By Darren Wurz

When you’ve dedicated years to building a successful law practice, the decision to sell your firm isn’t made lightly. Your clients have come to trust and depend on you, and you’ve built a culture and reputation worth preserving. 

As you open the door to new opportunities and new wealth for yourself and your family, it’s important to consider all the aspects of a sale to help create a smooth transition. Whether you’ve made the decision to sell or you’re still deciding, knowing what the process involves helps you take the proper steps to sell your law practice. 

Evaluate the Value of Your Practice

Before you put your practice on the market, you have to know how much it’s worth so you can determine if you’re getting a fair price. It starts by assessing these aspects surrounding your firm’s success.

• Financial health and profitability 
• Client base
• Reputation
• Operational systems
• Location
• Composition (size, employees, and practice area)

Typically, the factors listed here are analyzed by a hired consultant who conducts a valuation of your business. Of course, you’ll have a number in mind, but it could be more or less than what your consultant determines. 

Keep in mind you can always get a second opinion if you believe the valuation doesn’t represent a fair market value. Beyond the financial part of the evaluation, it can also help you better understand your firm’s strengths and areas of improvement. 

Seek Professional Assistance

Your clients approach you for legal advice because you’re highly trained and experienced in matters of the law. Engaging with experienced professionals who know how to help you facilitate the sale of your law practice is just as smart. Selling a law practice is a tremendous undertaking, so it’s wise to involve professionals who can streamline the process. 

Experienced specialists such as law practice brokers, mergers and acquisitions consultants, financial advisors, and CPAs help facilitate the process of selling your law firm. These professionals possess industry knowledge, networks, and marketing expertise to help you find qualified buyers, navigate legal and ethical considerations, and negotiate the terms of the sale.

Plan for a Smooth Transition

Your client base is one of your most valuable assets in this sale, so it’s critical to have a transition plan that establishes a solid connection between your clients and potential buyers. A successful sale involves a transition strategy that prioritizes open communication, trust-building, and confidentiality. 

Make it a point to address any concerns or questions your clients may have to build confidence in the buyer’s ability to continue providing quality legal services. As part of your professional responsibility, it’s also important to provide adequate notice to your clients as outlined in ABA Rule 1.17. 

Negotiate the Terms of the Sale

To get a fair market value for your firm on the terms you want, you’ll need to use your negotiation skills. You’ll have to consider and discuss the following factors during negotiations with potential buyers:

• Purchase price
• Payment structure
• Transition period
• Seller’s continued involvement

This part of the process may include seeking legal advice to safeguard your interests and work toward a fair agreement.

Documentation and Due Diligence

As with any legal proceeding, documentation plays a pivotal role in the sale of your law practice. You’ll need to be prepared with documents related to your firm’s value as well as documents regarding the sale within your jurisdiction. The exact documents you need may vary, but at a minimum, you’ll need to gather these documents:

• Financial statements (typically two to three years’ worth)
• Client lists
• Case histories
• An offer to purchase agreement
• A note of seller financing
• Cash flow statements
• A statement of the seller’s discretionary income

To protect sensitive clients and practice information, you’ll also need confidentiality agreements in accordance with ABA Rule 1.6. 

Consider the Impact on Staff

You and your clients aren’t the only people impacted by the sale of your law practice. Your staff has played a key role in building your firm, so considering them in the transition planning is a great way to create a smoother change of hands. Mitigate concerns with transparent communication and exit planning that addresses potential changes or employment contracts that may come with the sale. 

Fulfill Legal and Ethical Obligations

Throughout the sale process, it is crucial to uphold legal and ethical obligations. These include maintaining client confidentiality, addressing conflicts of interest, and complying with any regulatory requirements. To make sure you’re in compliance with all applicable rules and regulations, we recommend seeking guidance from other legal professionals. 

Post-Sale Integration

Once you’ve finally completed the sale, it’s time for the buyer and seller to fulfill their obligations and responsibilities in the post-sale phase. For sellers, these obligations usually include transferring cases, notifying clients, and training the new owner or new employees. Buyers should focus on client retention and successfully integrating the acquired practice into their existing operations. 

Work With a Financial Advisor to Plan Your Sale

Selling a law practice is a complex and multifaceted process. When you engage experienced professionals to plan and execute your exit strategy, you’ll create a smoother transition for everyone involved. One of the skilled professionals you’ll need on your team is an experienced financial advisor. 

If you’re considering what it looks like to sell your law firm, schedule a no-obligation consultation, and let’s find out if we’re the right people for you to depend upon during your journey to a comfortable retirement. Contact us at 859-291-9879 or dpw@wurzfinancialservices.com today! 

Also, join us at one or all of our free webinars: 

• Social Security 101: The 3 Rules to Maximize Your Lifetime Retirement Benefits! 
• Will I Have Enough to Retire?
• Retirement Planning Strategies for Solo & Small Firm Attorneys 

About Darren

Darren Wurz is a fee-based financial advisor and co-owner of Wurz Financial Services, where he operates the Northern Kentucky/Cincinnati office. He is a CERTIFIED FINANCIAL PLANNER™ professional and has a master’s degree in financial planning from Golden Gate University. Darren specializes in serving the unique financial planning needs of attorneys and law firm owners. He is the host of The Lawyer Millionaire Podcast and author of The Lawyer Millionaire: The Complete Guide for Attorneys on Maximizing Wealth, Minimizing Taxes, and Retiring with Confidence, published by the American Bar Association.

Darren is a member of the American Bar Association and the Financial Planning Association. He is also active in his local community as a member of the Northern Kentucky Bar Association, Cincinnati Bar Association, Covington Business Council, and Northern Kentucky Chamber of Commerce. To learn more about Darren, connect with him on LinkedIn.