Buyer Financial Pre-Qualification – What, Why and How?

You’ve decided that it’s finally time to take the step and move forward in exploring a purchase of a law firm. You have located one or a few potential law firm listings that you think may be the right choice for you or your law firm’s needs and you are ready to get things moving. However, there is one thing you should do before diving into a review of the law firms, financials, calls, and meetings to see if one is the right opportunity for you –  you should get pre-qualified for the purchase of a law firm. What Is Pre-Qualification? If you’ve ever gotten a home mortgage before, you may already be familiar with the process of pre-qualification. Pre-qualification is a preliminary commitment from a lender to give you a set amount of money that you can use to fund the purchase. The lender will supply you with a pre-qualification letter or document that you can present to brokers or to sellers when you reach out expressing interest in the law firm(s). Why Get Pre-Qualified? If you are going to require financing for any portion of the purchase of the law firm, it is crucial to get pre-qualified before you take any further steps. Even if your needs are only for working capital and not related to the acquisition price of a firm you would still want to make sure that key piece to the equation can be fulfilled. Doing so at the beginning of your search will provide a number of benefits: Saving Time – By applying for pre-qualification, you’ll know up front whether or not you’ll even be able to obtain a loan of the type, the amount or for the purpose needed. In the event that you can’t obtain pre-qualification with your current lender due to that lender’s industry focus, you’ll have time to connect with a lender which is focused on law firms and move things forward for you as needed. More Focused Search – Your pre-qualification will let you know precisely how much you can spend on the purchase of a law firm and what works for your goals, needs and overall financial risks.  As a result, you’ll be able to focus on the law firm that you can afford. The improved focus will make for a more streamlined search process and help you find the perfect law firm to buy much faster. Expanded Options – Some prospective law firm buyers are pleasantly surprised by their pre-qualifications and find out they will be able to afford a different scale of law firm than they anticipated. Once you know how much you will be able to borrow, you may be able to expand your search to more profitable or larger law firms that may be better fits for you or your firm in the long run. Credibility – Having a pre-qualification letter from a lender will show sellers that you’re the real thing. By establishing financial credibility from the start, you’ll be in a better position to negotiate. When sellers take you seriously, they’ll be more cooperative and eager to work with you. How to Get Pre-Qualified? To get pre-qualified, you’ll need to approach lenders and complete an application. Lenders may want to see proof of income, bank statements or tax returns, so it’s helpful to have those documents together. If you’re looking for assistance with pre-qualification or want to line up your next steps so that you can begin searching as soon as you have your qualification paperwork, The Law Practice Exchange can help! Contact us today and we can provide law firm marketplace lenders and other resources to help you expedite this process.

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What Does Buying a Law Firm Mean?

