Senior Attorney Match Podcast

During Ep. 38 of the Ask the Law Firm Seller Show, Jeremy E. Poock, Esq. addresses the following question:

What are the Components to Valuing a Law Firm?

As Poock explains, “When it comes to valuing a law firm, there are 5 key components to the valuation for what a law firm is worth.”

Those 5 components consist of the following:

(1) Client List

(2) Referral Source List (together with the Client List, the “Book of Business”)

(3) Key Employee Lawyers & Support Staff

(4) Subject Matter Knowledge

(5) Digital Value

Poock then poses the following 2 questions:

(a) Who wants and needs the 5 Components of Value? and

(b) What will they pay for it?

Distinguishing between internal successors and Growing Law Firms, Poock points out that Growing Law Firms want and need the 5 Components of Value that a selling law firm offers because the 5 Components of Value compliment the following 3 resources that Growing Law Firms need:

(1) More clients

(2) Talented lawyers and support staff; and

(3) Digital content

Regarding how much a Growing Law Firm will pay for the 5 Components of Value, Poock explains the following 2 law firm sale structures:

(1) Law Firm Sales 1.0 in which a seller’s value primarily relates to its Book of Business (client list & referral source), where the financial terms typically involve an earnout pegged to collections derived by a purchasing law firm from a selling law firm’s Book of Business during a negotiated period of time; and

(2) Law Firm Sales 2.0, which involves a fixed price, plus earnout terms, where the fixed price derives from the predictability of client originations attributable a selling law firm’s Digital Value and Brand Equity.

During Ep. 37 of the Ask the Law Firm Seller Show, Jeremy E. Poock, Esq. addresses the following question:

I found a Buyer for my law firm, but we have not agreed upon terms yet. What do you recommend?

At the outset, Poock clarifies the scope of the question to apply to Small Business Law Firms, typically owned by 1 or more founders.

Poock next distinguishes between why sellers typically have difficulty agreeing upon terms with either of  the following 2 types of purchasers:

 

(a) Internal successors; and

 

(b) Growing Law Firm purchasers.

 

Regarding internal successors, Poock explains the following as typical reasons for why negotiations stall:

 

Most internal successor prefer remaining as key employee lawyers because of their concerns about the following risks associated with purchasing their boss’ law firm: (i) Risk of decreased originations after the firm’s founding Rainmaker(s) retire; (ii) Risk of not affording to pay a purchase price; (iii) A need to work even harder; (iv) A worsening work-life balance; (v) Personal financial risk associated with guarantying an office lease and bank credit line; and (vi) Risk of key employees departing the firm.

 

Based upon those risks, key employee lawyers often stall negotiating purchase terms, followed by, at some point, sharing their preference to remain as an employee, rather than an owner of their boss’ law firm.

 

Poock then explains the following typical reasons for why negotiations stall between selling law firms and Growing Law Firm purchasers: (i) Discomfort with asking difficult questions during due diligence; (ii) Not necessarily knowing terms to include in a letter of intent, offer, or similar document; and (iii) Difficulty negotiating financial terms with a buyer who is often a colleague or friendly competitor.

 

As a cure to such stalled negotiations, Poock shares the following advice:

 

That the parties consider engaging a deal intermediary to facilitate completing due diligence, negotiating purchase terms, and preparing an agreement.

 

Here’s why:

 

The value of a deal intermediary includes: (i) Asking difficult questions to a seller and a buyer, including financial questions, experience level questions, post-Closing role questions, and more; (ii) Sharing the answers to difficult questions with each party, together with assisting the parties to remain focused on reaching deal terms; (iii) Facilitating the negotiation of deal terms; and (iv) Assisting with drafting deal terms into a Letter of Intent, followed by an agreement.

 

So, when a selling law firm and a purchasing law firm become “stuck in the mud” with reaching terms, a deal intermediary can provide the value needed to assist the parties with completing due diligence, facilitating negotiations, and reaching a win-win agreement.

During Ep. 37 of the Ask the Law Firm Seller Show, Jeremy E. Poock, Esq. addresses the following question:

Why do purchasing law firms need to hire the lawyers and support staff of a selling law firm?

