Can You Really Buy or Sell a Law Practice?
Have you ever thought about your exit plan from your practice? Retirement, family demands, a new career, or some other career pursuit may be calling. But the typical question that holds many lawyers back from entering the next phase is, “how can I afford to live without the income and resources from my practice?” For many, there are retirement savings, alternative opportunities from a second career or other options available to replace practice income. However, few attorneys actually consider the option of selling their practice as the precursor to that next step or even know that doing so is an option. Selling a practice through a law practice transition can be a great way to benefit from the value built up over years of work. In addition, there are probably even fewer growth-focused attorneys who consider the potential of purchasing a practice as a way to grow client base, income and revenue streams, and overall firm health and sustainability.
The Reality Is That Every Lawyer At Some Point In Time Needs A Plan.
Thanks to life’s multitude of unexpected events, that time may be sooner than you think. And when you throw in the current state of evolution of the legal profession, it becomes more and more apparent just how important it is for each practicing professional to understand the challenges and opportunities that accompany this type of transition. For instance, do you have a succession plan? A practice continuation plan? If so, have you implemented such plan, put the tools in place or sought the counsel needed for implementation? If not, you’re not alone. Few lawyers, particularly, solos and small firm members, have a signed succession or practice continuation plan in place and many don’t think about it until too late to fully recoup the practice value.
With this state of flux in the legal world and the potential impact of major life events, the rules of law practice succession are still being rewritten. Gone are the days of whipping together a succession strategy, transitioning the clients to the next generation of lawyers, and sailing off into a retirement funded by the new partners at the firm. From big-firm shakeups to increasing client competition among small firms, lawyers today must contend with unprecedented financial, cultural, and marketplace changes and, as a result, each attorney must be open to transition strategies with a longer reach than those employed in the past. These broader and more modern strategies include realizing the value of a law practice through a sale or acquisition.
So, How Does One Go About Buying A Selling A Practice?
The knowledge of the process is somewhat complicated by the fact that law practice sales are nearly invisible to the public market. Look down the street and around town and you see house-for-sale signs everywhere. A quick web search yields any number of results detailing homes values and prices and identities of the parties involved. Established markets, like the residential real estate market, give the general public an excellent idea of how and for how much to buy and sell all sorts of items, including real estate, stock, and cars. Buying or selling a business (especially a law firm) is a different story; potential buyers and sellers need to work a bit harder to find and utilize the resources and opportunities available in the law practice marketplace.
Self-education is a good place to start. A potential buyer or seller typically doesn’t know whether any given attorney wants to exit his practice or buy someone else’s, what his practice looks like, what the process or the price to purchase or sell may be. Therefore it becomes important for any lawyer to put in some time, do some research, and learn the basics about the law practice marketplace, how it works, the resources available and how it may help a lawyer looking to transition or grow. Putting the right team of advisors in place is also an important step. The buying or selling of law practices isn’t new, but the approach and need to maximize the practice’s value through an active marketplace search and proper transition structure are setting new benchmarks for lawyer transition success stories.
The Law Practice Exchange aims to curb the lack of knowledge in the profession on law practice transitions by educating and advising attorneys on the number of different options available in the legal marketplace and also serving as a confidential broker and advisor to seek and provide connections for those right opportunities between an exiting attorney and a growth-focused attorney or firm. Find out more at www.TheLawPracticeExchange.com. © 2015 The Law Practice Exchange, LLC. Reproduction in whole or in part is strictly prohibited.
The information and advice provided in this publication is general guidance and is not necessarily specific to your individual situation, objectives or other needs. Make sure you seek a qualified expert opinion before proceeding with your transition objectives.