What does buying a law practice really mean? The marketplace for selling and buying a law practice is still young as compared to some of the other professional business marketplaces (dentists, CPAs, etc.). So, it’s not surprising that we often get questions from those attorneys looking to transfer their practice and wind down (the “sellers”) and those attorneys who are looking to grow or expand through purchase or acquisition (the “buyers”) on how the structure really works when buying, acquiring or purchasing a law practice.  As with anything which involves lawyers and our ability to be creative in structuring new ways to approach a common problem the answer is, of course, it depends on the situation and the parties involved. However, there are some common elements to know and consider depending on what type of seller and buyer is involved that you may want to know and consider. To a Seller… Who is a solo practitioner or sole owner? It is typical that the marketplace will provide two types of potential successors or buyers for a solo practitioner or owner – individual attorneys and other law firms.  The Individual Attorney Buyer- The individual attorney is looking for firm ownership and the opportunity to take over established systems, clients, and the revenues and profits that come with them which you have built over the years in your practice.  Focus – The individual attorney is typically focused on the earnings of your firm as they would be considering what they would make if they took over and put themselves in your shoes to do the work (salary) and own the firm (profits). Typical Structure – It would be typical that the individual buyer would look to purchase all the assets or all the equity of your firm under agreed-upon terms and the structure would be seen more as a new partner joining the firm which you would begin introducing and working with to transition clients, referrals and other areas to over an agreed-upon timeline. To the outside, the firm name may change by the addition of this new partner, and clients and others see it as a continuation of the firm with this next generation.   The Law Firm Buyer – With solo practitioner or owner sellers it is common that other small law firms would also be interested in purchasing or acquiring in order to increase their client base, overall revenues, and/or expand their geographic reach and practice areas. Focus – The small law firm purchasers in this situation are typically focused on overall revenues that would be gained as well as how to provide for the transition of management and clients from the seller to the attorneys within their own firm. Typically, they are less worried about your systems as they have most of those in place within their own law firm.  Typical Structure – Structures seem to vary quite a bit, but the most typical would be internally structured as an asset purchase upon agreed-upon terms with it publicized and structured as a merger of the firms or a joining of the seller to the buying firm. It would be typical that the firm name would change or the buying firm’s name would be the sole to continue with the seller attorney being added as a non-equity partner or of counsel.        … Who is a small partnership. Typical partners for sellers who are small partnerships are other small to medium law firms who are seeking growth through acquisition and larger law firms who are looking for lateral groups to join their existing firm and overall structure. Small Partnership Buyer – Other smaller to medium law firms are always looking for opportunities for growth in existing practice areas and for ways to expand their reach or maximize revenue per client relationship by expanding into new geographic and practice area markets. Focus – These firms are usually focused on revenues generation as compared to the earnings of the firm. Key questions will usually revolve around clients, ability to transition to a new firm, and overall costs and desired financials from the transaction. Typical Structure – Most of these will be done as a merger with the potential to have some purchase or acquisition price paid for the transfer of goodwill value and/or joinder of the firms. However, it would be typical that compensation after a merger would play a material part in how clients and overall goodwill is paid for overtime to the seller. The seller would want to focus on a transition plan during due diligence to make sure clients can and will transition to the new firm as desired to ensure compensation after closing.   Medium/Large Firm Buyer – Established law firms with multiple offices and existing practice areas to what sellers may offer are also looking for good opportunities to increase their client base in those areas. This allows them to maximize their existing attorney and other firm resources by acquiring more client relationships.  Focus – Typical focus for this type of firm would be the types of clients or practice areas, overall billing, and revenues and what a transition plan for the seller would look like and would it be successful.  Typical Structure – Some may be promoted as acquisitions, but it would be common for most of these purchases to really be a lateral move with negotiated and agreed-upon compensation structure. That structure may have a bonus or ‘goodwill’ component for security to the seller, but most of the value to the seller will come from the compensation and bonus structure agreed to after closing.      … Who is a larger partnership or established firm – In the scenarios where because of lack of successor options or other motivators a larger or more established partnership or firm is seeking to transfer the value they have built the most common element would be a merger with another firm of comparable or larger size. Focus– Similar to the notes above when a larger firm would acquire a smaller partnership the focus will truly be on overall clients, revenues

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Should I Buy or Start a Law Practice?

