So, for our first question today, it comes from Steve Fretzin of Fretzin, Inc., and Steve is also the host of a great podcast called “Be That Lawyer with Fretzin.” Steve asks: “How do I best prepare my law practice for sale?” Steve, thanks so much. Great question, on the minds of thousands and thousands of attorneys, Baby Boomer attorneys in particular, that are thinking like, “How do you prepare? How do I prepare my law practice for sale?” So, let's first start with, OK, what do you have to sell? Right? . . . What is it that lawyers have of value that they would present to a buying firm? And, what we're showing here is that lawyers have and law firms have five components of value. Um, and those consist of the Client List and the Referral Source List. Taken together, that is the Book of Business of a given lawyer or law firm. And, then the additional, what we call Value Chips, are the Goodwill that a firm has developed over the course of many, many years in their community, state, nationally, sometimes even internationally.

The Subject Matter Knowledge that lawyers at the firm, as well as para-staff have developed over the course of many years. And, then, more and more as the 2020s continue, the Digital Value that firms develop.

And, when it comes to utilizing that value, OK, and preparing your law firm for sale, there's really three checklists that we recommend that attorneys consider when they're considering preparing for a law firm sale. The first, of course, is asking yourself, “Alright, is now even the right time to sell?” Okay. And, how do you know if now is the right time to sell? So, in this checklist, several of the “Now is the Right [Time] to Sell” items on that checklist are, well, there could very well be a life event going on. I'm not necessarily talking about a health event. But, often our clients, they identify a certain age, right?

Like, “I just always knew I wanted to retire at age 70, or 72” - some type of life event that happens in your life. Second, is something that we hope people really give a lot of thought to, which is: Is there realistically a low probability that your Internal Successor, that is, the person that you just wish would walk down the hall and walk into your office and say that they want to purchase your firm . . . is there really a low probability that that will ever happen? In our experience, actually, it is a pretty low probability because your Internal Successor, that is, the attorneys whom you hired many years ago and that you would love to take over the practice because you look at it as a great opportunity for them to continue the business that, really, you've developed . . . they were hired as key employees, and often, they just want to stay as key employees. So, that's an important one to recognize. And, now is the right time to sell because I realized that my Internal Successor just doesn't really want to purchase the practice and often can't afford to either.

And, then another point is recognizing that in the 2020s, Growth by Acquisition has finally arrived to the legal industry. And, recognizing that and preparing for that in terms of just even seeing that there are opportunities that firms want to purchase your firm. I spoke with a potential seller just the other day, and they were surprised that there are five firms that are already interested in their practice. And, then coming out of COVID, another reason is, you know, lawyers like so many of us in society today, they want to spend more time with their family, right? And so, if you're thinking about selling your practice, that you want to have more work life balance, selling is a great way, of course, to introduce them. It doesn't mean you have to automatically retire because many of our clients, when they sell their practices, they really are joining another firm; practicing for a number of years, but improve their work-life balance significantly because they no longer own the practice.

And, then a couple other reasons why preparing for selling . . . is looking at your bottom line. Okay? If your numbers are actually going down for some reason. You still have clients. You still have referral sources. Going back to those five Value Chips, those are the most important Value Chips when it comes to selling a firm. But, if you start seeing those numbers going down, and you're not generating as much revenue as yester-year. . . That is a hint. That is a sign. That is a bottom-line reason for considering of moving over your practice to particularly to a growing firm that is certainly going to be interested in the Book of Business that you have developed.

The Ask the Law Firm Seller Show Episode 3:
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