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After over 15 years advising retiring lawyers, one reality stands out: selling a law firm is far less universal than many believe. A sale assumes transferable client relationships, a willing, capable successor, and a business that can operate independently of the current owner. In smaller firms, those conditions are not always present.
This post outlines three alternatives to selling so that you can evaluate your options thoughtfully.
Those three paths are:
- Downsizing
- Winding down
- Shutting down
By understanding what each path involves, you can make deliberate decisions rather than defaulting to an outcome shaped by assumptions or inertia.
#1 Downsizing: Reduce & Continue
What Downsizing Looks Like in a Small Law Firm
Downsizing allows a lawyer to practice law while intentionally narrowing the firm’s scope. Instead of running a full-capacity operation, the lawyer does one or more of the following:
- Takes on fewer matters
- Becomes more selective about clients
- Raises fees, screening out those clients who are unwilling or unable to pay, and becomes more profitable
- Reduces staff and overhead as needed
The practice stays open, but it operates at a smaller, more controlled scale. In effect, the lawyer reshapes the practice to fit a new phase of life rather than walking away from it altogether.
Pros of Downsizing A Small Law Firm
For many lawyers, downsizing offers a gradual transition. Income continues as workload decreases. This allows for more flexibility while still preserving one’s professional identity. For those not yet ready to retire completely, it can extend earning years and make retirement feel less abrupt.
Cons of Downsizing A Small Law Firm
A smaller practice may become less attractive to buyers over time. As revenue and infrastructure decline, both the pool of potential buyers and the final sale price can fall. However, you may recoup the potential loss in sale value, and then some, by working longer under more favorable circumstances. In short, your retirement nest egg will not suffer, but may even be larger when you finally retire.
In some cases, downsizing delays the more difficult final exit decision and does not resolve it completely. Plus, not all expenses may shrink proportionally. This means the net financial benefit may be less substantial than anticipated. On the other hand, if the goal is to maximize a retirement portfolio, you may still come out ahead by earning money for a longer period of time than if you had simply shuttered your practice.
When Downsizing Makes Sense for Small Law Firms
Downsizing may be a good choice for lawyers who still enjoy practicing law but want less intensity. It can be a practical option for those who need to maintain income as well as for attorneys who want to see what life looks like with fewer hours before making a final retirement decision.
#2 Winding Down: An Orderly Conclusion
What Winding Down Looks Like in a Small Law Firm
Winding down is an intentional decision to bring the practice to a close. Unlike downsizing, in which the lawyer continues accepting new work at a reduced level, winding down means the firm stops accepting new matters entirely and focuses solely on completing existing client work.
Revenue declines as existing matters conclude, until the practice finally closes. As the caseload shrinks, staffing, overhead, and operational responsibilities are reduced accordingly.
Pros of Winding Down a Small Law Firm
Winding down offers clarity and control. The lawyer determines the general pace of the exit and avoids the uncertainty of negotiations, buyer compatibility, or post-sale obligations.
Because the shift happens gradually, there is no abrupt break from daily work. The owner maintains structure and professional identity, which can make the psychological transition easier than an immediate shutdown.
Cons of Winding Down a Small Law Firm
Winding down does not generate value beyond ordinary fee collection. There is no monetization of the firm’s goodwill, so the financial upside is capped. While the timeline may feel controlled, it is not always predictable. Certain matters, particularly litigation, can take far longer to resolve than expected.
For some small firms, client relationships do not end neatly when a file closes. Estate planning, business advisory, and other areas often involve ongoing revisions or future needs. In those cases, winding down may require careful referral planning to avoid leaving long-standing clients without support.
Lastly, depending on the situation, the winding-down process can take years. During that time, the lawyer may have difficulty retaining staff and may have to utilize “stay” bonuses to ensure that other lawyers and staff “stay” for the length of time that they are needed. Running a firm that is intentionally shrinking can feel more burdensome than expected.
When Winding Down Makes Sense for Small Law Firms
Winding down suits lawyers who value simplicity, client care, and closure over maximizing financial return. It is often appropriate when the practice’s goodwill is closely tied to the individual lawyer or when no realistic successor has emerged.
It can also make sense for attorneys who want a clearly defined ending. For those who are comfortable accepting that future earning capacity and goodwill will not be monetized, winding down offers a sound conclusion to a long career.
#3 Shutting Down: The Clean Break
What Shutting Down Looks Like in a Small Law Firm
Shutting down is the most decisive exit option. In this instance, the lawyer selects an end date, notifies clients, completes or transitions active matters, and formally closes the practice. Client files are returned or transferred, trust accounts are resolved, and the firm ceases operations.
Many lawyers suggest one or more attorneys who may assume open matters. While clients always retain the right to choose counsel, thoughtful referrals can ease disruption.
Pros of Shutting Down a Small Law Firm
Shutting down offers the fastest and cleanest exit. There is no need to locate a buyer, negotiate terms, or remain involved after closure. Once matters are resolved and administrative obligations are complete, the lawyer is free from ongoing responsibility.
Cons of Shutting Down a Small Law Firm
A shutdown leaves no opportunity to monetize practice goodwill, often resulting in significant unrealized value. Years of reputation, referral relationships, and community presence may simply end rather than transfer.
Clients may experience a loss of continuity, particularly where there are long-standing relationships built over many years. Even with careful notice and referrals, some clients may feel unsettled or displaced, especially in practices where trust and familiarity are central.
Staff may face sudden job loss, and family members may feel the financial impact if the value that could have been preserved goes unrealized. Emotionally, closing a firm abruptly can be tough, too. For lawyers who have invested decades in building a practice, the finality may bring mixed feelings when considering the firm’s legacy.
When Shutting Down Makes Sense for Small Law Firms
Shutting down is most appropriate for attorneys with few ongoing matters or those who are ready for a complete break, regardless of financial outcome. It is often the only viable course when personal circumstances or significant health issues make continued practice untenable. The priority shifts from preserving value or continuity to protecting the lawyer’s well-being and creating space to focus on that which requires attention.
For attorneys experiencing health issues or an urgent need to step away, this approach can provide immediate relief. It may also suit lawyers who no longer feel the desire or energy to continue practicing in any capacity and are simply ready to be done.
Evaluating Exit Options For Your Firm
Many lawyers don’t consciously choose their exit path. Instead, they drift into one. This is far from ideal. Just as you would counsel your clients, it is far better to be proactive rather than allow circumstances to make decisions for you.
Choosing intentionally starts with asking the right questions:
- Do I still enjoy practicing law, or am I simply going through the motions?
- What kind of transition best serves my clients, my staff, and my loved ones?
- How much does monetizing my practice matter to me?
Close Your Small Firm & Legal Career With Care
Selling is only one way to leave practice. For many solo practitioners and small firm owners, downsizing, winding down, or shutting down may be more desirable and realistic. Each path carries tradeoffs, but none is inherently right or wrong.
If you are weighing these options, it is wise to speak with an expert who understands the financial, ethical, and practical realities of law firm exits. These decisions affect not only your income, but also your clients, your staff, your family, and your legacy.
Roy Ginsburg has spent years advising solo practitioners and small firm owners on succession planning. Having worked through many different transitions, he recognizes the patterns that lead to smooth exits and the warning signs that can derail them. Schedule a free consultation today.
