Finding inexpensive or affordable solicitors to act for you in the sale or purchase of a law firm or accountancy practice can be quite difficult.
Solicitors’ firms are set up to do commercial work, but the profitable commercial work is for large businesses and multinational PLCs and definitely not acting for SMEs!
This means that very often you will be quoted hourly rates to complete the legal work needed to make a purchase of somewhere between £350 and £450 per hour, which on a small sale or purchase of a firm valued at around £30-40,000 can actually result in you paying almost half the cost or sale price in legal fees.
You can undertake your own due diligence if the deal is smaller sized and this will almost certainly speed things up dramatically and cut your costs considerably.
We usually offer clients a few alternatives. Firstly, we can recommend a Legal 100 law firm who have extensive SME M&A experience for an hourly rate in the region of £400 per hour. For larger, more complex deals, this can be very good value for money.
We can also recommend a couple of specialist SME M&A lawyers who will charge around £185-300 per hour to provide the requisite advice.
Finally we offer in house lawyers at a rate of £75 per hour.
Conventional Law Firm Option £400 per hour
The first option is to use a conventional law firm with a team of M&A solicitors experienced in the sale and purchase of SMEs and with the manpower to be able to move extremely quickly where required, including on any commercial property purchases, sales or leases to be assigned. The hourly rate for this is often c£400 per hour, possibly higher depending on the deal and the time frame the deal is taking place in. This is with a firm we can recommend you to; compared with other firms and teams of similar size, this is a surprisingly cheap option for using a conventional law firm with the expertise and manpower to be able to assist, and so is probably recommended for larger firm sales where there are complexities and you do need someone who knows what they’re doing with all aspects of the deal. Also relevant where a deal needs to be done quickly. Contact us to request a referral.
SME Specialist Option £185-300 per hour
The second option is to use a specialist for SMEs but someone who will be working on their own as a consultant via a solicitor’s firm. The cost of this is usually somewhere around £185 to £300 per hour. The difference between this one and the first is the time it will take the solicitor to complete the deal. With this arrangement you will be working with a single solicitor and totally dependent on their availability to complete the work. Furthermore, if there are different aspects to the deal that need additional expertise then you will need to pay for those specialists to come on board as well, and this may well slow things down further. If you want to use this service please drop us a line and we will refer you.
Interim Lawyers Platform £75 per hour
The final option is to consider using an in-house lawyer to provide you with legal advice on a non-liability basis. As M&A work is usually non-regulated, you do not need to use a solicitor’s firm to complete it for you. This means that you can actually take advantage of having your own in-house lawyer providing you with advice.
The way this works is that you use our Interim Lawyers Business Lawyer platform, and it is done on a pay as you go basis.
The major catch with this particular option is that you have no recompense if there are any problems with the advice you are given. The lawyer will be acting on an in-house basis and will not accept any liability for the advice they give you. So, in essence, you are sacrificing the ability to be able to sue your professional adviser for negligence in return for low-cost legal advice.
Typical Legal Process for Business Purchases
The process of selling or buying a law firm usually involves the production of the heads of terms and then a subsequent business purchase agreement, asset purchase agreement or share purchase agreement. Each time one of these documents is produced, you simply send it off to the interim lawyers platform and we will provide you with a time estimate. If you are happy with the time estimate for completing that particular review of a legal document, you pay up front for those hours, the lawyer completes the review, and the work is returned to you.
So, there we have it – three options for getting legal advice in relation to the sale or purchase of an SME law firm or accountancy practice. Each one is different, and each sale or purchase has separate issues relating to it, which will dictate which one of the options is the most suitable for you.
Any questions? Contact us.