Best Practice: Law Firm Succession/Exit Planning - Sole Owner Practice

Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the owner of an estate planning practice in Chicago's northwest suburbs. I have two associates and four staff members. I am 67 and would like to retire when I am 70 (3 years). I have no idea as to where I should start and the approach I should take. I would appreciate suggestions.

A. Sole owner firms and solo practitioners face a real challenge when deciding what to do with their practices. While many of the issues are similar to those faced by multi-owner firms, sole owners and solo practitioners must also face the following additional challenges:

• Identifying another attorney in the firm to move into a partnership position
• Locating colleagues to sell the practice 
• Locating merger candidates 
• Effecting the sale or merger of the practice 
• Proper wind-down of the practice if the practitioner decides to simply “close the doors” (employees, client files, etc.) 

As with multi-owner firms the key is to start early and not wait until the last minute. I suggest that you put in place your succession/exit plan as soon as possible – not just for retirement but for unexpected situations as well – so that your family, employees and clients are not left in the dark if something should happen to you.

Just because you have associates - don't assume they want to own a law firm. Look into this early as it may impact your hiring strategy as well as your overall strategy and whether it will be an internal vs. external succession strategy. 

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John W. Olmstead, MBA, Ph.D, CMC,(www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.