How to Fund Your Retirement by Selling Your Solo Law Practice
When it comes to the finances of your law firm, most attorneys concentrate on two numbers: revenue and profit. Is enough money coming in, and is that money covering expenses to the point where it is putting money into your pocket every month? If so, great! But in the long run, all you are doing is treading water. Things are great as long as you keep working. But, there’s a long-term financial number that very few attorneys think about: the equity in your firm.
What Is Your Retirement Plan?
What is your exit strategy? Do you see yourself as ever retiring? Have you been able to put aside money towards retirement? Do you see any value in your practice that would allow you to sell it upon your retirement (in other words, are you building equity)?
Now the ethics rules in various states differ on the sale of a law practice, and many attorneys think that they can’t sell it at all. They see the value of the firm as being the clientele and the files. However, I suspect all jurisdictions hold the ethical position that the law firm does not own the file or the matter; the client does. The client has the ultimate decision on representation.
Therefore, what are you actually selling when you sell your practice? The building (if you own it)? The furniture and fixtures? Your brand (if you have one – and it isn’t tied to you)?
How You Can Build Equity for Retirement
A law practice in the modern age that has true equity is one that would make money no matter who ran it. if your current clients wouldn’t stay on with the buyer, then you are the business, and you have nothing to sell. But what if your practice had an owner’s manual that laid out every step and every procedure that your practice has for serving clients? Could someone just buy that manual from you, step into your shoes, and continue on as the new practice owner without a hitch?
If you are ultimately selling a practice that has such a manual, a turnkey system for every aspect of the business, that can have tremendous value. The attorney or attorneys coming in do not have to go through the laborious process of creating their own systems; you already have them in place for them! You are no longer your practice; the owner’s manual is!
Start Writing It All Down!
Just like saving for retirement, the sooner you start writing that owner’s manual the better! Every time you do something on a file, write down all the steps! Make them easy to follow. Put them in a binder or in a folder on your file server. This will make it easier to do, rather than all at once.
This is a good idea even if you don’t plan to retire soon because if any one of your staff quits, the manual will make onboarding the replacement so much easier!
Don’t Know Where to Begin?
I know; it’s a daunting task to write an owner’s manual for your practice. If you need guidance and/or assistance along the way, I’m here to help. My coaching program provides a great resource for creating these systems that can make your practice run more smoothly, allow you to build equity, and enable you to retire some day!
Give me a call at 856-345-9699 or shoot me an e-mail to discuss how I can help!
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