What You Need to Know About Taxes and Fees When Selling A Law Practice. Not every lawyer lives in the world of business sales and transitions and even fewer have ever had the opportunity to advise and work on a law practice sale. The unique blend of law practice transaction specifics with the ever-changing landscape of structure options, how the government taxes proceeds and associated fees with a sale create potentials for some unknown and unwanted surprises.  You don’t need to be a tax or law practice expert, but it does help to put a CPA on your team early. Beyond that,  having an early idea of how things may work always helps in laying out structure and paths to achieve. Consider these quick items on structure and taxation before going too far in your plans: Transaction Structure Options. From stock purchase to asset purchase to mergers and beyond there are many potential purchase structures to consider. Each of those has its impact on taxes and your financials.  Taxation on Sale Proceeds. Depending on the structure of your law practice entity and the structure of the purchase your tax hit can often be anywhere from 20% to 50% or more of the sale proceeds. Making sure you understand how the net amount would be calculated under certain structures and terms to negotiate to lessen that tax hit to the lower range is key. Fees. Yes, you are an attorney but expect to pay other advisors such as practice brokers/consultants, accountants, and even an attorney to help you through the process. Knowing and calculating these as part of your expected after taxes and fees benefit is key. Knowledge of deal terms and having an idea of where key points of the deal may impact your net number is key to get your transition plans moving without surprises later. Look for the right people to add to your team, as it is near impossible to go it alone and plan for the best outcome while minimizing those surprises and hits to the bottom line. 

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.