Tired of the Rat Race? Tips to Sell Your Practice
After years of the small law life, you decide that you would rather fill your days with bocce ball than 12(b)(6). Don't just turn off the lights and take down your shingle; consider whether you could actually make a tidy little profit by selling your practice.
It's like Rod Blagojevich with Obama's vacated Senate seat, but without the indictment-worthy conflicts: You've got this thing (your practice) and it's ... golden. Don't just give it up for nothing. In most states, you can sell your practice to another qualified attorney.
But before you rush into anything, the American Bar Association has a few tips for selling your practice.
- Develop a timeline for selling your practice. This isn't a name-your-price-and-post-it-on-Craigslist transaction. According to the ABA, selling a practice involves a number of stages, including "arranging the appraisal and valuation, preparing a sales prospectus and advertising that the practice is for sale, finding qualified buyers, negotiating the final purchase price and payment terms, and then implementing the transfer of the practice to the buyer." Once you find a buyer, it will take at least another six months to complete the sale and notice requirements.
- Hire help. You spent your career writing contracts, but do you know anything about valuation? Hire a valuation expert to help you determine what your practice is worth. You might also want to enlist the services of a consultant or broker in your geographic area who has experience selling a law practice.
- Do Your Due Diligence. Be sure that you're complying with all of your ethical obligations before handing over the keys to the kingdom. The ABA notes that the rules of professional conduct require that you provide written notice to clients, usually no less than 90 days before the transfer. You must close out all client trust accounts, and inform clients of their right to retrieve files and retain other counsel. Your state bar association can provide you with more information about closing or selling your practice. Don't forget to bring the bar, the courts, and your malpractice insurer into the loop.
- Be Certain Before You Sell. You may not have the opportunity to turn back after you strike a deal to sell your practice, particularly if you sign a non-compete agreement. You could also encounter a regulatory barrier to practicing law after selling your practice; the ABA warns that many state bars require that you resign from the bar or adopt inactive status after selling your practice.
Selling a law practice isn't the right move for every lawyer; if you have more questions about whether it's the right decision for you, contact your local bar association.