Law Practice Succession Planning – Set Your Goals and Take The First Step.
The reality is that every lawyer at some point in time needs a plan for when he or she steps away from the legal field and the options for buying or selling a law practice should be considered. 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.
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. If those options are being considered in your exit or growth planning, then know your personal and practice goals and get ready to take that first step.
Set Your Objectives
The most important question: “What are my exit or transition objectives?” In looking to sell, transition, merge, groom the associate or even in buying a practice for growth, there are right reasons and there are wrong reasons. Any attorney must first reflect on his or her practice and determine if it is ready for such a transition or acquisition. Is now the right time, or is it better to put the plan in place for a transition or acquisition down the line?
Openly, you must first establish your objectives, weigh the costs and potential benefits, and then strive to determine the best path for your sale or purchase that has given those goals. And while personal aims may differ, in preparing a transition plan, it can be helpful to consider the following goals and rewards of practice transition planning:
– Better Prepare Practices for Change – Promote Lawyer Focus on Client Value
– Preserve Client and Practice Goodwill – Provide Alternative Growth Options
– Provide Exit Strategies – Continuous Service to Client
– Promote Mentorship – Increase or Expedite Retirement Options
Where to Start?
- Look Around. Regardless of whether you are looking to sell your practice or acquire another’s, the first step in any transition is to look at your practice and determine if it is in good order and capable of sustaining a transition. Focusing on how one will perceive your practice’s value or considering the potential of doubling your client matters overnight is great motivation to help you tackle those lingering items you have wanted to address for years.
- Put Your Team Together. Next, continue your education on getting ready to sell or buy by seeking assistance. This includes putting together your transition advisors, which typically include your CPA, financial advisor, insurance advisor, valuation expert and law practice broker. Yes, a law practice broker. This type of advisor focuses on the buying and selling of law practices, bringing guided expertise to navigate and exploit the marketplace even when you can’t see the for-sale signs. Confidentiality is key, so contacting and engaging someone to act on your behalf, but properly, helps make sure the transition is successful for all involved.
- Set Specific Goals. Once you have your team in place it is time to start developing your strategy for selling, buying, merging, or other transition. Set and review your goals and define your desired transaction terms; and, then your practice broker will confidentially seek out and search potentials as well as sort through the non-opportunities.
When to Start?
Now. Time has a way of working against us, especially in the legal profession where time is our typical exchange for compensation. Don’t be the lawyer who forgets to focus on his legal contingency plans when advising clients of the need of their own. Take the time today to jot down some of your objectives for a potential transition, whether selling or buying, and some tasks to do tomorrow to see what options are out there for you. Seek a resource to help you with your best next step.
A Law practice has transferable value and that value can provide options to an attorney looking to exit his or her practice or to gain the goodwill of another. Knowing your options and the likely financial outcome can greatly impact your professional and personal finances and can also provide tremendous opportunities for those firms or lawyers looking to see continued client service through a transition. Recognize that these options exist and begin exploring which may be best for you today.