Remember back to the days when you were just getting your law firm off the ground? Day after day, you pounded the pavement for business — volunteering for thankless tasks for a bar association committee, treating an endless stream of colleagues to coffee or lunch, rising at 5 a.m. to post a new entry on your blog or update your LinkedIn profile or circulate a couple of tweets — only to come away with one or two paying matters and a bunch duds.
Meanwhile, you couldn’t help but notice that one of your colleagues at the bar – let’s call him Jones – consistently attracted more clients than he knew what to do with. One day, you mustered up the courage to ask Jones his secret and he said, “I guess I’ve just been around long enough to make a name for myself.” Sure enough, when you asked other colleagues who they’d recommend for an [estate or family law or immigration or you-fill-the-blank specialty], Jones always topped the list. And so, you dreamed of the day that you too would might be like Jones – known as the go-to lawyer guy or gal in your practice area who could attract cases on nothing else but sheer force of reputation or “cult of the personality.”
As the saying goes, be careful what you wish for. Fast forward two decades, and you’re nearing the end of a successful solo career. You stuck it out through those first few salad years and slowly but surely, you gained renown within your practice area and amongst colleagues and clients.
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Suddenly, like Jones, you too were fielding calls, with prospects asking to retain you, gushing about the great things that others had said about you. And when those prospects asked for assurance that you would be the only one handling their case because you were the reason that they’d come to your firm to begin with, you were all too happy to oblige.
Over time, the cases kept coming, increasing in both complexity and financial renumeration – and you reached the point when you had enough work and sufficient confidence in your firm’s financial future to bring an associate on board. Yet somehow, that never worked out: either the associate couldn’t master your practice area and you lacked the time to train them, or your clients didn’t want to work with an associate; they wanted to work with you. So, you resigned yourself to continue as a one-man (or one-woman) band by incorporating more technology to replace associate labor and raising your rates so that you could earn more while working less. Yet now, as you get ready to shutter your practice, you realize that this entity that you built from nothing really has no value if you’re not a part of it.
That, my friends, is both the blessing and the curse of a cult-of-the-personality firm. A firm centered on the notoriety of a single person will do very well indeed and after the initial investment, the cult-of-the-personality firm will generate enough money to support a comfortable living, to pay for college and even to sock away a nice nest egg for retirement. That’s the upside. But on the downside, a cult-of-the-personality firm can’t grow if your clients refuse to work with anyone in the firm but you, and a cult-of-the-personality firm has no value once you leave – because even if you were to sell the firm lock, stock and barrel to another lawyer, the clients would just as well go elsewhere because you wouldn’t be available to serve them. As a result, cult-of-the-personality lawyers can’t reap the most significant benefit of ownership: cashing in on the appreciated value of the asset itself.
So what can cult-of-the-personality lawyers do, particularly as they near retirement, to maximize the value of the asset that they built? Here are a few suggestions:
- Team up with a hungry lawyer. Even if hiring an associate as a way to grow your practice didn’t work out before, this time, take a different approach. Instead of grooming an associate to take over your practice, use your reputation and the associate’s energy to expand into a related practice area that will generate new clients. For example, if you have a transactional practice working with small businesses who come to you with recurring problems, you might team up with a lawyer with experience in estate planning and business succession. You could support the estate planning lawyer’s efforts to market to clients in need of those services, thus generating a whole new client base. In addition, you could also cross-market the estate planning lawyer’s services to your business clients, who would be more likely to work with another attorney on matters where you lack expertise. Once the firm’s clientele is built up, you could begin to transition out and negotiate a transfer or sale of your practice (for more information on this, see some of the resources on selling or retiring from a law practice at Roy Ginsburg’s website ).
- Merge with another firm. Instead of bringing someone on to your practice, you could also consider a merger or of counsel position with another law firm and after joining, you could cross-sell your clients on services provided by other lawyers in the firm. Depending upon the terms of your arrangement, you could earn generation fees for new business and perhaps a slice of equity in the practice as well.
- Create an ancillary, non-law firm business. If trying to salvage the value of your law firm through continuation of your practice doesn’t appeal to you, you might consider creating an ancillary business related to your practice area. You might, for example, productize your knowledge by creating videos, training materials or informational guides to share your expertise with other lawyers or even consumers. Or, if you’re more ambitious and have unique skills, you can leverage your expertise and reputation to build an e-discovery company, cybersecurity or legal tech company that you could later sell – often without the onerous regulations that apply to sales of law practices.
Solo law practice is a tough game. Colleagues can be competitive and clients fickle. So, if you’ve built a cult-of-the-personality firm that’s endured for ten or twenty or thirty years, pat yourself on the back because that’s quite an accomplishment. Then take the time to regroup, rebuild and squeeze as much value as you can out of the asset before you shut it down.
Carolyn Elefant has been blogging about solo and small firm practice at MyShingle.comsince 2002 and operated her firm, the Law Offices of Carolyn Elefant PLLC, even longer than that. She’s also authored a bunch of books on topics like starting a law practice, social media, and 21st century lawyer representation agreements (affiliate links). If you’re really that interested in learning more about Carolyn, just Google her. The Internet never lies, right? You can contact Carolyn by email at [email protected] or follow her on Twitter at @carolynelefant.