I recently worked with two elder solo attorneys in excellent health. They wanted to work 2-3 more years at almost a full-time pace. However, they were old enough and wise enough to know that a sudden health issue could derail all of that if they didn’t make a plan soon.
I’ve written before about the risks of dying at your desk. Suffice it to say that if that occurs, you leave a mess for clients, staff, and especially grieving spouses and children. Further, selling a practice is way more difficult without the owner around. And even if it can be done, it is usually at fire sale terms.
The sensible strategy is to find a successor law firm sooner rather than later and eliminate the risks of dying at your desk. But doing so comes with a financial cost and a practical one.
Here’s the financial cost. If you still want to work, your earnings will decline during those last years while at a successor firm for two reasons. Your successor’s overhead costs will likely be higher than yours were as a solo, especially if the new firm has multiple lawyers. You will also have to share some of your profits with the successor law firm’s owners. Combine the two, and your take-home pay will take a hit during your last years.
The practical cost? You won’t be able to do things “your way.” Indeed, some successors may tell you that you can, but don’t believe them. You‘re joining their firm, and they like how they already do things. They will probably not listen to you very much.
Finding the “Win-Win”
There is a solution. Find the successor now, join in an “of counsel” role, but keep your solo firm fully operational. Most, if not all, states, allow solos to have “of counsel” relationships at other firms as long as clients know whether you are doing their work as a solo or as a representative of the successor firm.
For this type “of counsel” arrangement to work, you need to have some kind of bona fide relationship. The amount of work you do in the “of counsel” role can be minimal. Examples could be co-counseling on matters where you might need a warm body to help out or referring select matters.
Most importantly, you specifically include a provision stating that the law firm will serve your clients in the event of death or disability that provides for a method to determine a purchase price. It should also have a future transition date when you plan to join the successor law firm for all of your work and close your solo practice. Finally, don’t forget that client conflicts need to be handled properly, but in most small to mid-size firms, client conflicts between the “of counsel” attorney and the successor clients rarely exist.
This is a win-win for the senior solo lawyer and the successor law firm. The senior lawyer can maximize earnings in the last years without adjusting to a new setting. The law firm has the assurance that it will eventually benefit from a retired lawyer’s book of business. Further, both parties can use this newly solidified “of counsel” relationship to learn how to best work together and prepare for when you are ready to slow down or exit so it can be a seamless transition when the time comes. And finally, there will be far less panic for everyone should the unexpected happen.