Law Firms Selling Off Ancillary Businesses
Many law firms are selling off their law-related businesses after finding they aren’t very profitable.
Law firm consultant Jim Jones of Hildebrandt International told the National Law Journal that he now gets as many calls from law firms about selling ancillary businesses as he does from those who want to form one.
“It’s never really proved to be a great bonanza for firms,” said Jones, who has written a book on ancillary businesses. “Most firms have probably realized that these are tough entities to manage.”
Back in 2005, Jones’ views were more upbeat. He told the NLJ at that time that he got about one call a month from law firms seeking information about starting ancillary businesses.
Among the firms that have soured on the idea is Holland & Knight, which owned a handful of ancillary businesses until 2003. General counsel Kinder Cannon told the legal newspaper that Holland & Knight’s businesses didn’t bring in a lot of revenue and some lawyers were uncomfortable with the entities. “There was this sense that we’re not doing what we do best, which is practicing law,” he said.
Bingham McCutchen has also sold an ancillary business, and Littler Mendelson is in discussions to do the same.
The ABA Journal wrote about ethics requirements for lawyers who refer clients to ancillary businesses in its November story, “Top 10 Ethics Traps for Lawyers.”