As Poock explains,

“There's really four reasons why purchasing law firms need the lawyers and support staff from a selling law firm, and it's broken down into two categories. The first two needs relate to the clients of a selling law firm, and the second two needs [relate] to the clients of a purchasing law firm.

 

Regarding the first category, as it relates to the clients of a selling law firm, Poock explains that the lawyers and support of a selling law firm fulfill the following 2 needs of a purchasing law firm:

 

1. Continue representing the clients who comprise the Book of Business that a selling law firm presents to a purchasing law firm; and

 

2. Facilitate the post-sale “Trust Transfer” of the clients of a selling law firm to the lawyers and support staff of the purchasing law firm.

 

Regarding the second category, as it relates to the clients of a purchasing law firm, Poock points out the following:

 

1. As today’s Growing Law Firms continue to generate new clients digitally, they need talented lawyers and support staff to provide high quality legal services to those clients, which the experienced lawyers and support staff of a selling law firm can provide, often with minimal, additional training.

 

2. In addition to needing talented and experienced lawyers and support staff, Growing Law Firms need a stable workforce, which lawyers and support staff from a selling law firm provide because they have a similar need for stability in the form of needing to maintain a reliable, predictable, and safe job.

 

Taken together, purchasing law firms need the lawyers and support staff of a selling law firm to: (a) Ensure maintaining relationships with the clients of a selling law firm; and (b) Increase the talent pool at a purchasing law firm to provide top notch legal services to clients whom a purchasing firm self-originates, often via digital marketing in today’s Digital Era for the legal industry.

In Episode 72 of the State of the Market for Law Firm Sales in 11 Minutes, Senior Attorney Match’s Jeremy E. Poock, Esq. addresses the following:

The 4.5 Reasons Why MSOs Have Arrived to the Legal Industry   

 

During the course of Ep. 72, Poock explains the following reasons why Management Services Organizations (MSOs) have arrived to the legal industry in the mid-2020s.

 

Reason No. 1: Today’s clients search for lawyers online

 

Reason No. 2: The emergence of Digital Rainmaker law firms

 

Reason No. 3: Today’s lawyers want a Reliable, Predictable & Safe Job

 

Reason No. 3.5: Legal Tech delivers better work-life balance for today’s lawyers

 

Reason No. 4: Opportunities for Profits & Exits

During Ep. 36 of the Ask the Law Firm Seller Show, Jeremy E. Poock, Esq. addresses the following question:

What is a Law Firm to Law Firm Sale?

As Poock explains,

“The predominant sales of law firms continue to be Law Firm to Law Firm sales.”

 

Typically, Law Firm to Law Firm sales involve the following:

 

The sale or merger of law firms lead by Senior Attorney founders to Growing Law Firms who seek the following 3 resources that selling law firms offer:

 

1. Clients for whom Senior Attorney sellers offer their Books of Business, which they have often developed over the course of decades.

 

2. An experienced workforce, consisting of talented attorneys and non-attorney staff who want and need a reliable, predictable, and safe job.

 

3. Subject matter knowledge in multiple practice areas, whose utility includes the following: Content for digital marketing to attract the attention of today’s clients who search online for lawyers and law firms to retain.

 

Poock also shares the following 2 typical components to Law Firm to Law Firm Sales:

 

(a) Earnout Purchase Terms: In most Law Firm to Law Firm sales, payment terms involve earnouts based upon the owner(s) of a selling law firm receiving a percentage of collections attributable to a selling law firm’s Book of Business, payable over a negotiated period of time.

 

(b) The Importance of Trust Transfer: To maximize earnout payments, sellers need to transfer the trust of their long-time clients to lawyers at a purchasing law firm.

 

As Poock, states, “The importance of Trust Transfer . . . cannot be underscored. When a law firm sale happens, the seller should really have an expectation that the purchasing firm is going to need the selling Rainmaker Attorney or attorneys to transfer the trust of the clients to lawyers at the growing firm. And then, the consideration is fee sharing over a negotiated period of time.”

