Do you want more leads and clients but feel that there’s no one new left to service in your area? Wondering whether opening an office in a new location is the best way to grow your law firm?
Let’s face it; there comes a time when expanding geographically is the only way to continue growing. You’ve dominated the current market already, after all. You’re the first choice for clients in your area, and there seem to be no more leads for you to win over.
It looks like the only place to find new clients is elsewhere, right?
Unfortunately, expanding geographically takes more than just opening a new office in a new location. First, you must be absolutely sure that it is the right time for your firm to undertake such a risk. Second, you must be certain that the new location can generate enough business quickly.
In this guide, I’ll help you figure all that out and more. I will show you everything that’s involved in opening new offices for a law firm. I will also help you decide whether it’s the right time for you to expand to a new location.
But let start with something else…
What is a geographic expansion?
Geographic expansion is an internal growth strategy in which a business accelerates its growth by expanding from its original location and opening a presence in another area.
In most cases, the primary driver for expanding geographically is to access new markets.
That said, businesses might also choose to open new locations to reduce costs associated with servicing distant clients, tap into a new talent pool, or even find new sources of leads.
Does it work? Absolutely! I mean, if done well, of course. But, unfortunately, for every successful market expansion, about four fail. Here’s why:
- Expanding prematurely or being overly optimistic in evaluating the new location’s potential might put your company at serious financial risk.
- Similarly, the new location might not turn out to be the fit you thought it was. Granted, the market is there but there mightn’t be enough demand for your particular area of expertise.
- Your company might not be in a position to scale.
- The new market might already be dominated by the competition too.
So, how do you know when is the right time to open a new office?
When to consider geographic expansion?
Here are the most common scenarios when law firms begin considering expansion:
Reason #1. To cut the distance between them and potential customers
It’s a common scenario, actually. Even though a new lead may seem like a perfect fit, the distance between your office and them or the court might result in losing the opportunity.
Why? Because distance is a serious concern for most clients. According to one study, 41% of customers would travel 30 miles to visit a law firm. However, only 6% would journey 120 miles to see their lawyer.
In such a case, it might make sense to add a satellite office and capture that portion of the market.
Reason #2. Because the company seems ready for expansion
You may also feel that there is high enough demand for your services in other locations, and you want to avail of them.
What’s more, because you have processes and playbooks to deliver services fast and efficiently in place, you know that the expansion will not be a burden.
Reason #3. The desire to tap into new markets
Finally, you may have been getting great results in the current location. You have dominated the market and enjoy a strong authority and position. Now you want to attract more specific clients, but unfortunately, you’ve exhausted your current location.
Extending your reach might be the perfect way to access the market where those people are and grow the business.
But there is the problem – Despite thinking otherwise, most companies aren’t ready to expand geographically.
For many law firms, the decision to open in new markets might be far too premature, and that’s for several reasons:
There might still be opportunities to grow the firm in the original location.
We often see companies considering expanding geographically before they’ve even reached the outer limits of their current location.
Here’s the thing – Reaching and servicing those customers is cheaper than building a presence in another location.
What’s more, if you can service some customers virtually, then you can expand your reach without a need for opening new offices.
The firm does not have a strong market position in the current market.
Adding another location might seem like a good idea to grow, but, in this scenario, doing so might only dilute the company’s authority and positioning.
We see this problem quite often too.
Only recently, a client came to us wanting their firm to grow. They were certain that the only way to achieve this was through expansion to another location. However, when researching their situation, we quickly discovered that they didn’t need another location. Instead, they needed to increase the authority of the main office, improve the brand positioning and recognition, and build authority in the market.
And we were right. Some basic tweaks in the company’s positioning resulted in expanding the service area into a larger market, more leads, and more new cases.
Finally, the firm might not be in a good position financially to expand.
An expansion can decrease your firm’s profitability for quite some time. So, unless the company is in a position to cover the costs, I’d recommend holding off.
We always advise clients not to initiate the expansion unless they have a budget to support at least six months of decreased profitability and additional costs associated with managing the new location.
Other questions we ask clients considering geographic expansion include:
- Do you need to have a physical presence in a new location to serve it? Perhaps a staff member lives close to that location and could work remotely, servicing it once a week?
- Are your client relationships based upon direct contact and communication? To what extent are interpersonal relationships crucial to the maintenance of these clients?
- Would the firm be better served by utilizing technological resources instead of physical location expansion?
