More baby boomer solo practitioners and small law firm owners are thinking about their exit strategies. As well they should, considering the conventional wisdom that if “you die at your desk,” you leave money on the table.
The reasoning behind this wisdom is simple. As a practical matter, retiring lawyers can expect to extract far more value from a practice while they are still alive. But this wisdom does not hold true for every lawyer.
The Upsides to Staying On
Let’s assume that a hypothetical lawyer could obtain a respectable value for a practice by either selling it or going “of counsel” with another firm at age 70. But let’s further assume that this same lawyer still enjoyed practicing law and would rather die at his or her desk than get out and could do so until 75. It then becomes certainly possible that the income from the last 5 years of working could exceed whatever value one extracted at an earlier retirement date.
Do You Have What it Takes to Keep Working?
The “die at your desk” strategy requires a lot of those who pursue it.
First, one needs to still have the “fire in the belly” to maintain success. Few lawyers have that as they approach the twilight of their careers. Understandably, most grow tired of practicing law and want to accomplish other goals during the last years of their lives.
Second, one needs the physical and mental capacity to continue on. That is far easier said than done if you are practicing in your 70s or 80s.
Finally, if retirement is not an option, it is more important than ever to have a comprehensive contingency plan in place if one’s health fails. (Of course, you should always have such a plan in place. However, the chances of getting hit by a bus at 40 is far less likely than having a stroke or heart attack at 70 or 75.)
What Is Your Strategy?
Planning a succession strategy that provides ample opportunity to pull out the value of one’s practice to enhance his or her estate is best for most solos and small firm owners. For a select few, however, trying to practice law forever may be a preferable strategy. Regardless, both options require planning and preparation to ensure success.