Designing a Succession Plan for Your Law Practice: A Step-by-Step Guide for Preparing Your Firm for Maximum Value

By Tom Lenfestey and Camille Stell

The insider's guide to selling a law practice, transferring ownership, and designing a great Life After Law, written by two of the top  authorities in succession planning.

• Language: English
• Publisher: LM Press
• Release date: Jan 25, 2021
• ISBN: 9781734108637

Book preview

To assist you with your succession plan, we have also put these resources and additional tools, templates and helpful guides online at www.designingasuccessionplan.com.

Published by Lawyers Mutual Consulting & Services

1001 Winstead Drive, Suite 285

Cary, NC 27513

© 2021 by Camille Stell and Tom Lenfestey

All rights reserved

First edition, 2021

ISBN 978-1-7341086-2-0

ISBN 978-1-7341086-3-7 (e-book)

WHAT OTHERS ARE SAYING

You might be reluctant to think about a succession plan when you pick up this book, but as you read on, you will become positively eager to get going! Camille and Tom will convince you why you need one, explain your various options, then take you through the process step-by-step with practical advice, real-life examples, and good humor. Whenever the time comes for you to leave your practice, having that succession plan will help you do it with a deep sense of readiness and satisfaction.

— Ida Abbott, JD, Author of Retirement By Design (Ulysses Press, 2020)

Having worked with Camille on numerous seminars and conferences targeted at improving all areas of law practice management, and specifically those regarding succession and transition planning for law firms, I have seen first-hand the depth and breadth of her expertise in the matter and I have witnessed her commitment to helping law firms survive the transition from one generation of lawyers to the next. The scenarios, quizzes, how to chapters, as well as firsthand stories Tom and Camille share are the tools a lawyer needs to start their own succession planning process. This book can also serve as an introduction to Tom and Camille as members of their succession planning team. The book is designed to assist solo and small firm lawyers create a succession plan that includes transferring ownership of their law firm to an internal buyer or an external buyer. Succession planning doesn’t mean you stop work today, but that you have a plan for success in moving forward.

— Rachel Blunk, Managing Attorney, The Forrest Firm

Practical. Readable. Motivating! Designing a Succession Plan For Your Law Practice is an invaluable resource and planning guide. Solo and small firm partners will be especially interested in the sections on valuing and selling a law firm. All lawyers will appreciate the practical, expert advice outlining the options that await lawyers in this next phase.

— Joan H. Feldman, Editor/Publisher, Attorney at Work (AttorneyatWork.com)

Lawyers nearing the end of their careers will soon transition from the practice of law to the next phase of their lives. These lawyers, and their family members and friends, need help to accomplish this complex and challenging task. Tom Lenfestey and Camille Stell have provided the perfect resource with Designing a Succession Plan for Your Law Practice. This accessible and engaging book, written by two of the nation’s leading experts in law practice succession, guides lawyers step-by-step past the initial reluctance to contemplate the end of practice through the exciting process of envisioning their post-law future, and covers every last practical detail involved in valuing and selling a practice, preparing successors, looking after your clients, and charting a course forward. This book is an invaluable resource for accomplished lawyers approaching their final years in practice -- and makes an ideal gift from those who care about them.

— Jordan Furlong, Legal Market Analyst and Principal, Law21

The legal market is entering a seismic shift as the practice of law changes and many aging lawyers prepare to exit full-time practice. There has never been a more important time for lawyers and law firm leaders to embrace succession planning. Yet too many wait, and by so doing limit their ability to shape the outcome most effectively. In Designing a Succession Plan For Your Law Practice, Tom and Camille bring their significant experience and steady hands to an important topic with guidance that covers the emotional as well as the financial and practical. This book provides a clear road map to developing an exit strategy that is good for both the departing lawyer and for the law firm. Let them lead the way!

— Tim Corcoran, Principal, Corcoran Consulting Group

I have worked with Camille Stell and Tom Lenfestey and have observed them collectively handle the emotional and sometimes difficult issues with succession planning while simultaneously working through the economic matters law firms have during transition. I would highly recommend this book for any lawyer or firm who would appreciate working with a team of caring professionals during succession planning.

— Tea Hoffmann, Esquire, Law Strategy Coach, Managing Principal

FOREWORD

Reading this book could be one of the smartest decisions you’ve ever made.

I should know, because the two authors have worked wonders for me. With their expert help, I now know the answer to the question, What will I do if I’m not practicing law? And with their skillful guidance, I’ve got a plan for getting there.

They can do the same for you.

