Category: Buying & Selling a Practice

The noose just tightened on selling your law practice

More than 60% of the Bar is made up of lawyer firms ranging in size from solo to 9.  In any business, one would think that paying attention to a demographic that provides such a high percentage of your revenue would be wise. Of course, that presupposes that your customer base has an alternative.

In the case of integrated (mandatory!) bar associations, lawyers must be members, must pay their dues no matter how they disagree with the policies of the staff or of its Board of Governors! Therefore, their views can be disregarded. Such was the case recently when sole practitioners objected to the new rule of professional conduct that requires lawyers to tell clients in writing when they do not carry E & O insurance (malpractice) coverage.

Today, in California, there was a hearing on the rule regarding the sale of a law practice. The proposed new rule will make the lawyers (both buyers and sellers) jump through more hoops and cause further delay to get a deal done, thus jeopardizing the entire deal. Who does this target? The sole and small firm practitioner.  Only they are involved, to the extent this happens, in the sale of their practice. Large firms don’t sell their practice. They can break up, they can merge, they can combine … they can move entire practice groups from one firm to another … but they don’t "sell" their practice … at least they don’t call it that and thus side step rule 1.17 regarding the sale of a law practice. (I will discuss the details of the new proposal in later posts.)

So why should the Bar care? Why should they fix something that isn’t broke? Good question. I might attribute nefarious motives to the actors, but that would be unkind … and generally untrue. Because the folks on the commission are honest, hard-working and capable lawyers. But, in their zeal to do right, they are not doing good. They are like the law school professor who puts forth hypothetical situations that, if ever, happen rarely and can be dealt with on a case by case basis. The California rule ain’t broke; therefore don’t fix it.

When the ABA commission looked at the rule, they backed away from the precipice of considerable change … ultimately because they realized that there was no need to alter the rule. They made one change … and I’m proud to say I was the catalyst for this discussion. They now allow a lawyer to sell a practice area and still remain in practice, but not in the area sold. For example, a probate and estate planning lawyer may want to sell the estate planning segment, but retain the probate segment. This will allow him to work less, reduce marketing and still make a contribution to the law. Any other course would require him to sell/close the entire practice and wait for death … or continue his practice while serving his clients with less vigor because of aging … to the detriment of the clients.  It is a shame that younger attorneys on the commission have little or no sympathy for this aging process.

I’ve seen it in my clients; I’ve seen it in my family. That was why I recommended that the ABA make the one change it did accept. Clients are better served, both those whose estate plans are handled by other lawyers interested in the segment they purchased, and those who are probating estates of decedents …

One example after another in recent years demonstrates the Bar focuses on its perception of public protection — I say its perception because I don’t think the public is truly protected by a number of its recent actions, two of which are mentioned above. It is also very clear, however, that the interests of the Bar’s largest demographic is either disregarded or adversely impacted by the Bar’s new rules. I have come to the conclusion that the Bar should be a voluntary organization … as is the American Bar Association … needing to justify its value each year in order to maintain its member participation and dues revenue. The "mandatory" Bar as we know it should only be a licensing agency ….

Do you know of other examples in the organized Bar that defiles the sole practitioner? Do you know other industries where such monopoly power gives them the right to disregard the interests of its customers/patrons/members? How about the health insurance industry? How about the increase in premium rates that recently went up 39% to people who literally had no choice of carriers, only the choice of paying the increased premium or dropping insurance coverage … How about the airline industry who, in response to recent "fliers’ bill of rights" announced a decrease in flight schedules and increase in fare prices? Other examples abound.

Unless the Bar is able and willing to enhance the value and contributions to lawyers from whom it receives dues, it should not exist in its present form.

Selling Your Law Practice?

