3 Reasons You Should Tell Your Employees You’re Planning to Sell Your Law Firm

As a solo or small firm lawyer, you have a unique position in life. Despite what you might think, you aren’t just a lawyer: You are also a small business owner! And as a small business owner it’s very likely that you have employees who depend on you and your business for their livelihoods.

If your firm is anything like mine, you work closely with your staff day in and day out, and you honestly care about their well-being. However, this same care and close working environment can become a source of anxiety when you’re considering selling your firm. Many attorneys won’t discuss selling their firm at work, they’ll tip toe around any research into the matter, and won’t take measurable steps to make their firms more salable, all out of fear that their employees will find out. 

My question to you is, “What’s the big deal if your employees know that you want to sell?” 

Of course, as the business owner, you must be capable of framing the conversation properly. But, by and large, the uneasiness and frenzied need for privacy stems from a fundamental misunderstanding of what the sale process is and how an exit strategy works.

Let me try to put your mind at ease. Here are three reasons you should not only reconsider but should 100% tell your employees you’re planning to sell.

It’s a Process

Selling your law practice isn’t going to happen overnight. When you have the conversation with your staff about putting an exit strategy in motion, the culmination of that strategy could be as many as 7 years down the road! There isn’t going to be a mass exodus of your employees the minute you announce that you are implementing an exit strategy that will unfold over a long period of time.

Plus, if you think your employees don’t notice what’s going on, you’re wrong. Your long-term employees will know that your days of practicing are coming to an end, they’ll notice the subtle changes in your behavior that signal you’re slowing down. Eventually, not knowing will gnaw at them, and they’ll begin making their own plans.

Selling Doesn’t Mean Fire Sale

Second, quite often lawyers are working from a misunderstanding of what selling their firms looks like. If you think that selling your firm means your employees lose their jobs, your clients get the boot, and the doors of the firm close, then, yes, you have every right to be nervous. This is a liquidation; it is very unprofitable, and isn’t really a sale at all.

But you aren’t going to liquidate your firm! You have access to advice and guidance from experienced professionals. You are going to adopt a more profitable exit strategy and either sell your practice through an internal sale or an external sale.

However, the mere fact that you’re reading this piece leads me to believe that you are going to make the smart choice and plan ahead for the future of your employees and your firm.

To recap: If you plan to tell your employees, “I’m liquidating my law firm, I’m doing it next week, and you’re all out of a job!” then, yes, you should be very cautious about when and how you go about discussing the sale of your firm.

The whole point of beginning this process early and developing and implementing a sound exit strategy ahead of time, is to ensure that you, your clients, and your employees are cared for after you have successfully transferred your practice.

Employees Are Vital to Your Firm’s Value

Finally, your employees are essential to ensuring that the sale process goes smoothly.  

You aren’t the only thing making your firm run. Other employees are providing essential services to support your firm. Whether we’re talking about a senior paralegal, marketing manager, or client intake supervisor, these employees are a vital asset to your firm, and as such will be included in the calculation of sale price.

Any buyer will want key employees to stay on with the firm after the sale to ensure a smooth transition. If all your primary employees leave the firm, the salability of your firm will plummet. No buyer wants to buy a law firm that she will have to re-staff entirely because that downtime would cause a serious decrease in productivity.

Not only that, but in preparation for your sale, these employees will be instrumental in helping you make improvements to your firm to increase its salability.

The way to figure out whether these employees will stay on when you transition the firm isn’t to hide your intentions until the last possible minute; it’s to include them in the discussions early so they can help you prepare your firm and maximize its value and salability.

Timely Discussions

Far from being afraid to tell your employees that you are going to sell your practice (whether through an internal or external sale), your best option is to tell them at the appropriate time, frame the sale correctly, and bring them on board. They are a valuable part of your firm.