As attorneys, our job is to prepare for the worst. We’re always imagining the worst-case scenario—in deals, litigation, estate planning, you name it. Our job is to think of the most unfavorable outcome, prepare our clients for it, and make a plan to keep it from becoming reality.
Unfortunately, most attorneys don’t take the same attitude with themselves or their business. Worst-case scenarios are never fun to imagine, but you should be prepared. Why? Because you could walk outside and get hit by an anvil from the sky.
Or you could get sick.
Or you could decide it’s time to move to a far away beach and sell sunglasses, or just retire and have fun. Law firm succession planning is what gives you that peace of mind to know that your firm will be taken care of.
Whatever that next thing is, you should be prepared for it. Preparing takes time and thoughtfulness, so we’ll walk you through all the things you should consider.
That’s where law firm succession planning comes in.
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What Is Law Firm Succession Planning?
There are two sides to law firm succession planning. On the one hand, it’s planning for the best—for what you intend to do with your business when you’re ready for the next adventure. On the other hand, it involves planning for the “bad”—for the what if’s in life that might leave you unable to practice law and run your firm.
As a law firm owner, you need to be prepared for both sides and everything in between, including:
- Sudden death
- Serious illness
- Family emergency
Law firm succession planning helps you develop a stable foundation for the future of your firm. Additionally, it simultaneously creates a roadmap for your team to use to serve your clients and move forward in the best way.
Plan for the Worst
Every solo or small firm needs a contingency plan in place. What would happen if you were suddenly incapacitated? Think about it:
你可能会想，“嘿，我才刚开始呢！”如果是这样的话，现在正是计划退出的最佳时机。在开始之前，你应该知道你想如何完成。为结束做计划是你的 律师事务所战略 和商业计划。没有它，它们是不完整的。
How to Value a Law Firm
We know it’s tough to place a number value on something you’ve spent blood, sweat, and tears building. Yet, you’ll need to do so to ensure you receive a fair payout when the time comes.
Valuing your law firm comes down to two questions: what are you selling and what would someone be willing to pay? Not only is a buyer purchasing your practice, but they’re also purchasing your book of business. Everything in your firm has value, from the processes you use to the clients you serve.
There are a few different methods used to value law firms, including:
- Asset-based valuation. Put simply, this method adds up all of your firm’s assets and subtracts the liabilities, leaving the net value of your assets.
- Comparable valuation. This method involves researching what other similar law firms are often sold for in your market.
- Multiplier. This valuation method involves multiplying one year’s gross revenue by a factor of 0.5 to 3.0, depending on the number of clients you have, how much repeat business the new owner can expect, etc.
We recommend finding a professional to help you value your firm correctly. The last thing you want to do is short-change yourself as you walk away.
Increasing the Value of Your Firm Now
Even if you’re not considering selling now, smart business people build a business now to increase its value in the future. Also, because these are all the best business practices, there will be no harm done by putting these things in place and deciding not to sell. Waiting, however, can make it very difficult to catch up and build value in a short period of time. Here are things you can do to better position your firm when the time comes:
- 不要把你的公司和你的姓联系在一起。 当然，用你的姓氏命名你的律师事务所是法律行业一个古老的传统。然而，当你不在时，它会降低你公司的价值。例如，一个商品名将关注您的业务，而不是您个人。一定要遵守 ABA指南 还有你所在州的职业规则。
- 将关键系统和流程落实到位。 您为公司投资的流程和系统（如账单和客户吸纳）很有价值。通过创建和记录这些流程，您可以节省后续人员的时间和精力，而这些时间和精力通常比现金更有价值。
- 打造稳固品牌。 品牌不仅仅是公司的名称和标志。这是你的公司因其所做的工作和创造的客户体验而享有的声誉。如果你现在打算收购一家公司，你难道不想要一家声誉良好、客户满意的公司吗？专注于创建一个优秀的品牌，您的业务将对潜在买家更有价值。
- 推销你的律师和你的公司。 如果你是一家有其他律师的小律师事务所的老板，记住他们是你公司价值的一部分。确保他们在法律行业赢得声誉。他们的声誉和成功直接影响到你的公司。
- 检查一下你的开支。 费用和负债会降低公司的价值。确保您跟踪您的开支，并经常更改策略，以尽快消除负债。
For example, do you have someone inside your firm willing to buy? Before you select a successor, make sure they have the resources required to pay you. Additionally, consider whether that person is a good fit to run your firm. Being a great attorney is not the same as being a great business owner.
While this process sounds easy, there are a ton of operational hurdles you need to think through. Make sure you have solid operational documents. Don’t be afraid to enlist the help of an attorney that practices in this area. They have seen all the landmines that cause partnerships and sales to go south so they can help you think through and navigate them on the front end.
How to Look for a Buyer/Seller for Your Firm
If you’re a solo attorney or you have a small firm but not a viable successor, you’ll need to find a buyer on your own or seek out a broker’s assistance.
If you choose to find a buyer on your own, the best way to do so (without breaking ABA regulations) is through advertising and networking. For example, simply spreading the word by announcing your upcoming retirement to your colleagues can make some waves. You can also use online directories and websites to advertise the sale of your practice.
