Byte of Prevention Blog

by Client Services |

4 Reasons Your Practice Needs a Succession Plan

When it comes to developing a Succession Plan for their practice, lawyers come with a million excuses

And Tom Lenfestey, founder of The Law Practice Exchange, has heard every one of them.

“Believe it or not, most attorneys and law firms have done absolutely nothing to plan and set out a process for making sure succession can occur from one attorney or one firm to another,” he says. “If every attorney needs a will, then every attorney needs a succession plan for his or her law practice.”

One common excuse: I don’t need a Succession Plan because I’m not ready to retire.

“Succession planning doesn’t necessarily mean retirement today,” says Camille Stell, president of Lawyers Mutual Consulting & Services. “A succession plan includes developing a time frame for retirement, transferring ownership of the law firm to an internal or external buyer, transferring management responsibilities, law firm leadership responsibilities and client relationships.”

Lenfestey and Stell are presenting a special succession planning workshop, “Transferring Ownership of Your Law Firm to the Next Generation” on April 8 and 9. Learn more about the course and register here.

You Mean My Practice Has Value?

 At some point in the future – maybe next week, maybe years from now – you will no longer be running your law practice. What will happen to your practice then? What will your absence mean for your clients, employees and professional relationships?

A Succession Plan makes sure the transition takes place the way you want it to.

Seems simple. And yet, attorneys have lots of excuses to justify not having a plan. Here are four Lenfestey often hears:

  • Excuse Number One: My law practice doesn’t have any value without me in it.“Yes, this may very well be true, but typically there is little to no value in practices where the attorney has passed away or had a sudden event not allowing them to be in the practice. In the succession of a law practice it takes time and transition steps which help preserve and transfer the value of your firm to the next successor.”
  • Excuse Number Two: I’ll just keep working and earn out my value.“You can definitely continue to work in the practice for so long as desired, but life throws curve balls at you and if that day comes when you can’t, but your needs dictate otherwise then the problem arises. Instead, focus on transferring ownership under a succession plan or sale and if you want to keep working then do so for so long as desired. Having a transition plan does not mean you will stop practicing law. As well, exiting at a higher value instead of in the wind-down phase will always yield the best financial results for you.”
  • Excuse Number Three: I have tried that before.“A number of attorneys we have spoken with have started, stopped, started again and then things fizzled. Or they have hired an associate with the thought of a successor and associate(s) have left. Openly, if you have tried it without success it is probably because the client demands, the legal work, and life in general have taken precedent over the planning. It’s okay. It is understandable. For most of our clients, our true goal is to push through those time constraints and keep the process moving to get to implementation. Having an outside advisor for accountability and knowledge helps greatly in this area.”
  • Excuse Number Four: I don’t want to stop being a lawyer.“You don’t have to, and no one wants you to, even your successor or buyer. All law firm ownership exits should be based on transitioning over time. Even when that is complete most successors would be delighted to keep you involved and associated with the firm, but you have gained the flexibility to do so when desired and without fear of the unknown. You shouldn’t be done and with the right transition and exit plan you never have to be.”

Sign up for the valuable, limited-seating workshop Transferring Ownership Of Your Law Firm To The Next Generation on April 8-9.


Source: The Law Practice Exchange

About the Author

Client Services

Client Services is dedicated to carrying out the mission of Lawyers Mutual through providing education and risk management resources. Client Services focuses on nurturing relationships with insureds through various forms of communication. For more information call 800. 662. 8843, Follow us on Twitter @LawyersMutualNC, connect on our LinkedIn page, like us on Facebook.

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