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Should You Buy an Existing Law Practice, or Start Your Own?

by Alexa Drago on December 30, 2014

By Guest Blogger Melanie Fischer

If you are considering opening a solo law practice, you have undoubtedly pondered whether you should buy an existing law practice or start your own from scratch. There are certainly pros and cons to both options, and one choice is not necessarily better than the other.

Before deciding which option is best for you, it’s important to evaluate several factors, including the following:

Is there a specific area of law in which you want to focus your practice? If so, you will have to find an existing small law firm that fits the description of the law firm you want to own. While it’s possible to find a law firm that is for sale that vaguely or closely matches your desired practice area, you might not find a perfect match. If you purchase an existing law firm, you will likely have to continue with the firm’s current clients – even if their legal matters do not exactly match your desired legal focus area(s). On the other hand, if you open your own firm, you will be in more control of the direction your law firm takes from the get-go.

Can you work well with the seller(s) of the law practice? In most cases, there is a transition period after you purchase an existing small law practice. In other words, the ownership of the firm will usually not transfer from the previous owner to the new owner over night. Typically, the out-going owner assists with the transition for months or even years. Therefore, it’s important to believe that an excellent working relationship can be possible between the seller and the buyer in order to guarantee a successful transition.

Is the small law firm that you wish to purchase located in a desirable area? Before you make the decision to purchase a small law firm, make sure it’s based in a city or town in which you want to practice law. Even though today’s technology allows professionals to work from virtually any location in the world, a solo law practice often relies on local clients. If you do not anticipate living in the immediate vicinity of the law practice you want to purchase, you might encounter difficulty retaining local clients.

Should you take on debt in order to purchase an existing solo law practice? The answer to this question will not be the same for every attorney considering the purchase of an existing law firm. The answer may be influenced by whether you recently graduated from law school or if you are an older, more experienced attorney. Additionally, if you are a new law school graduate, do you have college or law school student loan debt that you must repay? It’s important to consider your current financial situation prior to committing to debt that may be associated with purchasing an existing law firm.

Does the law firm you are thinking of purchasing actually have real value? It’s incredibly important to know how to evaluate the true value of an existing law firm before you consider a purchase. This can be accomplished with the help of a CPA or an attorney that specializes in helping individuals buy and sell small professional practices (such as law firms, doctor’s offices, dental practices, etc…).

Buying an existing small law firm might be an excellent choice for a young solo attorney that recently graduated from law school. Additionally, the purchase of an existing firm might be a great option for an experienced attorney looking to open a solo practice. However, starting your own law firm from scratch has several appealing benefits as well. For example, the ability to grow and guide your own firm from the very first day you are open for business can be quite appealing.

If you are currently trying to decide whether to purchase an existing law firm or start your own solo practice, try talking to as many solo attorneys as you can. Ask them which route they took, and what they would recommend to you, as a new solo attorney about to embark on the same venture.

 

 

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