- Are there marketing disadvantages to not having a physical presence even if the firm can serve the client’s legal needs with a local presence? For example, could the firm lose out on opportunities?
Of course, in many cases, answers to these questions lead to the decision to expand.
And in that case, the next step is to choose the new location.
How to choose a location for your new office
The most common question we hear about choosing a new location isn’t actually where to expand. Instead, most clients want to know how far should the new location be from the existing office.
That’s a sensible question. However, as you’ve seen from one of the examples I shared above, you can sometimes expand and serve nearby locations from the main office.
There are two approaches to answer this question – By looking at staffing the office and marketing.
For marketing, local SEO, specifically, I wouldn’t recommend opening a new location anywhere closer than 20 miles from the original location.
Twenty miles is a radius you can easily cover with local SEO strategies and attract customers and leads. Plus, as you’ve seen in the research quoted above, the distance is well within the range of how far customers are willing to travel to a lawyer’s office.
If you plan to attract customers who reside further than 20 miles from your current location, opening a satellite office would make sense.
Staffing the office. This is another consideration worth making. If you have employees living in another city area, the new location can be driven by their residence.
For example, your staff could work from home initially for a couple of days a week. This way, they could meet and work with clients from their location. This would allow you to test the waters and evaluate the market potential of the new office without having to face large upfront costs.
How to select a location?
Outside of these two considerations above, you can choose several other approaches to select the new location:
#1. Buying an existing law firm in a nearby location
Here’s an interesting fact – According to Grapevine magazine, 41% of mergers that happened between 2011 and 2014 in the legal industry were driven by geographic expansion. Further, 34%, as the article states, were driven by both geography and practice needs.
This means that almost all companies considering expanding geographically chose to buy an existing law firm in another location rather than opening a new office there.
But it makes sense, doesn’t it?
The existing firm would have some position on the market, a client base, and premises. In addition, they’d be known to potential clients in the area and, most likely, would be generating at least some revenue.
All this would, theoretically, reduce the initial cost of opening a new office.
Granted, in many cases, such firms wouldn’t be profitable. But a new owner, with their processes and market position, could close the gap between the current situation and profitability faster.
#2. Targeting market size
Another strategy is to look at the population data and select a location based on the density of your target demographic in the area.
In this approach, you are driven not by the potential of shortcuts and lower expansion costs. Instead, you select a market that could support the firm’s aggressive growth expectations.
#3. Targeting gaps in marketing competition
The final method is to look for gaps between your firm’s online authority and the competition in a desired new location.
The goal here is to find a location where the gap is severe enough that with an aggressive SEO and marketing strategy, you could position your firm at the top within six months.
In practical terms, it means that the competition in the potential location isn’t strong enough so that a new company couldn’t break into the top local search results in a matter of months.
Selecting a New Location – Examples
Example 1 – Using distance data to establish market potential
One of our clients, a firm located in Northwest, was looking to expand. We analyzed the potential in nearby markets and discovered that:
- There are many nearby locations close to large cities – Portland and Vancouver. These locations, we identified, could be easily staffed with employees on a split-week basis.
- There are locations around 40 miles south of them with populations large enough to support the company, should it open a new office there.
- We’ve also found other locations, about 60 miles south, that would support the firm but wouldn’t cannibalize the base office.
Example 2 – Using SEO to expand base office’s reach before selecting a new location
Another client felt that their firm has saturated its local market already and was looking to expand. However, upon quick investigation, we discovered that their organic reach is still limited, with many areas not covered well with advertising and marketing.
The client was looking to open an office about 15 miles from the current location.
After working on their local SEO for 45 days, we expanded the base office’s reach and gained full coverage in areas the client wanted to expand to with a new office.
The result? The client can service their original target area from the base office, while we’ve identified a better potential location 45 miles south.
Interested in Exploring New Locations and Expansion Possibilities?
At Envoca, we specialize in guiding law firms in successful expansions to new locations.
With our help, you will identify and launch additional offices, expand your regional and multi-state law firm into a national firm, and boost the reach of your practice.
What we bring to the table:
- Practical and proven recommendations to develop new revenue with geographic growth, based on over 15 years of experience.
- Digital marketing support to boost your growth strategies in new markets
- Advice on the strategic trends and developments in the law firm markets in the United States
- Full support in successful expansion, guidance, and information on practical approaches to reduce costs, please clients, and improve efficiency.
Get in touch; we’d be delighted to review your expansion plans with you.