Law Practice Startup or Acquisition? Attorneys today are looking at more options for practice growth and expansion than ever before. Due to continually increasing challenges in the legal profession and an abundance of the attorney workforce for hire, the competition in certain practice areas or specific geographic markets is sometimes too burdensome to consider starting a new law firm location or a law practice from scratch. A history of proven financials, ongoing client matters, phones that continuously ring, and systems and knowledge built to serve those clients successfully all lead to the appeal of buying a law practice compared to stepping into the unknown of the startup world. THE PROCESS 1. Self-Assessment. Is now the right time for you to take on more work and responsibility? Are there things in your personal life or your current firm’s structure that could benefit from such additional time instead? 2. Get Help. Even though you are an attorney, this isn’t something you go through every day. It is a unique process, and having the right advisors from step one can ensure the transition is successful and missteps are avoided. Assemble your advisory team and connect with a qualified law practice broker (we know a good one) to help you get started and understand the platform. 3. Consider Opportunities. The law practice marketplace is mainly hidden due to confidentiality concerns. It’s happening all around you, but most transactions go unnoticed. To look for the opportunities that are out there, contact a law practice broker sign a confidentiality agreement, and get preliminary information on potential firms that may be a fit, including their financials and overall characteristics—still interested? The practice broker will then coordinate an initial conversation with seller(s) to discuss how transition may work, get questions answered, and get an overall initial comfort level that could be a success. 4. Get Engaged. After some discussions and review, if you and the owner of the practice think it may be a good fit, then it is time to agree on the financials of the transaction and how they will be paid, transition plan details, and other vital aspects of the purchase transaction. Once these are agreed to, then due diligence continues as you work towards closing. This is also typically when you and the seller will work out the details on transition plan specifics, and you complete any due diligence review of the selling firm with your advisors. 5. Closing & After. Just like in other business sales and acquisitions, a day will be chosen for the ownership to change, and the purchase and ancillary agreements are executed along with the financial exchange. At this point, you should feel confident about what post-closing looks like and your plans for transition success. THE QUESTIONS 1. What’s The Key to Success? If you think buying a law practice is an option for you, then understand that the buying process and transaction are vastly different from other types of non-law firm business purchases. The key to success lies in a well-prepared transition plan for the selling attorney(s) in the law practice world. A law practice (and its value) is so closely tied with the individual owner(s) or partner(s) that the success post-closing of a transaction will be achieved in the details and structure of that transition by the seller(s). Ultimately, you will want to know that you and the selling attorney agree on the goals of the transition efforts, the time required, and the benchmarks of a successful plan as it is implemented. Overall, the goal in any practice acquisition is that the selling attorney remains or becomes part of the buyer’s practice post-closing. 2. How to Value? The value of a law practice is typically calculated based on historical cash flows and adjusting for several factors personal to the seller or that practice and deal terms that impact value (shorter transition timeline, etc.). The sale price and practice cash flows should be reviewed during the due diligence period to ensure the selling price is justified and the payments are sustainable with your projected future cash flows. Make sure a law practice broker or CPA knowledgeable in this area is providing this opinion and taking into account the critical value-drivers of law practices and the expected post-transition retention. Net income may be a great line item to use in determining the purchase price, but the cash flows post-closing are the real determining factor of whether it makes financial sense for your acquisition plans. A law practice broker or CPA can show you how those two can match and make it a win for both sides. 3. How Does Payment Structure Work? Payment structures for law practices vary almost as much as the prices themselves. Overall, the most typical is for you as the buyer to finance or pay a certain amount at closing and for the seller to invest some or structure the remaining portion as a percentage of revenues earned over time. This allows buyers and sellers to share the risk, focus on making the transition plan a success, and enable buyers to have immediate income from the practice. An abundance of cash on hand is not typically the norm for younger attorneys, so considering all financing options with lenders and payment structures is vital. For more established firms or attorneys, cash may be more readily available, but some form of a seller earnout is typically still desirable. IS IT THE RIGHT CHOICE FOR YOU? The law practice succession marketplace is still young. Still, current opportunities are present (and more are being added every day) for those attorneys ready to take advantage of the benefits of purchasing a practice. While success and growth are certainly not guaranteed to follow, a well-thought-out and implemented purchase can go a long way toward achieving these critical goals. Careful planning, thorough due diligence, and some hard self-evaluation, should always be performed before you make the commitment required in buying a law practice. It is a unique process, and having the

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Looking for Law Firm Growth? Consider Buying a Law Practice.

