As a financial advisor, Brooke Lively helps lawyers prepare their law firms so they can sell. Mentally preparing to exit your practice is a crucial step in the process.
Table of contents
75% of those who exit (their business) ‘profoundly regret’ the decision within 12 months of exiting.
Price Waterhouse
Life after the law. Some attorneys can’t imagine it, and others spend lots of time dreaming about what they will do in retirement. As I see more and more law firms change hands, this is something to consider. Because if you don’t consider your life after law, you will likely end up among the 75% who regret selling.
When I first stumbled upon this statistic, it was like a punch to my solar plexus. All I could think about was our many clients who were working toward their exits. I hated to think these owners would sell, and then a huge number of them would regret it — not just regret it, but profoundly regret it.
Mentally Preparing Yourself for Life After Law
It is crucial to consider what you’re really selling when you sell your law firm. In my research, I learned that the people who regretted selling tended to be the ones who were not mentally prepared for the sale. They didn’t understand and plan for what they would be losing.
They didn’t think about their “what’s next.”
Understanding What You Are Selling
As a lawyer, your law firm is more than just a business. It’s your passion, your identity and the culmination of years of hard work and dedication. So, when the time comes to sell your firm, it can feel like you’re selling a piece of yourself. You may worry about losing control, losing your connection to your clients, and losing the very thing that occupies your time and brings you joy.
When you sell or transition your law firm to someone else, you lose three important things:
- Your “baby”
- Your work identity
- The thing that occupies your time
Selling Your “Baby”
How many of us have referred to our businesses as our babies or said we were married to them? We started these firms from nothing — we gave birth to them. We nursed them through hard times and sickness and celebrated every milestone, birthday and achievement. We spent more waking hours with our firms than we did with our actual children. And now that they have grown up to become self-sufficient, they are ready to pay us back for our sacrifices by funding our next stage of life.
It’s a lovely story, but you are still selling your child. Since you started your firm, it has probably consumed more of your time and brain power than your family, and it is about to be gone. If you are not prepared for this large segment of your life to disappear, you will sit firmly in that 75% of owners who ”profoundly regret” selling.
Selling Your Identity
Very often, when you go to a party and meet somebody new, the first question is, “What’s your name?” followed quickly by, “What do you do?” Right now, answering that second question is easy: “I own my own law firm.” Or if you are great at marketing, it might be something like, “I help immigrants achieve the American dream.” When you sell your firm, that quick answer is gone.
All of a sudden, your answer becomes, “I used to ….”
- I used to own a law firm.
- I used to be an attorney.
- I used to go to the office every day.
- I used to solve problems for people.
- I used to make clients happy.
- I used to be the head honcho. I used to employ 30 people.
- I used to be important.
For many law firm owners, their identity is tied to their firm. It’s not just a business — it’s who they are. When you sell your firm, you’re selling a part of yourself, and that can be a difficult thing to come to terms with.
You may have built a reputation as a trusted advisor or expert in your field, and it can be hard to let go of that status. Your identity may be tied to your clients, your community or your professional network. Selling your firm can make you feel like you’re losing a part of yourself.
Selling the Thing That Occupies Your Time
Selling the thing that occupies your time can be a challenge for many business owners. For years, your firm has been your primary focus. You likely have a strong personal attachment to your work and the people you work with.
When you sell your business, you’re not just giving up a source of income. You’re also giving up a significant part of your daily routine and most of your daily social interactions. Suddenly, you have free time that you didn’t have before. Without the structure your law practice provided, you might find yourself feeling lost or even depressed.
For Fewer Regrets, Prepare Now to Fill the Void
You are entering a new time in your life. But, unlike when you became a spouse or parent, you aren’t adding anything. This time, you are subtracting, and you need to fill the void. You can create a new you — a new identity, a fresh take on who you are. But if you don’t start to discover who you want to be and how you are going to occupy your time before you sell the business, you will end up as part of the 75%.
Photo by Dustin Tramel on Unsplash
Calculating How to ‘Exit on Top’
If you want help calculating an approximate value for your law firm, go to www.ExitOnTopBook.com to access the valuation quiz from my book, “Exit On Top: Sell Your Law Firm to the Right Person at the Right Time for the Right Price.”
More Law Firm Financial Tips from Brooke Lively
For more tips on building a more profitable law firm, read:
- What Is My Law Firm Worth?
- Why You Should Prep Your Law Firm to Sell — Even If You Don’t Want to Sell
- What Makes a Law Firm Attractive to Buyers?
- What Should Be on Your Law Firm’s Dashboard
- Are Your Law Firm’s Financial Systems Ready to Scale?
- Law Firm Profits: 5 Ways You May Be Sabotaging Your Firm’s Growth
- Law Firm Overhead: What It Is — and What It Isn’t
- Building a Law Firm That Pays You First
- Understanding Law Firm Profits — And What to Do With Them
- Funding Growth: Are You Starving Your Law Firm?
