask of the other firm and of yourselves.
How does this opportunity fit into our strategic priorities?
If your firm does not have well-informed, documented strategic priorities for the next three to five years — the things that are most important for you to enjoy sustainable success — you risk your attempts to answer this foundational question being little more than hopeful guesswork. Even if you do have a clear sense of what your firm needs to do to achieve your long-term goals, be wary of any temptation to change your priorities to “make the deal work.”
What does the recent performance of other firm really tell us?
Revenue alone rarely tells the full story. As part of the first approach to your firm, the other party should be able to produce summary data about their productivity, client retention, write-offs, realization rates, staff utilization, and working capital trends over at least three years. You will want to get into deeper details later, but this basic information — which any reasonably well-managed firm or practice should be able to produce — will tell you whether there is a business rationale for further discussions. This provides a more realistic picture of strengths and weaknesses—and can quickly reveal whether each firm’s expectations about value and potential are based on reality or optimism.
What does the data tell us about profitability?
The value of a law firm involves much more than fee revenue. Many law firms mistakenly focus only on the revenue of the lawyer or law firm that has approached them. A strong gross revenue figure can disguise chronic inefficiencies in the firm’s internal operations, especially in low-margin practices that require high volume. The focus should always shift quickly to profitability—by practice area, client segment, and office. A realistic profitability analysis helps prevent acquiring another firm’s problems and ensures that any combined structure enhances, rather than dilutes, economic performance. Asking and answering this question can produce substantial benefits for both firms, even if they do not combine.
How responsive is the other firm?
One of the earliest signs of a productive combination is how promptly and transparently both sides respond to requests for information. Delayed replies, incomplete data, or inconsistent answers suggest possible cultural mismatches or deeper management issues. A lack of responsiveness might also be part of a weakness in how the other firm responds to their clients.
Can we make reliable, well-supported projections about possible synergies?
Do we really know what we could do together? Past performance may explain where each firm has been, but it says little about where both could go together. Decision-makers should apply disciplined scenario modeling to estimate how synergies—such as shared clients, lower overhead, improved leverage—might actually translate into financial results. Overly optimistic projections — or overly pessimistic ones — based only on past performance can undermine credibility and confidence. Well-informed, realistic, data-grounded forecasts build them.
A structured, consistent approach to these first five questions gives leadership teams the confidence to decide whether the opportunity deserves further discussion—or a polite decline. The goal is not to move fast, but to move wisely, guided by facts and grounded in sustainable profitability.
What if you’re a “seller?”
Many of our client law firms are small law firms, some of whom a looking for opportunities to integrate with another firm. These questions are highly relevant to prospective “sellers,” as we advise our clients to answer them at the start of the process, not later. You The ability to present clear, fact-based answers to each of them will greatly enhance the probability of a successful outcome for both parties.
How we can help your firm to ask the right questions and evaluate the answers
For more than 23 years, Walker Clark LLC has been advising law firms of all sizes — both “buyers” and “sellers” — in evaluating, negotiating, ane implementing merger, acquisition, and lateral hire opportunities. Our methodology can help your firm to separate promising opportunities from risky distractions and build a strategy focused on long-term performance and sustainable profitability. We will also help you to develop standard processes to make well-informed decisions about other potential opportunities in the future. Use the confidential e-mail link at the bottom of this page to contact us to schedule an initial complimentary discussion, or click here to read more about Walker Clark’s services to law firms considering growth opportunities.