Purchasing an existing law firm may be ideal if you are looking to grow your existing practice or law firm, or if you are an in-house or a lateral looking for immediate stability in revenues along with the flexibility and independence that comes with firm ownership. The upward climb from starting from scratch to sustainability may be too great or too financially risky. Where attorneys once locked the front door when they were ready to retire, today they are instead looking to sell or transition their practices to maintain the value that has been built and demonstrated by the ringing phones, systems, clients, firm reputation and overall practice knowledge base. Check out our current listings here: https://thelawpracticeexchange.com/listings-sale/ THE BUYING PROCESS 1. Self-Assessment.  Is now the right time to take on the work and responsibility associated with buying a firm? Is there anything in your personal life or your current firm’s structure that could benefit from additional time instead? As a buyer, what would be a good fit for you or your practice in terms of practice area(s), size, location, culture, etc.? 2. Get Help. While you are an experienced attorney, this isn’t something you go through every day. It is a unique process and the right advisers can ensure the transition is successful. Assemble your advisory team and connect with a qualified law practice broker (I know a good one) who understands the unique nature of law practice transitions as compared to other business transitions. 3. Consider Opportunities. The law practice marketplace is mostly hidden due to confidentiality concerns. Most transactions go unnoticed. To discover firms for sale, contact a law practice broker, complete a confidentially agreement, and get preliminary information on potential firms. The broker will coordinate initial conversations with seller(s) to discuss how transition may work, your questions, and to get an overall initial comfort level. 4. Get Engaged. If you and the current owner believe it’s a good fit, you’ll need to agree on the value of the law firm, the structure of the transaction, transition plan, and other important deal terms while conducting due diligence. 5. Closing & After. A fixed date will be chosen for the ownership to change and the purchase and ancillary agreements to be executed along with the financial exchange. At this point you should also feel confident about the post-closing plans for a successful transition plan with the transferring attorney. THE STEPS 1. What’s the Key To Your Success? It’s a well-prepared transition plan for the buyer and seller. You both will need to agree on the goals of the transition such as the time which will be required of the seller, and the benchmarks of a successful plan. Your goal in practice acquisition is for the selling attorney to remain or become part of the buyer’s practice post-closing. 2. How To Value?  The value of a law practice is typically calculated based on historical cash flows, adjusting for factors personal to the seller or that practice as well as deal terms that impact value (shorter transition timeline, etc.). The sale price, and practice cash flows should be reviewed during the due diligence period to ensure the selling price is justified and the payments are sustainable with your projected future cash flows. A law practice broker or CPA who is knowledgeable in the buying and selling of law firms can be vital in assessing the key value-drivers of a law practice along with the expected post-transition retention. Net income may be a great line item to use in determining the purchase price, but cash flows post-closing are a more accurate way to ascertain the firm’s value. As well, consideration of tangible asset value, accounts receivable and post-closing seller compensation should all be considered and calculated. 3. How Does Payment Structure Work? A typical payment structure is for you as the buyer to finance or pay a certain amount at closing and for seller to finance some or structure the remaining portion as a percentage of revenues earned out over time. This allows buyer and seller to share the risk, focus on making the transition plan a success. For younger attorneys, an abundance of cash on hand is not typically the norm, so considering all financing options with lenders and payment structures is key. For more established firms or attorneys cash may be more readily available, but some form of a seller earn-out is typically still desirable. IS IT THE RIGHT CHOICE FOR YOU OR YOUR FIRM? Success and growth are not guaranteed if you purchase an existing practice.  Careful planning, due diligence, and self-evaluation should be performed before you buy a law practice. It is a unique process and having the right advisors can help ensure the transition is smooth and successful. Tom Lenfestey Attorney/CPA at NC Planning and Accredited Business Intermediary at The Law Practice Exchange, LLC. Tom Lenfestey, Attorney, CPA, ABI with The Law Practice Exchange LLC. Tom Lenfestey is a managing The Law Practice Exchange LLC member and a North Carolina attorney and CPA. The Law Practice Exchange aims to curb the lack of knowledge in the profession by educating and advising attorneys on the number of different options available in the legal marketplace for a succession of law practice and also serving as a confidential adviser to seek and provide connections for those right opportunities between an existing attorney and a growth-focused attorney or firm. Contact The Law Practice Exchange at (919) 789-1931 or info@TheLawPracticeExchange.com for a confidential conversation. Posted in Articles,

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Acquiring a Law Firm May Be Smarter Than Starting From Scratch