If you don’t want to go the DIY route, you have the option to find help from consultants or law firm brokers. Often, these individuals already know other attorneys who want to buy and have the skills necessary to properly value your firm.
Recruiting, Mentoring, and Training a Successor
Recruiting a successor and then mentoring and training that individual can help you ensure your firm is left in good hands.
Tips for Recruiting the Right Successor for Your Firm
You may already have an individual working for your firm that’s a candidate for succession. Or, you may need to start fresh and hire one. Here are several ways to make the recruitment process simpler:
- Stay true to your culture and core values. 你的继任者必须符合你公司的文化，展示你的核心价值观。当你与潜在候选人交谈时，谈谈你的价值观并提出问题。如果你凭直觉行事，你就会知道候选人是否适合你的公司。
- 传达您的期望。 确保任何候选人都理解你雇用继任者的目标。传达你的继任计划，包括你对未来关系的期望。
- 提出正确的问题。 你不仅仅需要一个律师；你需要一个继任者，他将在未来接管律师事务所的所有权。在搜索过程中，不要简单地询问有关法律的问题。询问有关领导力、商业敏锐度、营销和传播知识等方面的问题。
- 牢记多样性。 多样性和包容性 打开通往各种视角的大门，这些视角可以增加公司内部的创新。在你寻找继任者的过程中，通过记住其他形式的多样性，比如宗教信仰和残疾，来扩大你的候选人库。创建一个系统，以相同的方式评估所有候选人，以减少偏见。
- 记录您的流程和程序。 如果您还没有这样做， 记录您的流程 从客户接收到计费再到结案。如果你是唯一一个知道如何经营公司的人，那么当你这样做的时候，关键的知识就会离开。您的目标是将这些知识传递给您的继任者，并为他们提供文档，以便他们在以后有问题时参考。
- 创建后续发展计划。 你的继任者每天都在跟踪你是不够的。您还需要定义技能差距，并制定发展计划来强化这些弱点。例如，如果您的继任者在客户沟通方面需要帮助，请创建一个计划，概述他们可以采取的改进步骤。
- Cross-train your successor. Your successor should understand the basics of each position within your firm. This enables them to understand the unique dynamics of your team while improving their skill set.
- Hand over the reins gradually. Over time, give your successor more responsibility. Expose them to your responsibilities such as management and strategy gradually. Not only will this help them understand your role, but it will also prepare them for it.
- Learn from your successor. One of the benefits of mentorship is discovering new ideas and perspectives from your successor you may not have thought of on your own.
Common-Law Firm Succession Planning Issues
We’ve already covered in detail two issues that arise during law firm succession planning: how to find the right successor and how to properly value your firm. Beyond that, there are several ethical items that you’ll want to address upfront to avoid issues later on down the road, including:
- Confidentiality. Selling or transitioning your clients and firm to another attorney requires the disclosure of at least basic information. It’ll be your job to not violate client confidentiality rules while seeking your successor.
- Fee sharing and future compensation. ABA Model Rules of Professional Conduct discuss fee sharing, referral fees and more. If you pursue the sale of your firm, you’ll want to pay close attention to how you’re arranging fees and payment.
- Client communications. You’re required to provide certain notices to your clients throughout the succession process. This can include the potential need to get client permission to share details about their situation with a prospective buyer. It can also include the need to provide notice of a pending sale and communications post-sale of how you will be transitioning out of your practice.
- 停止接受新的客户案例。 把你的精力放在捆绑客户案例上，以确保你当前的客户不会落空。
- 与员工分享您的离职计划。 一旦您决定采取积极措施退出，请告诉您的员工。你给的通知越多，他们就越容易准备。现在也是向你的公司解释你对他们未来的计划的好时机（稍后再详细介绍）。
- 通知你的客户。 ABA指南 声明如果你要出售你的机构或结业，你必须通知你的客户你的退出。这意味着在你离开之前向他们发送书面通知。
- 将案件档案移交给新的律师。 如果适用，将所有与未决案件相关的文件移交给贵公司的其他律师。
- 向继任者和员工提供相关信息。 如果您还没有这样做，请向您的继任者和适用的员工提供一份所有信息的主列表，如银行贷款、合同、财务义务等。
The best way to protect your employees after your retirement is to plan ahead. This requires creating a documented compensation plan that includes the wages, salaries, bonuses, and more you expect your employees to receive after you exit. This plan can be negotiated when you pass your practice to a successor or buyer.
If you’re planning to close your firm, give your employees as much notice as possible so they can find another place of employment. In good faith, offer your employees their unused vacation or sick days, if applicable, to ease the financial burden of job loss. Do your best to offer letters of recommendation or perhaps help your employees find new positions with colleagues who are looking to hire.
Don’t Get Too Caught Up in the Details
We know planning for your future is overwhelming, especially when trying to build and run a successful law firm. Take a moment to breathe. Now’s not the time to get too caught up in the details. Instead, start small by simply deciding what you want your exit to look like. Then, create a simple plan that outlines the steps to take to get there for your law firm succession planning.