PRESS RELEASE – NEW PRODUCTS

FOR IMMEDIATE RELEASE
Contact: Derek McIver
Public Relations, Ictus Initiative
617.717.8294, Derek@IctusInitiative.com

NEW PRODUCTS FOR ATTORNEYS LOOKING TO LEAVE THE PRACTICE OF LAW
   
VENICE, CA. September 8, 2009 – LawBiz® Management, a leading provider of seminars and products on the Business of Law®, today announces the release of two new products. “Law Firm for Sale,” a 4-disc CD set and “Exit Strategy: Selling & Other Strategies to Leave the Practice of Law,” a 3-disc DVD set, are the latest offerings from LawBiz® Management and Ed Poll, JD, MBA, CMC that will help lawyers leave the legal profession, whether retiring, selling their firm, or otherwise moving on.

“Law Firm for Sale” and “Exit Strategy” present strategies that have been developed by Ed Poll over two decades of working in business and law as an executive, an attorney, and a consultant. These products will help attorneys make the best decisions that will maximize profitability and keep the best interests of clients in mind. In each, Poll discusses strategies to value and price a firm, to market its sale, and to consider ethical issues that might arise in the process.

“Over the next ten years over 400,000 lawyers are expected to retire,” comments Poll. “These attorneys need to have a succession plan that works not only for them, but for their clients and their firm. If they don’t, their life’s work might suffer once they’re gone.”

Click here to read more about this Law Firm for Sale: The Complete Audio Guide to Selling Your Practice.
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About LawBiz® Management

In 1990, Ed Poll, J.D., M.B.A., CMC founded LawBiz® Management Company. A nationally recognized expert in law practice management, Poll is now committed to coaching, speaking, and training law firms across the country. He helps attorneys and law firms increase their profitability consulting with them on issues of internal operations, business development, and financial matters. Poll brings his clients a solid background in both law and business. He has 25 years experience as a practicing attorney and has served as CEO and COO for several manufacturing businesses.

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Selling your law practice

One of the objectives in creating LawBiz® Forum was to provide an alternative method of buying and selling a law practice. There is no opporunities broker of whom I’m aware that focuses on law practices. Some lawyers prefer to save their cash, not engage an expert in advance, but yet want an outlet to sell their practice on their own. Sort of like selling your house on your own. Some can do this while others prefer to continue practicing law without the distractions of dealing directly with prospective buyers. Now, there is an option open … see LawBiz® Forum and join the segment on buying and selling a law practice … and best wishes.

I need your help …

You may have heard me talk about the 400,000 lawyers who will be retiring from the practice of law in the next 10 years. When the financial crisis first hit, I began to doubt that we will face so many retirements. But, my phone continues to ring with people wanting to know how to sell their practice, how to value it (a requirement before selling) and then how to transition into the "second season" of their life. Thus, there must still be a market …

I still battle lawyers who are surprised to learn that they have anything of value to sell. But, yes Joe, "there is goodwill in them thar hills."

So, one night when I couldn’t sleep, I came up with an idea … and I need your help to test out the idea,  to know whether to go forward. The following is the outline of the concept. Much is yet to be added to it if we go forward. But, I want your ideas and your expression of interest to confirm my belief that this is a viable concept.

Idea:  My web site, devoted exclusively to a community of lawyers interested in buying, selling or merging their law practice. Each lawyer would be entitled to create and post a listing describing the nature of his / her practice that is available for sale, or the nature of the practice desired to purchase or with which to merge.

There would also be a discussion "board" that I would monitor and participate in … giving suggestions and commentary as I think appropriate. And I would post articles and other resources, including portions of my books and audio materials, for the further education and assistance of the members of this community.

In effect, this would be a multiple listing service … better than a listing like Craig’s List because of the substantive content and focus by and for lawyers … The monthly fee would be modest and would continue automatically on a credit card only so long as you wanted to continue to participate. Termination is at your discretion.

I would be available to help on an individual basis such as reviewing the description of the practice, etc. … My services in this field such as valuation and consulting to sell a practice would be available but not to be considered as part of the low monthly rate offered to the community … They would be negotiated separately, though at a reduced fee to any member of the community.

Please respond by email (edpoll@lawbiz.com) with your thoughts on this … Thank you for your help and guidance.