5 Steps to Take Before Selling Your Solo Practice
If you've had a good run with your solo law practice and you've decided the time has come to leave, you have a number of choices.
One: Close out your files, don't take on new clients, and hang a sign that declares "Out of Business." Two: You could sell your business to another competent attorney who will carry on the practice.
Under the American Bar Association's Rule 1.17, most states allow selling a law practice to another lawyer. Here are a couple of steps you should add to your checklist before you finalize the sale of your firm.
- Make Sure You Can Sell: It's been mentioned that most states allow the sale of your practice to another qualified lawyer. However, not all states follow the ABA rules (California, for example) and the sale of law practices is also governed by your state's applicable business statutes. Take the time to research this issue.
- Notify Your Clients: No set of applicable ethics rules will allow you to simply close up shop and leave your clients hanging in the wind. The ABA rules require written notice of the sale 90 days before the sale is executed. Other rules may apply. But the grand takeaway is that you must give your clients written notice before the deed is done.
- Get the Right Price: Hiring a professional adjuster or appraiser is critical. You have an idea of what your firm is worth; and a professional has her idea. Most likely, your idea is wishful thinking, but that doesn't mean you shouldn't hold out for a fair price. You don't want to pack it in on a sour note.
- Prepare at Least a Year in Advance: All of this takes time. If you think it's going to take six months, you should probably budget a year. Most attorneys know this, but they make this mistake over and over.
- Don't Compete Within a Given Radius: The attorney who buys your practice will almost certainly insist on including a non-compete clause in the contract of sale. You can't blame them. At the very least, it will preclude you from practicing whilst using the same name of the firm you just sold. Know the language. The standard clause states that the seller will not compete within a given geographical area represented by a X mile radius from the firm.
Last but not least, be certain.
- For Sale by Owner: Getting the Most for Your Law Practice (Illinois State Bar Assoc.)
- Should Young Attorneys Ever Buy an Existing Law Practice? (FindLaw's Strategist)
- 5 Ways to Get Clients to Value Your Advice (FindLaw's Strategist)
- Going Solo? 3 Questions to Ask Before Hanging Your Shingle (FindLaw's Strategist)
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.