Have You Saved Enough To Exit Your Law Practice?
Most attorneys made their law practices their largest source of income for themselves and their families. The dependency on that income may become less over the years, but there is always the question of what things would look like if the law practice salary, profits, and benefits ceased upon retirement.
For attorneys who find themselves asking the question of whether they still need the practice, there are a few ways to reduce this dependency and ensure your long-term financial security.
- The first step is to get a clear picture of your total personal financial situation. What do spending and savings look like post-law firm ownership? Is there a gap in needs with what you have saved?
- Get help from your financial advisor or retirement planner to make sure there is a gap that you can fill with income or from the sale of your law practice.
- Look at life after given your spending, giving, and other financial expenditures to determine how many are provided by the business and which you will be responsible for personally. It may make sense to stay with the new practice owner or firm for longer after closing to receive health insurance or other benefits for of-counsel work.
- Remember that your law firm can provide financial benefit to you even after your ownership or retirement through a sale, merger, or other sale-type transaction, but you need to take the steps early to plan to do so. We can help!
Overall, this analysis can be done fairly quickly with the right help and should be done regardless of your desire to sell or exit in the immediate future. Knowing your number and any gap in funding your goals will help you have confidence in preparing the timeline for transition and those financial goals needed for the value of the practice upon sale or otherwise.