Buying a law firm is a common way for attorneys to expand their existing practice or for young lawyers to hit the ground running, but it’s not as straightforward a process as buying another type of business. There are practical and ethical considerations that anyone who wants to buy law firms for sale needs to know about.
5 Things to Know About Buying a Law Firm
- The sale will be governed by the American Bar Association and the State Bar Association Rules of Professional Conduct. Selling a law practice used to be highly unethical. Today, those concerns have eased somewhat, but strong ethical protections remain in place. According to the ABA, any sale of a law practice must be in compliance with the governing jurisdiction’s Rules of Professional Conduct. Buyers and sellers in Florida must follow and comply with certain requirements set by the Florida Bar Association in order for the sale to be valid. For example, the sale must include the entirety of the practice or an area of the practice; the seller’s clients must be given written notice of the proposed sale; and the fees charged to clients cannot be increased as a result of the sale.
- Due Diligence is more difficult. Due diligence is an important part of any sale, helping buyers determine the suitability of the sale and the viability of the business. Due to the nature of the legal business and client confidentiality, it’s very hard for buyers to verify the business’ income ahead of time and even the number of clients the firm has. Buyers do still have some options for due diligence. They can look at past income tax returns, financial statements, and bank statements to get a broad overview of the firm’s financial state, as well as any property lease agreements related to the firm. Liens and malpractice suits can be researched and inquiries to the state bar can unveil disciplinary complaints and concerns.
- Timing of the sale may be affected. The settlement date is impacted by a firm’s pending cases. In cases where litigation is involved and the selling attorney plans to leave the profession, the sale may be delayed until the case is settled. This is because the selling attorney may not be able to withdraw as counsel from the pending case once a jury has been selected.
- Clients are not for sale. Just because you are buying a successful law practice does not mean you will get to keep all of the firm’s current clients. The practice of law is a profession in addition to being a business, which means there are a lot of intangibles that impact the success of a firm, such as the lawyer’s experience and reputation. Clients are always informed of the pending sale and have the option of taking their business elsewhere.
- A court order may be involved. In cases where clients cannot be served with notice of the sale, it may be necessary to obtain court authorization. In lieu of the client okaying the change in counsel, an order from the court is needed to make the substitution. The court will determine whether or not reasonable efforts to find the client have been made and whether the client’s interests will be served by the substitution of counsel. Lack of a court okay, does not necessarily halt the sale, however.
Find Law Firms For Sale and Navigate the Sale Process With Help From Crowne Atlantic Business Brokers
The business brokers at Crowne Atlantic Business Brokers can help you navigate the realities of buying a law firm in Florida. We can match buyers and sellers, help you conduct due diligence, and advise you through the entire transaction. Learn more about buying an Orlando law firm for sale by contacting us at 407-478-4101.