Law Practice Sale Tips: Check the Checklist off the Checklist. As most (probably all) legal practitioners know, a good checklist is a lifesaver when it comes to completing legal matters. That principle holds whether the matter involves suing on a faulty construction defect claim, administering an estate, or selling a business: especially when it comes to selling a law practice.
Your transaction checklist can mean the difference between a smooth, effective, and efficient closing and a deal that falls through due to an issue you didn’t think to check. There is any number of other factors that affect the deal, of course, but the checklist is a must.
The law practice sale tips will likely look substantially similar to checklists you may use in other M&A deals: it will involve many of the same general categories, including the following:
1. Putting the team together (CPA, Banker, Law Practice Broker, etc.)
2. Addressing financing requirements before closing.
3. Seller inspection matters, such as entity and financial review; asset inspection and review; due diligence for liens, judgments, and encumbrances; IP review; employee matters; licensing and permits; contracts, assignments, and third party consents; taxes; client information review; litigation and insurance issues; and other disclosure needs.
4. Definitive transaction agreement and ancillary document preparation and review.
5. Pre-closing actions.
6. Closing actions, including payoffs and verification of funds transfer, license and title transfer, utilities and service connections, and others.
7. Post-closing actions, including outstanding payroll and employee issues, retention of employees, verification of vendor transfers, and others.
The nuances and subtle differences between the sale of law practice and the sale of another entity, particularly involving your ethical responsibilities to your clients, will have an enormous impact on the transaction. Furthermore, with a law practice transfer, the selling attorney is most likely going to be engaged by the buyer for an extended period for goodwill and client maintenance, the association of a competent attorney in the practice area, and other ongoing practice needs.
Yes, in many ways the practice sale list is similar to the checklist you would see in other types of transactions, but on a much more detailed and intricate level that is directly impacted by the structure of exit chosen and the professional requirements. It is incredibly important, therefore, to use a law-practice-specific checklist for the sale of your practice.