Purchasing an existing law firm may be ideal if you are looking to grow your existing practice or law firm or if you are an in-house or a lateral looking for immediate stability in revenues along with the flexibility and independence that comes with firm ownership. The upward climb from starting from scratch to sustainability may be too great or too financially risky. Where attorneys once locked the front door when they were ready to retire, today they are instead looking to sell or transition their practices to maintain the value that has been built and demonstrated by the ringing phones, systems, clients, firm reputation and overall practice knowledge base. THE PROCESS 1. Self-Assessment. Is now the right time to take on the work and responsibility associated with buying a firm? Is there anything in your personal life or your current firm’s structure that could benefit from additional time instead? As a buyer, what would be a good fit for you or your practice in terms of practice area(s), size, location, culture, etc.? 2. Get Help. While you are an experienced attorney, this isn’t something you go through every day. It is a unique process and the right advisers can ensure the transition is successful. Assemble your advisory team and connect with a qualified law practice broker (I know a good one) who understands the unique nature of law practice transitions as compared to other business transitions. 3. Consider Opportunities. The law practice marketplace is mostly hidden due to confidentiality concerns. Most transactions go unnoticed. To discover firms for sale, contact a law practice broker, complete a confidentially agreement, and get preliminary information on potential firms. The broker will coordinate initial conversations with seller(s) to discuss how transition may work, your questions, and to get an overall initial comfort level. 4. Get Engaged. If you and the current owner believe it’s a good fit, you’ll need to agree on the value of the law firm, the structure of the transaction, transition plan, and other important deal terms while conducting due diligence. 5. Closing & After. A fixed date will be chosen for the ownership to change and the purchase and ancillary agreements to be executed along with the financial exchange. At this point you should also feel confident about the post-closing plans for a successful transition plan with the transferring attorney. THE STEPS 1. What’s the Key To Your Success? It’s a well-prepared transition plan for the buyer and seller. You both will need to agree on the goals of the transition such as the time which will be required of the seller, and the benchmarks of a successful plan. Your goal in practice acquisition is for the selling attorney to remain or become part of the buyer’s practice post-closing. 2. How To Value? The value of a law practice is typically calculated based on historical cash flows, adjusting for factors personal to the seller or that practice as well as deal terms that impact value (shorter transition timeline, etc.). The sale price, and practice cash flows should be reviewed during the due diligence period to ensure the selling price is justified and the payments are sustainable with your projected future cash flows. A law practice broker or CPA who is knowledgeable in the buying and selling of law firms can be vital in assessing the key value-drivers of a law practice along with the expected post-transition retention. Net income may be a great line item to use in determining the purchase price, but cash flows post-closing are a more accurate way to ascertain the firm’s value. As well, consideration of tangible asset value, accounts receivable and post-closing seller compensation should all be considered and calculated. 3. How Does Payment Structure Work? A typical payment structure is for you as the buyer to finance or pay a certain amount at closing and for seller to finance some or structure the remaining portion as a percentage of revenues earned out over time. This allows buyer and seller to share the risk, focus on making the transition plan a success. For younger attorneys, an abundance of cash on hand is not typically the norm, so considering all financing options with lenders and payment structures is key. For more established firms or attorneys cash may be more readily available, but some form of a seller earn-out is typically still desirable. IS IT THE RIGHT CHOICE FOR YOU? Success and growth are not guaranteed if you purchase an existing practice. Careful planning, due diligence, and self-evaluation should be performed before you buy a law practice. It is a unique process and having the right advisers can help ensure the transition is smooth and successful. 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.   Posted in Articles,

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Rewards and Risks of Buying a Law Practice

Buying a law practice isn’t something that is commonly discussed, but if you haven’t considered the financial and professional opportunities that may come with purchasing a law practice it may be time to do so. Attorneys have been buying law practices, whether internal transfer (partner to associate) or external (firm acquisitions and mergers) for years, but the marketplace is continuing to build with more sellers looking to exit their practices for value and more attorneys considering the buying of a practice as a way to grow and solidify revenues in a constantly more demanding legal marketplace. Buying a law practice is probably one of the biggest decisions an attorney may make in his or his career. As a result, it is important to make sure the right information is gathered and the proper advisors are consulted before taking that leap. If you are moving in that direction of buying a law practice consider these rewards and risks as part of your evaluation: -Common Rewards  -Financial Freedom -Flexible Schedule -Sense of Accomplishment -Proven Practice Model -Acquire Trained Employees -Predictable Revenues -Geographic Expansion -Improved Systems and Process -Common Risks  -Financial Commitment -Failed Client Transition Plan -Management and Legal Time Capacity for Increased Workload 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.   Posted in Articles,

