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The start-up strategy, often, is to build until you're bought.
It has made millionaires and billionaires out of tech company founders. Small firm lawyers, not so much.
That's because BigLaw typically doesn't buy budding practices, especially not solo attorneys' offices. But in an age of innovation, asks one popular practitioner, why not dream a little?
Carolyn Elefant, of MyShingle fame, writes that large law firms have always merged and absorbed other practices. But recently, she has noticed a "string of small, specialty law firms that have been willingly swallowed up by bigger fish."
Womble Bond acquired Bennett and Bennett, a husband-and-wife boutique. Squire, Patton and Briggs took over the Yarborough Law Group, a small cybersecurity and data privacy practice.
"Given that large firms are becoming more deliberate about buying out small practices, maybe it's time for solos and smalls starting out to think about a BigLaw buyout as a potential end game," she says.
Of course, there are ethical issues about selling law practices, such as rules against selling them to non-lawyers. Some states, like Maryland for example, also prohibit attorneys from selling practices that are less than five years old.
But large law firms are adapting to changes in the marketplace, and sometimes it's better for them to acquire niche practices than to start from scratch. And from the buyers' perspective, buying a brand is probably better than buying a lawyer's name.
"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," Casey Sullivan explained for FindLaw.
Building for a buyout should also include tax considerations. "Unfortunately, most solo and smaller law firms do not follow Generally Accepted Accounting Principles (GAAP) standards, so the financial statements and tax returns do not always paint a complete picture of what is going on in the seller's practice," wrote Steven Rinaldi for the American Bar Association.
Solo and small firm records, i.e. bank statements, accounts payable and receivables, should be available and show profitability for at least three years. That's because BigLaw generally wants more money, not more losses -- which some businesses report for purposes other than being acquired.