During Ep. 33 of the Ask the Law Firm Seller Show, Jeremy E. Poock, Esq. addresses the following question:

I am tired of running my law firm, but I still want to practice. What options do you recommend?

Poock begins by pointing out that many of today’s Senior Attorney law firm owners have become tired of running and managing their offices.

After explaining succession planning options that Senior Attorneys have, Poock shares the following preferred option:

Selling to or merging with a Growing Law Firm, which typically provides Senior Attorney law firm owners with the following:

A pathway to transform from Tired to Inspired to Retired

By joining a Growing Law Firm, Senior Attorneys become inspired by:

1. The relief of no longer managing the day-to-day affairs of their law firm; and

2. Joining a Growing Law Firm that wants and needs the clients, experience, and know-how that Senior Attorneys have developed over the course of their careers.

After joining a Growing Law Firm and typically continuing to practice during a negotiated time period, Senior Attorney sellers can then retire with the pride and peace of mind of leaving a legacy that includes:

(1) Ensuring that their clients will continue benefiting from ongoing, competent representation;

(2) Securing ongoing employment for their talented lawyers and non-lawyer staff with a Growing Law Firm purchaser; and

(3) Sharing a career’s worth of experience and knowledge, together with providing treasure chests of Subject Matter Knowledge for a Growing Law Firm purchaser to convert to Digital Content to attract the attention of new clients who search online today for lawyers and law firms to retain.

During Ep. 33 of the Ask the Law Firm Seller Show, Jeremy E. Poock, Esq. addresses the following question:

Why should I consider selling my law firm within the next 1-2 years?

 

Poock begins by sharing the following 5 typical reasons for why “now” presents the right time to sell a law firm:

(1) Low probability of selling to an Internal Successor a/k/a a key employee lawyer

(2) The arrival of growth by acquisition to the legal industry

(3) The need to spend more time outside of “the office”

(4) Not generating as much new business as yester-year

(5) Upcoming lease renewal

When contrasting key employee lawyers as buyers to Growing Law Firm buyers, Poock distinguishes between key employee lawyers who want a reliable, predictable, and safe job to Growing Law Firms who view growth by acquisition as presenting the following 3 benefits:

 

(a) Instant client growth;

 

(b) Adding experienced lawyer and non-lawyer staff to their workforce; and

 

(c)  Opportunities to convert decades of Subject Matter Knowledge into Digital Content to publish to multiple channels of digital marketing to attract the attention of today’s clients who search online for lawyers and law firms to hire.

 

Poock concludes by sharing the following non-financial benefits that Senior Attorney sellers of law firms experience after they sell to or merge with Growing Law Firms:

 

(1) The joy of spending more time outside of “the office,” including more time with family.

 

(2) The dual satisfaction of knowing that clients will continue to receive ongoing representation, together with the satisfaction that a Growing Law Firm often hires a selling law firm’s lawyers and support staff.

 

(3) The ability to continue practicing, often as Of Counsel attorneys, benefiting from having the time to focus on what Senior Attorneys enjoy (egs. business development, drafting, litigating, etc.).

In Episode 71 of the State of the Market for Law Firm Sales in 11 Minutes, Senior Attorney Match’s Jeremy E. Poock, Esq. addresses the following:

Why Senior Attorneys Smile after Selling to a Growing Law Firm   

 

Poock begins by sharing the following 2 popular reasons for why Senior Attorneys decide to sell their law firms to a Growing Law Firm:

 

1. The need to no longer manage the law firm that they have built over the course of their careers.

 

2. Frustration regarding their key employee lawyers not expressing interest to purchase their law firms.

 

Turning to the end of the sale cycle, Poock explains the following 3 reasons for why Senior Attorneys smile after selling to a Growing Law firm:

 

(1) Achieving 4 wins: Senior Attorney achieve the following 4 wins by selling to Growing Law Firms: (i) Monetize their law firms; (ii) Encourage Growing Law Firms to hire their lawyer & non-lawyer staff; (iii) Ensure continuous, competent representation for clients; and (iv) Facilitate growth for a Growing Law Firm.

