Planning Ahead – Count in all Factors
Your law practice is a valuable asset and is an important component of your financial portfolio, now and for your future. Lawyers should develop a clear understanding about what will happen to this asset when they retire, die suddenly or become disabled. Too often, attorneys face the loss of the financial benefits of their life’s work (their firm) because they have not planned ahead.
Even if you are a sole practitioner, your practice is one of your most valuable assets! It does have value beyond the day-to-day hours that you put in!
We know one attorney, for example, who became disabled unexpectedly. He struggled to keep the firm going throughout the ordeal but almost lost it to some untrustworthy associates who attempted to steal the firm’s clients. While in various hospitals trying to recover, the last thing this attorney had the ability to focus on was maintaining oversight of the crumbling firm, yet because there was no emergency plan in place, that is exactly what he had to do.
This disabled attorney did not want to simply close the firm because he understood that significant value would be lost and rebuilding would be untenable. Rather than closing the firm and losing its value, they arranged a high-dollar sale of the firm. This allowed the attorney to focus on getting better while feeling secure in knowing that his years of work were not lost, and that his future was secure.
The importance of this story is not that everything worked out great for this particular attorney, but rather that it might not have. He had no emergency plan in place and had his personal circumstances been direr, he may have lost everything. The lesson is that planning ahead can save you a lot of trouble when disaster strikes–and a lot of money.
With regard to planned retirement, attorneys who think they will just close their doors one day are giving away an asset they have spent a career building. For example, prior to retirement, an attorney should learn how to sell the cases on your shelf, your phone number, your website, your equipment, the referrals that may be coming to you in the future, the goodwill you have garnered throughout your career and yes, even your name. Your name will bring in cases for years after your retire. Find the right person to pay your for all of these assets!
That door you are closing is made of gold. You can’t keep your firm going forever, but with clear planning, you can maintain some excellent benefits from it. Don’t let someone else capitalize for free on all that you have created.