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Why hang your own shingle when you can buy one? If you're looking to be a solo practitioner or run your own small firm, buying an existing practice can be an efficient alternative to building your own book of business.
Sound appealing? Here are some tips on how to get started.
1. Where to Find Firms for Sale
Obviously, the first step to buying a law practice is finding one for sale. Usually, small practices are sold when lawyers are looking to retire or, more rarely, when they are moving to a new jurisdiction or seeking to change career paths. So where can you find them?
The Illinois State Bar Journal recently ran a story, which came across our paths via MyShingle, about an attorney who purchased a practice he found on Craigslist. (Apparently, Craigslist isn't an unusual venue for law firm sales.) Other attorneys find firms for sale on sites like LawBiz, by pairing with consultants, or simply through the grape vine. Few firms hang out a "For Sale" sign, though, so your best bet when searching for a practice to buy is to learn about your legal market and put in some leg work feeling out leads.
2. How Much Should You Pay?
Valuation is another difficult part of purchasing a firm. After all, most lawyers don't have a background in accounting. So when you're looking at firms, make sure you pay attention not just to the volume of the firm's existing business, but they future income that business might bring as well. For example, one of the more common types of firm sales involve estate planning practices, since a firm's clients will likely need services repeatedly over time, from the initial planning, likely handled by the firms' previous owner, to eventual probate. And when it comes to valuation, don't be afraid to bring in an accountant or expert to handle the numbers for you, and who can help put structure any purchase.
3. Get a Firm That's Easy to Transfer
Consider the branding of the firm you'll buy as well. If you're thinking of taking over "The Law Offices of John Q. Attorney" and your name isn't "John Q.," there's less value to the brand than, say, a firm that's marketed as the "Maryland Family Law Center." If you're going to be building your firm's brand from scratch after the sale, that should be reflected in the price.
4. Remember to Make Sure Everything's Ethical
Buying a firm was once considered unethical, but those days have largely passed. The ABA adopted Rule 1.17 allowing for the sale of a law practice in 1990 and most states have slowly followed suit. Under Rule 1.17, the seller must notify clients of the proposed sale and advise them of their right to retain other counsel and take possession of their file. Most states have similar requirements, but make the rules of buying a firm can vary between jurisdictions, so make sure to check into yours before.
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