Revisiting Our January 23rd Luncheon – Buying and Selling a Law Practice
On January 23rd, 2019, D. French Advisors held a luncheon to discuss the issue of buying and selling a law firm. Joe and Anica Parker of The Parker Law Team and Kyle Hallstrom of The Hallstrom Law Firm were our expert panelists. Joe is an accomplished corporate and tax attorney, advising on the many legal and business issues relevant to law practice sales and partnerships. Anica is an estate planning attorney who assists her clients in attaining future goals. Kyle is the founding and managing partner of The Hallstrom Law Firm, who recently executed a successful purchase of a law practice.
When contemplating a law firm sale, Joe says his clients usually start with a napkin and it doesn’t go any further than that. Joe stated, “There’s a real reluctance among lawyers to sit down and negotiate the critical points.” He expressed that the continuity of a firm’s business takes more work than some lawyers realize “…there’s a lot of discussion that is no different than when we are selling brick and mortar businesses.”
Kyle recently purchased a law practice and explained the significance of how establishing a healthy, open relationship with the person or firm that you are negotiating with can affect the efficiency of future business. He was offered an open look at the books and historical records. He felt it was imperative to ask, “what can I expect to be bringing into the firm?” and stressed the importance of lining up synergies to eliminate redundancies within the firm to make a more cost-efficient practice.
Anica stressed the importance of documentation and foresight in planning law practice successions and sales. Many unknowns must be accounted for when estate planning for a law firm and its future. Anica stated, “‘What if we don’t get along?’…or even the unthinkable, what happens if in the middle of this sale or in the middle of this partnership one of them passes away unexpectedly?” or loses the capacity to practice. She articulated that with better documentation on how one’s interest is held in the practice and the better the estate can continue to collect. There are certain approaches to holding interest in law firms, but all should be viewed in light of how they will be treated through estate planning.
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