FAQs on How to Value Your Law Practice

So what’s my law practice worth?

How’s this for an answer: “Whatever someone is willing to pay”?

Not clear enough? Then go through this little exercise:

Imagine it is a Friday afternoon. After years of hard work, you’re ready to ride off into the retirement sunset. When Monday morning comes, will existing clients or prospective clients still contact you and agree to work with your successor?

If your answer is “no,” your practice is probably worth little to nothing. If your answer is “yes,” you’ll need to ask two more questions.

  1. How much revenue do you think would your successor bring in during the first few years after the transition? Put another way, how much predictable future revenue will there be?
  2. If you were still actively practicing and referred out all of that work, how much would you expect to receive in referral fees?

Will I get referral fees if I sell?

No. But thinking about future predictable revenue in the context of referral fees is a concept that lawyers can wrap their heads around to appraise a firm.

So what valuation method does Roy use to determine the right number?

Roy values practices by taking a percentage of predictable revenue over a timeframe. But the number you get under this method is usually not what a seller will ultimately receive.

For most deals, Roy’s valuation methodology is an excellent starting point for negotiations. It is rarely the ending point.

What other factors can affect valuation?

For starters, other market realities frequently impact what a practice is worth.

How Can I Get More Information About Law Firm Valuation?

If you’d like more information on other market realities, as well as a more comprehensive discussion of Roy’s valuation method, consider reading Roy’s eBook, Exit Strategies for Lawyers. It’s only about 30 pages long, but it will tell you everything you’ve ever wanted to know about how to value a law practice and a lot more!

Ready to Discuss Appraising Your Law Firm? Contact Roy Ginsburg Today.

Roy Ginsburg, attorney coach and law firm succession consultant, can provide you with the valuation insight you need to prepare your practice for sale. Call him today at (612) 524-5837 or contact him by email.

 

 

I wanted to buy a practice and hired Roy to help me assess the law firms I was considering. What I found most helpful was his knowledge and insight into what other firms are experiencing and doing in regard to succession planning and buyouts . . ." Read more
– Solo practitioner, NYC

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