There are countless articles on the importance of succession planning for attorneys. The articles generally focus on two important considerations:
- Protecting clients and colleagues in the unexpected event of death or disability, and
- A plan for your retirement from the practice of law and the importance of succession planning in accomplishing that.
While you are required to have a plan in case of death or disability, Elevate KPIs’ focus in helping clients is on the second point – how a firm uses succession planning for owners retiring from the business.
There can be many obstacles in executing a successful succession plan. These include:
- Finding, developing and retaining the right talent.
- Determining the roles and responsibilities of the owners.
- Successfully transition of clients.
- Compensating retiring owners and new owners.
- Valuing what the ownership in the firm and matching that with the buyer’s willingness to pay.
These challenges can feel impossible to overcome. This causes many founders and owners of law firms to often take one of three paths:
- Transitioning clients in a short period of time to other practitioners in the community, resulting in no compensation.
- Slowly decreasing the client base over a long period of time until retirement, once again resulting in no payout at the time of retirement.
- A zero in and zero out ownership structure bringing on a new owner at no cost and retiring without a payout.
We believe attorneys who have built a firm and worked in the profession for years deserve a payout at time of retirement. In order to achieving that payout we must understand the buyer’s point of view. As in all business purchases, the buyer will consider the following:
- Can I rely on the information provided to analyze the performance of the business?
- Does the business have a strong team to help with the continuity of operations?
- Does the business have processes to build upon to generate continued revenue and profits?
- How much of the revenue is generated by services performed by the seller and can the business scale up?
There are additional considerations if the potential buyer is a junior attorney who has worked with you for years. What have they observed from your years of working together? Long hours? Difficulty taking vacation? Wearing all hats for the firm? Under-compensated? When it comes time to make a decision, your potential successor will look at all the tangible and intangible considerations.
Elevate KPIs can help you position your firm and your interest in the firm as a desirable business for potential buyers, including those that may already be at your firm. Your junior attorney will see that you are making a change, you are not comfortable with the status quo, that you are continuing to strive for excellence, and that you want a better future for yourself and your successor and they will want to be a part of that future.
Our Total Law Firm Solution package of services is designed for law firms who want to think big and convert their practice to a business that has real value, both to you and to potential buyers. We will:
- Develop a systematic approach to your financial data;
- Provide accurate, timely and professional financial statements and reports;
- Provide a high quality team of professionals;
- Minimize your taxes and plan for a tax efficient succession;
- Coach you and your team to super-charge profits while fully utilizing your team to decrease your personal client burden; and
- Help you identify and capitalize on opportunities for new business with current clients.
Are you ready for a change?
Elevate KPIs is looking for select firms that:
- Are bold enough to challenge the traditional law firm as a practice model!
- Understand the value of proactively managing and planning a business!
- Are ready to ELEVATE their profits!