MCLE Self-Study Article The Right Strategy for Bringing on a Practice Successor
By Ed Poll, Esq.
Principal, LawBiz® Management
A retirement transition from a solo or small firm legal practice is above all an issue of planning. If the practice is not sold or closed, the best alternative is grooming a successor brought on board as an associate or junior partner. Ideally the succession plan can be structured to proceed over a period of up to five years, as client responsibilities gradually transition to the new lawyer. These five years can be seen as the âred zoneâ of the retiring lawyerâs career â the area right before reaching the goal line of retirement. During this period the retiring lawyer can identify a successor, have ongoing conversations with key clients about the upcoming transition, forge new ties between the successor and both current and new contacts at the client, and ensure that the new lawyer is completely up to speed on what the client needs and expects.
Preparing for this kind of smooth transition can ease problems over the issue of goodwill when the time comes to turn the practice over to the successor. If the new lawyer seeks to buy the firm outright and change the name, and thus deleting that of the retiring lawyer, one might question whether the value of the firm’s goodwill is decreased or even destroyed. Often when a firm is bought by outside interests, the buyers assert that clients will not remain with the firm once its proprietor leaves, and thus offer a lower purchase price. The selling lawyer then is left to assert that goodwill means that the reputation of the firm continues beyond the removal of any one individual. With that reputation comes the client list, the phone number, and the on-going nature of the practice (with staff and systems in place). Grooming and transitioning a successor from inside the firm, if done properly, can eliminate discord over this issue.