48 Years and Going Strong

I’ve been practicing law in North Carolina for 48 years. Licensed in 1972, I hung out my shingle as a sole practitioner in my hometown of Statesville, NC before forming a partnership with Richard Phillips. Richard and I practiced together for 25 years until his death five years ago.

At that point, I had already spent more than four decades helping people deal with some of the most difficult problems they would ever face – some of which were unsolvable. When I tried cases in court, there was always a lawyer on the other side trying to beat my brains out. For my clients – facing the loss of their children, their home, or their life savings – the stakes could not have been higher. As if that weren’t enough to worry about, I was running my own business and managing a team of exceptional people who trusted me to pay them every Friday.

And there was one more stressor added to the above list. The great Willie Mays said he loved baseball so much he would have played for free. (Of course, he said this after he retired.) However, I am not like Willie Mays. I choose to be paid. For 48 years, I have had to balance my desire to help people with my need to pay the expenses for my business and for the biggest joys in life – my seven children and my wife.

These years of practicing law have been the best of times and the worst of times. I have helped thousands of people, one at a time. I have never been bored. I have supported my family financially. I would do it all again, no doubt about it.

A Look Back, A Life Ahead

Here’s what another baseball great, the Hall of Fame pitcher Satchel Paige, said about growing older: Don’t look back. Something might be gaining on you. I disregarded Satchel Paige’s advice and I looked back. Call it Father Time or God’s Plan, but I saw something gaining on me.

So, last year, in my 47th year of practicing law, I decided to think seriously about retirement. I was 74 years old. My father had died at age 91 and my mother had died at age 95. My law partner, Richard, had died at age 56. I had no clue how to retire, other than just quit and walk away. I had seen law practices simply dissolve when a successful lawyer died, became disabled, or just quit. I didn’t want that for my law practice, my employees, my clients, or my family.

I needed a plan.

About this time, I attended a Lawyers Mutual CLE seminar that included an hour or two of information about transitioning my law practice. The speakers, Camille Stell and Tom Lenfesty, were dynamic and knowledgeable. They told me exactly what I needed to hear.

Camille and Tom confirmed my thinking that I needed a succession plan.

Facing That One Big Fear

After the seminar, I spoke to Tom and Camille. I knew that they could help me form a plan to transition my law practice. They arranged for me to come to Cary and meet with them for a day and a half. This was extremely valuable.

In our talks, Camille and I discovered one of my biggest fears was, What will I do if I’m not practicing law? I discovered I’m not the only person facing retirement who asks that question. Camille and I discussed the perceived loss of identity when a lawyer retires. We discussed why my identity was so dependent upon my profession. Together, we concluded that I did not want to die with my wingtips on, and that I was ready to slow down my 80-hour work weeks. These and other related issues are critical to a meaningful retirement and, for me, a meaningful succession of my 48-year law practice.

I needed to face my fear of losing my identity as a practicing lawyer. Maybe that is not a fear you have. I can only speak for myself. Camille’s counsel, sound advice and encouragement have been invaluable. She helped me to not only accept retirement, but to embrace the journey.

But could I afford to retire?

From Abraham Lincoln to a Succession Plan

Here is where Tom’s knowledge and expertise came in. First, I needed the answer to the following question: Does my law office have a financial value? In my waiting room, I have a plaque of Abraham Lincoln’s quote: A lawyer’s time and advice are his stock in trade. I discovered that Lincoln was not totally correct.

Tom helped me see there is more to a successful law practice than giving good advice and spending time with clients. A successful law practice must have clients. Many of my clients are repeat clients. Tom helped me understand that most of them will continue to come to this law firm, even as I slow down my practice, if I do a few critical things, which are explained in this book.

Tom was able to calculate a financial value for my law practice by using his knowledge as a CPA and an experienced attorney in these matters. It was important that this value be reasonable to me and to my potential successors.

I am by nature a planner. So, naturally, I was delighted when Tom said we would design a succession plan. This plan included identifying the best prospects to purchase my law practice. The plan was not just for me. It was also for my prospective purchasers, my clients, my employees, and for my family.

Succession Planning Doesn’t Mean Stopping

Tom gave me sound legal advice and sound accounting advice. Just as importantly, his encouragement helped me realize that I could expand my law firm prior to retirement. Amazingly, I was able to do so even during a pandemic. Six months before my partner died, we had hired an associate attorney fresh out of law school. I added another associate around the time I first met with Tom and Camille, and a third associate some months later. Then Tom guided me through negotiations with an experienced trial attorney who will join our law firm at the end of this year.

When I first consulted Tom and Camille about succession, I had no