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 pay for the practice you decide upon.
Lawyers looking to take a smart leap to build their practice should seriously consider buying the practice of a retiring attorney. Buying an existing legal practice has its advantages:
While there are many good reasons to consider buying a practice, make sure you don’t overpay. Ask the seller about the precise basis of the asking price. In my experience, the answer sellers most frequently provide is that there is no basis other than that the seller thinks it’s worth that much. In other words, the number was pulled out of thin air.
Further, don’t forget that you always have alternative ways to grow a practice by traditional marketing methods. In reality, 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 would be far less costly to strike out on your own? Do the math before committing.
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:
Moreover, if your offer is the only one on the table, something is usually better than nothing for the seller.
If you are considering buying a law practice, work with attorney Roy Ginsburg. He has 10-plus years of experience working as a strategic advisor to solo practitioners and small law firms across the country. He also has 30-plus years of experience actively practicing law himself. If you’d like more information, pick up the phone and call Roy at (612) 524-5837 or send over a quick email inquiry.