Specific Things to Remember When Selling Your Law Practice. While many different considerations are leading up, during, and after the sale process, here are a few to which you should pay particular attention.
Valuation and Increasing Purchase Price. It is common to value our work. It is particularly true for business owners, and lawyers are no different. As such, we may be prone to overvaluing the business.
Unrealistic or unsupported sales prices can hamper or outright quash a deal. So it is typically a good idea to bring in a valuation professional to accurately value the practice.
However, it would be beneficial to review some of the critical factors of valuing a practice. These include historical financial performance and growth, reasonable expectations of future revenue, likelihood and extent of repeat clients, geographic location of the firm, a saturation of practice areas in the local and regional marketplace, and others.
Many factors come into play, so getting a formal opinion from a valuation consultant will almost certainly benefit you in the long run. But make sure you know about your practice’s valuation prospects.
Insurance Considerations. Coverage details will likely be a pivotal point in the sale transaction deal. Maintaining proper coverage is vital due to the nature of legal malpractice insurance coverage.
Coverage details will likely be a critical point in the sale transaction deal, with the seller’s responsibility probably taking the form of “tail” coverage, which provides a certain period of extension of coverage for claims made during the original life of the policy.
Ethical Considerations. As an attorney, you are subject to a myriad of legal and ethical duties on an ongoing basis. That doesn’t change just because you sell your practice!
Rule 1.17 of the North Carolina Rules of Professional Conduct is the seminal authority on your responsibilities during and after this process, laying out certain conditions precedent the ability to sell and providing guidelines on the post-closing transition.
Make Sure You Are Ready. Selling your practice can be very draining: mentally, emotionally, physically, and financially. It is important, therefore, to make sure you are ready, on all of these levels.