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Key Strategies for a Successful Law Firm Merger

4 Key Considerations to Buying a Law Practice

Where to start? If you are considering buying an existing law practice or buying out a retiring partner in your own practice, here are some key items to consider:  1. Make sure the practice is the right fit for you – Not just the practice areas, geographic location and financial needs, but review and consider: -Are the clients going to be comfortable with you and are you comfortable with the clients? -Are the revenues sustainable for how you would run the practice? -Are you going to be happy coming into the office each day? -What changes are required of the practice model, facility, and staff? Are you up for making those changes? 2. Do the financials work? – Have you had the practice valued by a qualified individual to make sure the cash flows and practice characteristics justify the purchase price?  3. Are you being objective? – Keep focused on getting the deal that you want on the right practice for you. Maintain your professionalism and be ready if one or more of the potential purchases do not work out at first. Competing purchasers or due diligence items may work to terminate a deal and keeping emotion out of it will help you regroup and move onto the next practice that’s right for you. 4. Get help! – You are an expert in your field. Now it is time to swallow your pride and get experts in the practice acquisition field. A law practice broker, a law focused CPA and yes, even an attorney, are all needed to advise you and make sure things proceed as needed. 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. Posted in Articles,

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Can You Really Buy or Sell a Law Practice?

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. Posted in Articles,

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5 Things to Consider Before Buying a Law Practice

5 Things to Consider Before Buying a Law Practice If you have been considering the benefits of buying a law practice in order to expand or grow your client base, be sure to ask yourself the following questions at the beginning of the process before going too far. Buying a law practice could be one of the biggest decisions an attorney makes in his or her career. As a result, it is crucial to prepare and make sure this potential purchase is right for you. IS NOW THE RIGHT TIME TO BUY? The first step should always be conducting an assessment of yourself and your firm when determining if you are ready to buy. A certain amount of confidence is needed in your strengths and the ability that you and your team can handle the transition and increased workload that will accompany the increased revenue stream. If you, the lawyer, and your law practice are ready, give some considerations to the personal aspects as well. Is this time right for you to take on more work, responsibility and risk? Or are there things in your personal life that should require such time? IS THE PRICE RIGHT? All law practices have value, but determining the exact amount of value is the real challenge. An analysis should be completed on the sale price and practice cash flows should be reviewed during the due diligence period to ensure the selling price is justified. Make sure someone who is knowledgeable in this area is providing this opinion and taking into account the key value-drivers of law practices. WILL THE SELLING FIRM’S CULTURE BE A GOOD FIT? If you don’t already know the attorney or practice, you will have the opportunity to get a glimpse of the firm’s culture throughout the due diligence period. Are there tenured employees or is there constant changeover? How much of the firm’s focus is on marketing for the future and getting clients as repeat customers? These and many other factors can help determine if it will be a good fit for you and your practice. IS THERE A DOCUMENTED TRANSITION PLAN? Whether the purchase you are considering is an internal transaction between attorneys of the same firm or an outside purchase, a documented and well thought out transition plan should be agreed on and a timeline should be specified. What transition goals should the exiting attorney focus on in the first few weeks? Next two years? Ultimately, you will want to know that you and the selling attorney agree on the goals of the transition, the time which will be required and the benchmarks of a successful plan as it is implemented. DO YOU HAVE ALL THE ANSWERS? You don’t. We promise you. Even though you are an attorney, this isn’t something you personally go through everyday. It is a process and having the right advisors from step one can ensure the transition is successful and missteps are avoided. Assemble your advisory team and connect with a qualified Law Practice Broker, your CPA and your Financial Advisor to help guide you through the process. Make sure these questions are asked and answered! 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. Posted in Articles,  

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