Law firm succession planning: Prepare for your firm’s future

law firm succession planning

Law firm succession planning

Whether you run a small firm or a large law practice, the loss of a key employee or partner can have a massive impact on your firm. Planning for the long-term future  well in advance is key for saving time and money, as well as avoiding stress down the line.

Not only does a  succession plan provide you and your employees peace of mind, it also reassure key clients, suppliers, financial institutes and regulators of the firm’s ongoing and long term future. Law firm succession planning is also key for protecting the value built up in a firm and managing risk.

Small law firms and sole practitioners may face many challenges throughout the succession planning process. A strategy to sell your law firm, close, or transition the practice to another firm maybe be required to protect your clients, your firm, and yourself.

Why is a law firm succession plan required?

Unexpected events: No one knows what is waiting around the corner; an unexpected crisis, such as death or severe illness of a family member, may lead to an urgent change in leadership for your business. It can be difficult to think about these situations in good times, but it is important that your employees and clients are aware of the next steps if a key person at the firm dies or is required to leave their role unexpectedly.

Retirement: A well planned succession and exit strategy will set you up well to enjoy your retirement, providing peace of mind that your firm and clients will be in the right hands. You may wish to establish a successor practice to take over your caseload and staff following your retirement; or you may plan to appoint a member of staff to succeed  you. Increasingly, outsourcing the run off for ongoing matters and closing the firm compliantly is becoming another alternative.

Insurance: For some insurers, a succession plan is necessary when evaluating your business risk. Not having a proper  plan in place may lead to you being refused insurance for your business.

Business strategy: A succession plan within your business strategy will add value to your business, provide stability for the future , and prevent adverse effects on your business  during times of uncertainty. It also ensures  your firm are able to continue provide great client service, even during the most difficult times.

 

Things to consider when making a succession plan

There are lots of things to consider when making a succession plan, including estate planning. We highly recommend that you ensure your Power of Attorney and your Will are kept up to date to include details of your succession plan.

Your plan should include  exactly what will happen to your firm, your staff and your caseload when you are no longer around. You may wish to  appoint a member of staff to head up the firm, consider a management team acquiring  the firm, merge with another law firm, sell your firm, or simply close the firm. Whatever you decide, you will need to consider how the firm will adapt in these situations and how your clients will be looked after.

Planning in advance is key to avoid a distressed situation. Robert Banner at Banner Jones Solicitors highlighted the importance of avoiding the risk of leaving a succession plan too late in a Law Society Gazette article, stating; ” ‘his or her business is not as good as it was because of age or ill-health, and very few firms will look at it’”

 

How can Recovery First assist?

The Recovery First model can be used to assist in law firm succession planning, whether you are a sole practitioner, or a larger firm wanting to exit a specific legal market due to the retirement, death, or unexpected illness of a partner. We can assist whether you decide to close, merge, or restructure your firm as part of your planning.

We also provide a complementary service for professional advisors that assist in the restructuring process or closure of law firms, such as advisory only accountants and restructuring specialists.

Our process involves discreetly selling a firm’s cases to multiple purchasers on our panel of solicitors. This reduces the risks to the buying firms and results in a higher value for the work in progress (WIP) being recovered, whilst ensuring SRA compliance.

If you decide to close your firm as part of your succession plan, we can assist in the orderly run off of files, ensuring full SRA compliance.

Our team manage the transfer of files from start to finish, placing case files with an approved law firm to protect the integrity of the client’s case.

We are an accountancy service provider that has built specialised software and processes to liquidate the full value a law firm has locked into WIP over time. We monitor case progression and conclusion in real time and account back to our clients for the value realised on an agreed reporting period.

 

Why choose Recovery First to assist with law firm succession planning?

Law firm succession planning can be a difficult topic to think about; however, early planning is essential to avoid a distressed situation. Whatever the route you choose to take for your firm, Recovery First will ensure the most positive and profitable outcome is achieved.

Our services are suitable for all types of legal work, using a simple, ongoing process with no up-front costs.

We guarantee 100% confidentiality for all clients. If you would like to find out more about Recovery First’s process, feel free to get in touch today via email (david.johnstone@recoveryfirst.co.uk), telephone (07887796989), or contact Sally Dunscombe at sally.dunscombe@recoveryfirst.co.uk or 07774 205 870.

It's never too late to speak to Recovery First. Contact us now in the strictest confidence

Sally Dunscombe:

07774 205 870

sally.dunscombe@recoveryfirst.co.uk

David Johnstone:

07887 796 989

david.johnstone@recoveryfirst.co.uk

Manchester Address

106 Kennedy Building

Murray Street

Manchester

M4 6HS

Kent Address

PO Box 632

Chatham

Kent

ME4 9FL