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A recent headline out of a Chicago business journal highlights the sale of a divorce law firm that charges flat-fees. It was purchased by another family law firm in the area that was looking to expand.
While flat-fee family law services might not be the newest or most revolutionary idea, with news of the sale, it raises the question of whether flat-fee clients make a law practice more buyable and/or sellable. Also, it should make solos and small firms, ones that are hungry for more business, think about whether buying another practice that charges flat-fees is even an option.
Buying and Selling Law Practices
In the world of small law and solo practice, practices are not usually bought and sold. After all, a solo legal practice isn't really subject to hostile takeovers, particularly because there are no partners and no public shares and ethics. Frankly, it's a longshot exit strategy for most firms, at best.
But that doesn't mean a law practice cannot, or shouldn't, be bought or sold. While still not that common of an occurrence, it does happen. Frequently, when attorneys want to retire, or transition into another industry, selling their practice can make a lot more sense (and money) than just winding down. Conversely, for an experienced practitioner looking to set up their own shop, starting off with an established book of business will always be easier (though much more expensive).
Do Flat-Fees Make for Quick Sales?
The business news report out of Chicago explains that the buying firm is planning on transitioning to the flat-fee structure the firm it bought uses. Notably, for that firm, the flat-fees are calculated specifically for each client, after a review of the case, so it's not like commoditized services, where every client pays the same flat-fee.
A potential problem with buying and selling flat-fee firms involves the clients that have already paid, have active cases, and don't expect to pay more. It's similar to usual question of whether the purchase or sale of a firm is more of a "transition" or a "transaction." Hopefully, at least, buyers can negotiate a discount due to those clients starting the firm off in the red.
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