Why Not Use the Rule of Thumb?

First, the marketplace for law practices is very immature. There is no meaningful database due to the low number of deals occurring in the industry. Second, and even more problematic, is the fact that most lawyers complete deals confidentially—no one but the lawyers themselves know the terms. Finally, even if a sufficient base of knowable transactions existed, you would be hard-pressed to find a worthwhile multiple due to incomparable data—practice areas are too different. For example, comparing a million-dollar family law practice to a million-dollar estate planning practice is like comparing apples to oranges. They are two fundamentally different businesses. The only thing they have in common is that their owners are licensed attorneys.