 

(2) Gaining More Control of Their Lives: By no longer managing “the office,” Senior Attorneys can finally take a 3-week vacation, or even go away for months at a time. Also, for those Senior Attorneys who continue practicing (and many do), they can pick and choose which clients with whom they want to work.

 

(3) Benefiting by Leaving a Legacy: By selling to a Growing Law Firm, Senior Attorneys sellers benefit by transforming from their law practices, defining their identities to leaving a legacy of: (i) Taking care of their clients; (ii) Taking care of their employees, and (iii) Sharing the experience and knowledge that they have developed over the course of their careers.

 

As Poock states, “So, when [I] go on to the websites of the Growing Law Firms that our clients join, I am just not surprised anymore at all that our clients smile when they take . . . the pictures for their bios at the Growing Law Firms to whom they sell.”

During Ep. 35 of the Ask the Law Firm Seller Show, guest Dennis Meador, Founder of The Legal Podcast Network (LPN), turns the microphone around asks the following question to Senior Attorney Match’s Jeremy E. Poock, Esq.:

What is the “sweet spot” age for lawyers to sell a law firm?

 

Poock responds by distinguishing between the sales of Senior Attorney-led law firms and Start-up Law Firms.

 

Regarding law firms owned by Senior Attorneys, that is, attorneys who have practiced for 30+ years, Poock shares the following:

 

Ages 55-75 present the right age for Senior Attorneys to sell their law firms.

 

Why?

 

As Poock explains, “We find that lawyers between ages 55 and 75 . . . [are] in the MVP years of their careers . . . meaning that they have the knowledge to know one or more practice areas super well that attracts clients to their firm. They've developed a reputation in their community, in their state, regionally, sometimes even nationally. They close on matters regularly.”

 

Based upon typical earnout terms tied to a selling law firm’s Book of Business, Senior Attorney law firm owners realize maximum value during the MVP years of their careers by presenting the following to a purchasing law firm:

 

A Book of Business filled with clients and referral sources

 

When Senior Attorney law firm owners wait too long to sell, though, the value of their law firms decreases due primarily to the following:

 

Originating less new clients than yester-year, which results in offering a less valuable Book of Business to a purchasing law firm.

 

In contrast to the sales of Senior Attorney-led firms, Poock points out the following new trend in law firm sales:

 

The sales of Start-up Law Firms, whose value relates to Digital Value and Brand Equity, as compared to the Book of Business value of Senior Attorney-led firms.

 

As Poock points out, purchasing law firms will pay “real money” at a closing table in consideration for Start-up Law Firms because purchasing firms want and need the following during today’s Digital Era for the legal industry:

 

1. Clients;

 

2. Digital Value; and

 

3. Brand Equity

During the guest appearance of Ep. 35 of the Ask the Law Firm Seller Show, Dennis Meador, Founder of The Legal Podcast Network (LPN), discusses the following:

Podcasting as an Example of Brand Building & Thought Leadership for Today’s Digital Rainmakers

 

Since founding LPN in May 2024, LPN has grown to host over 200 legal podcasts and publish over 400 podcasts each month.

 

Addressing the growth of lawyer hosted podcasts, Meador distinguishes between:

 

1. Community building podcasts in which lawyers interview guests for the purpose of providing community type value by interviewing guests and essentially becoming a center of influence; and

 

2. Authority podcasts in which a lawyer can exemplify subject matter authority by publishing content geared toward the client profiles of a podcast host.

 

Meador elaborates about the value of authority podcasts from the standpoints of digital content delivery, personal branding, client development, and establishing “know, like, trust” relationships via content-rich podcast episodes.

 

Poock and Meador also discuss the following value that legal podcasts offer from the standpoint of law firm sales:

 

1. The development of brand value based upon the authority derived from content-driven podcasts;

 

2. Client attribution data when new clients credit a legal podcast as the reason for contacting a lawyer or law firm; and

 

3. The interest of law firm purchasers to succeed to the Digital Value and Brand Equity that established legal podcasts present.