We all know of the impact the baby boomer generation has had throughout the past decades starting with record growth in school enrollment followed by record numbers of workers and now record numbers of retirees. It is estimated that 10,000 people are reaching the age of 65 each day in the U.S. and will continue to do so for some years to come. How is this impacting the legal profession? Consistent with their generation, baby boomer lawyers are living longer and therefore having to create a longer-term retirement strategy which usually includes working further into their senior years. In a law firm model, senior exiting lawyers are part of the firm strategy. Although the pension plans that were common in law firms many years no longer exist, they were replaced with contribution plans (401K) that offer suitable retirement savings vehicles and are accessible through the law firms. Importantly, those plans often include a contribution to the lawyer’s retirement account from the employer law firm which is presumably funded by the business created by that lawyer which will continue beyond the lawyer’s exit for the benefit of the law firm.
A solo or small firm practitioner has a very different model when it comes to retirement savings or planning. There is no firm collective to contribute into their personal retirement accounts. How do they benefit from the practice they built and the potential future business that could result from that practice beyond the exit of the solo or small firm practitioner? For the solo practitioner, in order to benefit from the future legal business created by the firm they have built after or upon their exit, the common approach is to either sell the practice or merge it into another law firm. Often, if applicable, successor acquisition is the easiest and most direct way to sell a practice- that is, to turn the practice over to an associate or associates who currently are employed at the firm. However, in a solo practice, no associates are present; even in a small firm often managed by only partners, associate level attorneys are not present, not interested, or not able to take over the practice. So, in the solo or small firm model in which the partners are looking to exit, where can they find successors?
A firm wanting to sell their practice without any clear successors or interested acquiring firms would need to promote their practice to the lawyer public. This can be done one of two ways. One, the more traditional model is to engage a consultant to act as broker to help you promote your practice. A second option, a newer but more promising model, would be to promote that practice of an online lawyer marketplace where hundreds or even thousands of lawyers come to look for project-based work and conversely where hiring lawyers come to find help on a project basis. The project-based work marketplace includes lawyers looking for work and those wishing to grow fledgling or even developing practices. Those lawyers would welcome the opportunity to jump start their growth with the acquisition of an existing law practice which would presumably include years of good will, existing clients, and existing and future legal matters. These types of transactions could be funded, just like the larger law firm model, with proceeds from ongoing case work creating more options in making the transaction possible.
So, if you are an attorney considering retirement and ways to monetize your solo or small firm practice, you may do so by transferring firm assets either to an existing firm or a successor as lawyers have done for many years. Now, however, where a successor is not available, you may be able to locate one or more through an online lawyer marketplace that is used to find and offer project-based legal work.
Interested in learning more?
Contact Bob Meltzer to learn about how to get started!
Bob Meltzer - Founder & CEO of Lawyer Exchange