Should My Associate Be My Successor?
July 16th, 2018
As a small law firm owner thinking about retirement, you are likely looking to your own associate to be your successor. This decision is not one to enter lightly, however.
Before you make anything official with an associate buyout, you need to consider whether your associate has the talent and the skills to pull it off. Just because the associate handles files well doesn't necessarily mean that they can successfully operate a law firm.
Does Your Associate Have the Right Skill Set?
The skill set required to be an effective law firm owner is quite different from that of a good practicing lawyer. Here are the most important skill sets to consider when vetting any successor, current associate or otherwise.
- Can they run the law firm as a business that makes money? Do they know the difference between revenues and profits? Can they screen clients? Will they be careful in managing office expenses? Will they send bills in a timely manner? Do they know what to do to collect on unpaid bills?
- Do they recognize the importance of marketing? Getting the phone to ring or attracting clients to your website just doesn’t happen. Your successor will need to develop business. Will they be able to that?
What are your answers to the questions posed here?
If you can answer both questions with either a “yes” or “maybe,” then you should promptly assess where the gaps exist. Then you need to make and execute on a plan to ensure the associate receives the necessary training and mentorship.
If your answer is “no” to either question, stop dreaming about an insider deal. Pursuing one will be a fool’s errand.
Do You Need to Consider an Alternative Option?
Most deals with insiders are at least partially funded by the profits of the firm going forward. A successor who cannot manage or market a firm will simply not be profitable enough to pay you out. If you find yourself in this situation, the time is now to consider realistic alternatives. Typically, those include selling the practice or taking your practice to another firm and join it in an “of counsel” role.
Categories: Attorney Retirement