Once upon a time in a land not far away, lawyers could plan on riding off into the sunset of their practice at a nice, leisurely pace. For many, the exit plan consisted of retaining a small handful of loyal clients that would provide some income into their retirement years, while hoping a blood relative would take over the practice. This “die at the desk” strategy worked well enough for those times.
Today, of course, the increasingly competitive nature of law practice is prompting more senior lawyers to ask the question, “How will I transition out of my practice?” The desire to serve valued clients and retain quality staff has collided with the desire to recoup on the investment of sweat equity and enjoy retirement—or a second career—while still young enough to do so.
How should you start to map the route to your exit? While the path is not a clear as it once was, the answer begins with how you are grooming your practice’s assets now, so that you can recoup value later. The sooner you are conscious of the role your current management practices will play in your ability to exit well, the better you’ll come out.
Begin Now with the Exit in Mind: Five Assets to Consider
While there are a variety of assets to concern yourself with, in the end your practice will only be worth what another lawyer is willing to pay. Here are the five assets any wise attorney would consider and value when taking over or buying your law practice.
- Your team. It takes time to recruit, train and develop a championship team. Every effort you make to craft a crew of quality professionals will pay you dividends.
- Your systems. A quality team paired with systems that produce quality results on a consistent basis is worth gold. Take time to ensure your systems produce efficient value for clients.
- Your culture. Clients assess the value of your firm by the way they feel every time they interact with your office. A culture that promotes a healthy atmosphere will create a long-term client. Investing in a positive, professional and personal culture accelerates a return on investment.
- Your referral sources. It is easy to develop referring relationships with others who are plus or minus three years of your age. To make your referral sources a true asset, however, I suggest diversity and youth.
- Your clients. I would assert we have left the information age and have entered the “personal age.” Personal relationships are becoming the treasured commodity in the current economy. The common mistake made with this reality is that personal relationships are not transferrable assets. The ability of your firm to personalize services for clients creates the opportunity to transfer trust and increase value.
The complexities of transitioning your practice will require asking many questions of financial planners, tax accountants, advisors and attorneys who can help shape your exit strategy. Do your due diligence, and be sure to surround yourself with people who can help make the next stage of your career both valuable—and relaxed.
Glenn G. Gutek is Senior Practice Advisor with Atticus. He has a passion for creating healthy corporate cultures and has worked with some of the brightest and best leaders around the country. Previously, he served as principal consultant and coach for a company that facilitated the development of executives, managers and leaders of large corporations and nonprofit organizations. Glenn served for 10 years as senior pastor with churches in Southern California and Florida.