Succession Planning for Law firms

on 3 December, 2012 Email this Email this - Print this Print this

As the old saying goes, “if you don’t know where you’re going, you’ll end up somewhere else”. So where is your Practice going? Have you thought about where your Practice will be in 12 months, in 3 years, in 5 years? Founder member of CoreLegal Ray Fox from the Bottom Line Consultancy gives food for thought on a subject that is often ignored or left until the last moment.

 

For example, have you given thought to an exit strategy? Do you know what the tax implications are? Do you need to think about recruiting the Solicitors and Partners for the future? What do your current Partners think about the fact that you might be thinking of retiring or even selling?

What plans do you have in case you become ill and unable to continue working? Do you have Solicitors within your firm who are thinking of leaving because they haven’t been offered a Salaried Partnership?

Likewise, do you have Salaried Partners within your firm who are thinking of leaving because they haven’t been offered Equity? How would you value the firm if someone wanted to buy equity and where would they get the funds from?

What would happen if one of your key fee earners became ill or left?

 

Do you know what your Practice is worth in terms of goodwill or has someone maliciously convinced you that your Practice isn’t worth anything? Perhaps now is the time to sell some or all of your equity to your salaried partners – the question is, do they want to buy equity and, if they do, do they have the funds and how much do you sell the equity for?

 

Maybe you need to consider selling your Practice to a third party. Are you trying to get from A to B but don’t know where A and B are, and, if you did, you wouldn’t know how to get there. How would you go about putting your firm on the market without all the local law firms finding out or your staff becoming aware of your plans and then leaving you in the lurch?

 

Perhaps you’re interested in expanding your Practice and acquiring other law firms – how would you find out about other law firms who are interested in possibly merging their practice with yours?

What are the tax implications of forming your Partnership into an LLP, LTD or an ABS? What would the balance sheet value of the goodwill be? Do you know any accountants who have such experience of actually selling law firms that they could give you an accurate valuation? What will happen if the HMRC dispute the valuation?

 

What are the implications for your firm of all the new legal groupings, franchises, virtual law firms, etc? How will the reduction of legal aid fees and the drop in conveyancing effect your Firm?

 

What areas of law are more profitable than others and how does your firm compare in terms of financial performance with other firms? 

With our knowledge and expertise of having worked with hundreds and hundreds of Law Firms, ranging from International and Multi-Site Firms to Sole Practitioners and High Street Practices, we can help you review where you are today, where you would like to be in the future, and, more importantly, how to get there.

 

Ray Fox

www.BottomLineConsultancy.com

ray.fox@virgin.net

01494 483728


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Topics: Professional opinion · Selling law firms · Succession planning
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