Selling Your Law Practice to Retire? — Address the Buyer’s Needs
April 15th, 2009 by Jim Cotterman
Retiring lawyers are well served if they approach selling their practice by thinking like a buyer, a client and possibly an employee. No, we are not suggesting that you negotiate against your own interests. This is not about offers, due diligence, deal terms or the specific writing that memorializes the transaction. This is about putting in place the means for the buyer to realize their objectives — client and possibly personnel retention. The clients are the essence of the deal when a seller is retiring. Without clients there is no value to the buyer. And depending on the specific situation, there might be value in retaining the associates, paralegals and support staff who service those clients. Buyers think about integrating the acquired practice into their firm. This includes preserving current relationships and forging new relationships among clients and employees. Find ways to accommodate those needs to have a successful deal. Understand if your buyer has experience in integrating an acquired practice or if this new to them as well. The buyer needs to be part of the transition efforts and the seller needs to devote time specifically to transition.
Clients select counsel for a variety of reasons. Trust in the lawyer and the firm’s ability to handle their legal matters is high on that list. In today’s market, value and price paid have taken on even more importance then they traditionally held. Continuity in service is also an issue that is generally raised in connection with succession issues but is also seen in those firms where there is a high turnover amongst the delivery team (associates, paralegals and staff). That high turnover may be due to partner relocations and/or internal firm realignments. Either way, clients grow weary at the thought of training new people to their business, culture and priorities.
Employees worry about jobs, pay and benefits first. After that they worry about changes in reporting relationships, duties, work policies and the like. For most, this is a first time experience. They will be nervous because most acquisitions that are covered in the press focus on the redundancies and efficiencies that mergers create. And the one thing they are certain of is that things are going to be different. Change may not be bad, but it is generally not well received initially because of the many unknowns that precede it.
Communication is the first element to consider. Make sure your employees hear about the transaction from you before they hear about it from someone outside the firm or even worse from the announcements to clients and others. Tell them yourself and in person if it is feasible to do so. That has become much easier with video and audio conferencing. Be honest and upbeat about the upcoming changes. Have a carefully thought through message and don’t try to wing it. Consider what questions the staff will have when putting the message together. Identify positive changes and benefits to the employees. During Q&A, admit if you don’t have a good response to a question and promise to get back to everyone once you do (make sure you actually do this).
Equally important is the communication to clients. They should hear of the transaction before the general public. While a personal visit or call is most appropriate, either may not be practical for all of your clients. For some clients this may not be a surprise, but rather the culmination of a collaborative process where the client knows you have been putting into place a transition plan. Again the message is of vital importance. Key to the clients is continuity during the transition and long term benefits of the deal. This begins the introduction of the successor to the client. While it may be delivered as introducing new resources and capabilities initially; eventually it will be about building trust in a successor.
This entry was posted on Wednesday, April 15th, 2009 at 6:04 am and is filed under Mergers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.