I have been counseling law students and attorneys regarding business planning and development for over twenty years. Nationally, about 50% of practitioners are solos. In Michigan, about 38% are over the age of 60. Put those two percentages together, the numbers they represent, and you have a “gray tsunami” building within the legal profession. Rapidly increasing numbers of solo attorneys will need someone to take over their practices. Failing to plan, they can leave a mess behind.
Attorneys know they should plan for their demise or disability. But most do nothing. Their plan? Work until they die at their desk and leave the mess for others to clean up. They assume their practice assets can be sold and cashed out. The truth is that the physical assets will have scrap value. The good will that they believe is inherent in their practice dies with the principle. Rather than leaving their families with an asset, they leave them with a liability.
Bar associations are often left with no alternative but to appoint receivers to close out these practices. Or they ask for friends of the failed firm to take over. Often, it is those attorneys who clean up the mess left behind. Without a surrogate or succession plan, clients are left hanging. Files are misplaced, inaccessible or never located. Financial records and trust accounts cannot be accessed without court intervention. Access codes and other information necessary to retrieve information in the cloud is often unavailable. It can take years to undo the damage left by one who died without a plan.
The longer you wait, the fewer options you may have available. If you haven’t noticed, law school graduate numbers are declining. More senior attorneys in the pipeline looking for transition partners and fewer graduates to fill those roles presents a supply problem. Don’t be one of the solos hunting for a partner who finds themselves at the back of the line trying to fill a position when the supply is drying up.
For a few true stories about attorneys who failed to plan with disastrous results, read my book. But don’t be one of them. Plan ahead. This book gives you the formula to leave your family an asset, not a liability.
There are many scenarios possible for your transition. It may be a complete transfer within a year or two. It might take shape over five or ten years. Or, you might wish to stay involved as long as you live or become incapacitated, but with blocks of free time for travel or to engage in non-legal pursuits. But in any scenario, you would want to see the firm grow stronger as this transition takes place. This book gives you multiple paths to experience that outcome.
Current rules of professional responsibility allow you to sell your practice. There are limits of who may purchase your practice and how it may be sold. This book outlines those parameters and how that might be accomplished effectively and efficiently while ensuring the interests of your clients are protected.
How do you find the perfect candidate? A great lawyer might not be a good fit. Your money management skills or desire to practice a certain substantive area of law might differ greatly from your new associates. How do you find and vet the new candidate? Can you take them on a test run? What does that look like? Do they have sufficient connections to your community to want to stay? Do they have an interest in your firm to engage and stay with the practice? Will they learn the trade and become your greatest competition?
How do you value a practice? Should you consider merging with another practice? Or should you consider selling all of your business to another practice? What are the advantages of merger or sale over transitioning with a junior partner? It is all in the book.
In this book, I answer all of those questions and much more. In addition, I provide forms and documents you will need during the transition period and beyond. For instance, once you decide to sell your practice, how do you notify your clients? What options do your clients have? What does a buy/sell agreement look like? How might you structure the transfer when the purchaser is deep in student debt and has no money to fund the sale?
How do you value your practice and negotiate a transition plan with the junior associate? I give you some of the guiding principles when conducting these negotiations.I also warn that you, the seller, you are not always in the driver’s seat. Often the junior partner brings more to the table than the senior partner with greater energy, fresh ideas and technical competence.
Finally, I have found that some senior attorneys, who find success and greater energy with that new associate, decide to stay on. Both parties should be on the same wavelength when it comes to how control will be transferred and that they stick to the plan. Otherwise, frustration might set in with the new associate and your deal might fall apart. Once the plan is put in place and you find time on your hands, what do you do with that time?
This book is designed chronologically so that as you read it, it takes you down the timeline of events and assessments. This book will help you get started and give you the boost you need with ideas to get you going. Leave your families an asset, not a liability, while bringing a new associate into the fold with greater potential for success in this wonderful profession of ours. Enjoy.