New Opportunities for Buying and Selling Law Practices
Selling a law practice has been prohibited for decades. Times are changing! California has permitted such sales since 1989. The American Bar Association altered its opposition in 1991. Since then, other states have changed their prohibitions. The legal profession is taking one more step toward recognizing the economic realities of modern professional life.
Some attorneys in larger firms have bemoaned the commercialization of the legal profession. Yet, these very same attorneys have always had mechanisms in place that provided them and their heirs with funding for the value of their interests in the larger firm. Allowing small firms and sole practitioners, and their heirs, the opportunity to reap the rewards of years of effort in building a valued reputation from delivery of quality legal services levels the economic playing field in considerations for retirement and estate planning. Now that all attorneys can sell their practices, the true value of the practice, by reference to the marketplace, can be determined.
Slowly, the mechanisms for selling the law practice from one attorney to another attorney are developing. Larger firms are accustomed to the process of buying and selling a practice. The process is called “merger” or “retirement” or “breakup,” among other headings. An increasing number of sole practitioners and small firm partners are thinking about getting out of the practice of law and doing something else. What else? That is less clear. But, many attorneys have left the practice of law, just closing their office doors one day and never returning. By doing this, the attorney forsakes “cashing in” on a valuable asset that has taken many years to build. That no longer has to happen.
And, what about the situation where the attorney dies suddenly and leaves his/her spouse to “mop up.” Is there anything of value that can be sold? Yes, there are the books in the library, the used computer equipment, the office furniture and the like. There are also accounts receivable. But, there are also client files and goodwill. This goodwill and the clients’ files have value. And that value can now be recognized as a result of the change in the Rules of Professional Conduct.Tags: Buying & Selling a Practice
Categorized in: Buying & Selling a Practice