Start With Success—Buy a Law Practice
An increasingly popular way for lawyers to grow or diversify their practices is by strategically purchasing other lawyers' practices. “Strategic” is the key word here, as you must be smart about which practices you consider purchasing and how much you are willing to pay.
Benefits of Buying a Practice
Whether you are looking to establish yourself in practice or expand your existing practice, you should seriously consider buying the practice of a retiring attorney. Buying an existing legal practice has its advantages:
- You have work to do right away
- You gain access to a built-in referral network
- Your book of business is full of vetted, paying clients
- Your phone rings and your website gets visitors
- You have predictable costs
- You may even gain access to a willing mentor
Make Sure You Pay a Fair Price
Once you’ve found the right practice to buy, make sure you pay the right price. Ask the seller about the precise basis of the asking price. Often, there is no real basis other than that the seller thinks it’s worth that much. In other words, the number was pulled out of thin air.
Buying a practice has its benefits, but it’s not your only option. When you buy a practice, you add a significant cost to your overhead. While purchasing a practice should reduce marketing costs, there’s no point in pursuing a deal if your financing costs, when added to other overhead costs, create little or no profits.
Also, if you’re an insider thinking of buying out the practice of your soon-to-be retiring boss, run a rough calculation of the associated costs of hanging out your own shingle. Sure, there are lots of advantages to taking over an existing practice, but do you want to fund someone’s retirement for years, when it could be far less costly to strike out on your own? Do a cost-benefit analysis before committing.
How to Finance the Purchase of a Practice
Often, new or inexperienced lawyers worry about the cost of purchasing a legal practice. The truth is that buying a practice may not be as expensive or risky as you think. Indeed, the seller may choose to:
- Personally finance the deal
- Take a payout over an extended period of time
- Base payments on future revenue
Moreover, if your offer is the only one on the table, the seller would probably rather accept it than risk ending up with nothing. They have an incentive to structure the deal in a way that works for you.
Purchase a Practice with Confidence
If you are considering buying a law practice, but need help finding a practice, arriving at a fair price, or structuring the deal, attorney Roy Ginsburg can help. Roy has over 15 years of experience working as a strategic advisor to solo practitioners and small law firms across the country, and over 35 years of experience as a practicing attorney. To get the help you need to confidently purchase a law practice, call Roy today at (612) 524-5837 or connect online.