How to Sell a Law Practice in 30 Minutes
Clickbait is not a "gotcha."
In the online publishing business, it's a headline meant to tempt a reader to click on a story. It's like a hook with a fake lure, which is fine for everybody in "catch-and-release."
So if you didn't know it already, you can't sell a law practice in less than 30 minutes. But if you take the time to read this blog and listen to the podcast linked below, you will know how to do it.
Value the Practice
First, you have to value your law practice. But it's not like real estate; there are no "comparable sales" because sales are confidential.
However, one rule of thumb usually works:
- Calculate the average gross revenue of the practice over the past five years
- Multiply that number by .03 to 1.33, depending on the predictable revenue
"What you're getting basically is a percentage of future revenues for a fixed period of time, and it really is sort of a hybrid of a referral fee," says attorney Lou Nostro of the American College of Trust and Estate Counsel.
Structure the Sale
Second, you have to structure the deal. Nostro, speaking on an ACTE podcast, said lawyers can't just sell their practice and then walk away.
Buyers want a transition period to meet clients, transfer files, etc., before their final check clears. Clients need to know who is handling their legal business.
Selling a practice is a balance of past accounting and goodwill going forward. It means you have to open your books to the buyer and the doors to your clients.
Of course, there are other details to selling a law practice. Finding a buyer is another story, and that will take a lot more than 30 minutes.
Want information on effective marketing? Let the experts at FindLaw's Lawyer Marketing give you a hand with FindLaw Integrated Legal Marketing Solutions.
- Ethical Considerations for Selling Your Law Practice (FindLaw's Practice Management)
- How to Buy a Law Practice: 4 Tips (FindLaw's Strategist)
- How to Future-Proof Your Law Career (FindLaw's Strategist)
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