How to Sell a Law Firm
Selling a law firm is not as simple as most other business sales and purchase. All sales of law firms must be SRA compliant and must take into consideration a number of factors, such as informing clients of the sale of the practice and dealing with the run-off of files prior to closure of the law practice.
The SRA has set out some guidance on how to sell a law firm on their website; however, we aim to address some of the main points within this article.
Reasons for Selling a Legal Practice
There are many reasons as to why a law practice may decide to close or sell their firm. The main reasons for the sale or partial sale of a law firm include:
- Financial struggles
- The decision to explore alternative avenues
Whatever the reason for deciding to sell a law firm, Recovery First can assist in the run-off of files whilst ensuring maximum WIP recovery on the sale of the firm/files.
Planning for the Sale of a Law Firm
When selling a legal firm, it is important to plan for the sale in advance. It may take 2-3 years to fully prepare for the sale, and you should always inform the SRA that you are planning to sell your law firm. In preparation for the sale, you should:
- Get your firm into good shape in the years leading up to the sale and ensure that there are no outstanding compliance issues.
- Ensure that your firm remains profitable to ensure you get the best price for your firm and/or files
- Ensure that your staff are motivated and performing well to get the best price for your firm if the sale of your firm involves the transfer of staff.
Selling to a Single Purchaser
In some sales, a single purchaser may agree to purchase all your files in bulk, and the transfer of staff may also be included. The downside of selling to a single purchaser is that you may not get the best price and WIP value for your cases.
Selling to Multiple Purchasers Using Recovery First
As an alternative to selling your law firm to a single purchaser, Recovery First provides a method of running off your Work in Progress files by selling them to a panel of multiple Solicitors. The firms in our panel of Solicitors assist by taking on part-run cases and running them to conclusion. On the successful conclusion of each case, the Solicitors then pass their obtained files onto an independent cost drafting firm to assess each case so that they can allocate a fair split of costs. The benefit of running off files in this manner is that we can ensure that you retain the value of your WIP in a fully outsourced, managed, and compliant manner.
Selling Part of a Law Firm
In certain circumstances, a law firm may wish to sell only part of their law firm; for example, they may wish to exit a specific market, such as Personal Injury. This type of sale can be particularly useful during times of restructuring, or when a firm is facing financial struggles, they may wish to run-off some of their files to focus on more profitable areas of law.
In the same way, as mentioned above, Recovery first can assist your firm in the sale of specific files whilst ensuring you recover the maximum WIP value.
Why Choose Recovery First?
Recovery First is the optimal choice for those looking for a structured exit from the legal market and wanting to recover 100% of their WIP value, either due to difficulties in continuing their practice or due to retirement/restructuring.
Whatever the reason, Recovery First will ensure the most positive and profitable outcome is achieved. The unique scheme offered by Recovery First is suitable for both law firms and professional advisors. Our team manage the transfer of files from start to finish; placing case files with an approved law firm so as to protect the integrity of the client’s case.
We guarantee 100% confidentiality for all clients and perform due diligence on all files. If you would like to find out more on how to sell a law firm using Recovery First’s process, feel free to get in touch today using the contact information or fill in the form on our “Contact Us” page, and we will contact you to discuss the process.