Four Steps on How to Plan for a Law Firm Succession

In part 1 of 2 of this topic, we discussed why it is important to have a succession plan in place to ensure your firm’s ongoing success, protect your clients, and maximize the financial benefits of your business. In this blog, we will discuss four important steps involved in that process.

  1. Estate Planning Coordination. Make sure your estate planning documents are up-to-date and contemplate the fact that your law firm is not only an asset, but also an asset that will be in transition. Give your personal representative/executor authority to work directly with your named transition attorney (see below), and make sure he/she understands the directives you have given to the transition attorney.
  2. Appoint a Transition Attorney. Find an attorney who is willing and able to competently close, sell, or transfer your law practice. This can be a co-worker, friend, or potential partner. You can then create a written agreement defining the relationship and duties of this attorney. This agreement can authorize the lawyer to manage such things as client notifications, collecting invoices, and managing the transition process to another law firm or to your estate.
  3. Create an Accessible Checklist. Your transition checklist should include items such as:
    1. Clients’ names/contact information and case details. Investing in practice management software will likely address this issue.
    1. Passwords and logins for electronic devices and online accounts.
    2. Bank accounts – especially the trust account.
    3. Professional liability insurance information.

This is not an exhaustive list, but it would be a good start

4. Align Succession Strategy with Your Goals. Before you decide your firm’s course of action in your succession plan, you need to be clear on your goals in various scenarios for retirement and for unforeseen death or disability. For example, do you want to simply close the firm and collect invoices; do you want your transition event lead to a partnership with another lawyer or law firm; do you want to give the firm to a successor and if so does that successor have to pay a share of profits to your estate for a set number of years, or do you want to just outright sell your practice. There are many viable options, and all should be considered when putting your plan together.

If you would like assistance or ideas regarding a succession plan for your law firm, please contact us and we will be happy to assist.

For assistance with any legal matters related to your business or estate planning, contact Fournier Legal Services at jfournier@jeflegal.com or 860.670.3535 now for a free consultation and planning session.