Buy a Law Practice
If you’re considering going solo, you may be interested in purchasing an established practice from an attorney who wants to transition out of the practice of law.
The WSBA provides resources to help connect you with prospective sellers.
Picking a Practice
Start by considering some of the factors that go into buying a practice.
1. Consider Practice Type
Do you know what type of practice you want? You should have a clear understanding of what practice areas motivate you.
You can be successful in a variety of areas of law, but it’s critical to know your personality, your interests, your values, and your abilities in order to be successful.
2. Consider Location
Consider whether you want to practice in a city or a more rural area.
Both have their advantages and disadvantages. You need to consider your long-term goals and how you envision yourself connecting with your clients and community.
3. Make Sure It's a Good Fit
Usually there is a transition period from the time you acquire a practice to the time the seller leaves. This arrangement benefits you as the buyer, allowing you to receive personalized support as you adjust to the practice.
The transition time is often one to three years. If you and the seller agree, you can structure the agreement so that the transition period is longer.
With this in mind, you want to make sure that you get along with the seller and that you would collaborate well.
Developing a Deal
You need to be familiar with these elements of developing an agreement to purchase a practice.
Do your due diligence to make sure the book of business is transferable and will lead to further referrals. Not all books have the same value.
A practice that is successful solely based on the attorney's personality or reputation may not necessarily be worth buying since so much of the good will is wrapped up in the reputation of that one individual person.
Ask questions regarding the attorney’s client base, how they obtain new clients, percentage of clients that return, percentage of practice that is referral-based, etc.
If the book of business is transferable, the next question is valuation. There are a variety of methods that are used to calculate value, but the key will be to consult with an accountant or business broker who has experience in this arena before moving forward.
3. Structuring the Deal
How the deal will be structured is a key consideration when thinking about your next steps——especially for a newly-minted attorney with student loan debt.
The key is to have an open dialogue and develop an agreement that works well for both parties. There are a variety of ways to structure a deal so that very little money is exchanged up front such as a payout over an extended period of time, or basing the payments on future revenue.
4. Developing a Transition Plan
A transition period provides the buyer with an opportunity to assume ownership and operations at a gradual pace, while simultaneously benefiting from the historical knowledge of the seller.
This type of “mentoring” may be quite important for the new graduate just starting their career. Some manner of financing, which may be a variant of “sweat equity,” may be achieved with a period of transition.
Search Practices for Sale
When you are ready to get started, check out the WSBA Career Center for practices that are posted for sale.
You can also review ads in the latest issue of NWLawyer.