If you have lawyers working for you and you’re ready to retire, the first succession plan option to consider is an associate buyout. Here’s what you need to know about this popular choice.

The Basics of the Associate Buyout Option

Being a successful law practice owner requires a skillset entirely different from that of a good working attorney. Before passing the baton to one of your associates, you must ask yourself the following:

• Do they have good business judgment? Among other things, can the associate keep expenses low, effectively screen clients, successfully manage staff, get bills out timely, diligently pursue collections, and all the other tasks that come along with this?
• Do they have marketing sense? Does your associate understand that the phone doesn’t ring just because one practices law well? The phone only rings when others (potential clients and referral sources) know that you are a good lawyer. Getting the word out requires business development skills; do they have them?

Your answers to these questions will likely fall within one of the following categories:

• Are you kidding? Not on your life! It’s not even worth trying to teach them.
• Well, I’m reasonably confident that with enough training and mentoring, my associate can get where they need to be to achieve success.

If You Know Your Associate Isn’t the Right Fit

If your answer is akin to, “Are you kidding me?!”, there is no need to think any more about an insider deal. Many insider deals are partially funded from the firm’s future profits to make it feasible for successors to pay the retiring lawyer. There will be no future profits for funding if the successor mismanages the firm. That means it’s time for Plan B: find a third-party successor.

If You Think Your Associate Might Have What it Takes

If your answer is more along the lines of, “I think there’s a good chance,” what makes you so confident that the lawyer has the “right stuff”? Have you objectively evaluated the situation and your associate? If you find that, once blind spots are uncovered, things don’t look so good, consider finding a third-party buyer.

If you work with Roy Ginsburg to gain that objective evaluation and Roy confirms your judgment, he’ll then provide you with the parameters of how to price and structure the buyout for a successful transition.

Want to Talk Through Your Firm’s Potential Associate Buyout? Contact Roy Today.

Roy Ginsburg is an experienced law firm succession coach as well as a seasoned attorney in his own right. With more than three decades in the legal field in his tool belt, he’ll be sure to provide you with the insights you need to make the right choice as to how to exit the legal profession profitably. Call Roy today at (612) 524-5837 or send Roy an email to learn more.