Like every other business owner, you will one day step away from ownership of your law practice. That day definitely doesn’t have to be today, but some day it will occur. The real unknown is whether it will be a voluntarily decision through transition and retirement or involuntarily through disability, death or another unplanned event. When that event does occur, you will want to make sure you have planned to achieve certain professional and personal goals to make sure your legacy is not left in a state of chaos, but is instead transitioned ethically and professionally while taking care of certain fundamental financial, personal and practice needs as well.
It is probably not that surprising to hear that most attorneys and law firms have done absolutely nothing to plan and set out a process for making sure succession can occur from one attorney or one firm to another. Attorneys are trained to think ahead and plan for contingencies, but planning for your own seem to be problematic as well as troublesome due to lack of information and process knowledge. Here are just a few of the excuses used to justify the delay or failing to put a transition plan in place.
Excuse No. 1: My law practice doesn’t have any value without me in it. Yes, this may very well be true, but it is unlikely. We believe that if the practice has value to you, it can have value to another attorney. In the succession of a law practice, it takes time and transition steps that help preserve and transfer the value of your firm to the next successor. Fail to plan succession and the value is truly lost.
Excuse No. 2: I’ll just keep working and earn out my value. You can definitely continue to work in the practice for as long as desired, but life has a way of throwing curve balls at you. If that day comes when you can’t continue, but your needs dictate otherwise then the problem arises. Instead, focus on transferring ownership under a succession plan or sale and if you want to keep working then do so for so long as desired. Having a transition plan does not mean you will stop practicing law. As well, exiting at a higher value instead of in wind-down phase will always yield the best financial results for you.
Excuse No. 3: I have tried that before. A number of attorneys we have spoken with have started, stopped, started again and then things fizzled. Others have hired an associate with the thought of a successor and the associate(s) have left after some time to their disappointment. Openly, if you have tried it without success it is probably because the client demands, the legal work and life in general have taken precedent over the planning. That is okay and fully understandable. For most of our clients, one of our key contributions to the process is to push through those time constraints and keep the process moving in order to actually get to the implementation stage. Having an outside adviser for accountability and knowledge helps greatly in this area.
Excuse No. 4: I don’t want to stop being a lawyer. You don’t have to and no one wants you to, even your successor or buyer. All law firm ownership exits should be based on transitioning over time, as it tends to be best for the clients, the staff and both the exiting and successor attorney. Even when that immediate transition time period is complete, most successors would be delighted to keep you involved and associated with the firm. At the same time, you have gained significant flexibility so you can do so when desired and without fear of the unknown events. You shouldn’t be done until you want to be and with the right transition and exit plan you control the timeline without fear.
If you have used one or more of these excuses or any other, then the time is now to take the first step and realize that planning for your exit under a transition and succession plan is not only achievable, but it is also a personal and professional responsibility. The benefits far exceed any costs or time committed to the process or planning. Start today with a call to a trusted adviser or contact us for a confidential discussion about how we can help stop the excuses. Tom Lenfestey