As estate planning attorneys, we often advise clients on business succession. We always tell them to start planning early, and then we discuss the many different options for the future of a successful business. What about our own practices?
For attorneys who are starting to think about their exit strategy, a client care program is a means to an end. The recurring revenue and profitability that comes with a successful client care program makes it far more attractive than an estate planning practice without such a program. The enhanced value provides the founding partner with more options and more flexibility.
Whether it is an outright sale, a buy-in by a successor partner, most law firm transactions involve installment payments over a period of years. The recurring and predictable revenue created by a client care program provides revenue that can be used by the purchaser to pay the annual payments on the installment note, making the transaction more secure for both the buyer and the seller.
It’s possible also that the founder of the firm may not want to sell the firm outright. Another alternative is to adopt a CEO model, where the partner or partners retain ownership, but they reduce their every day activities at the firm, paying non-partner senior attorneys to run the practice. Since the firm has recurring revenues, the pressure to consistently bring in new business is replaced by the need to provide the best possible services to existing clients who are already paying.
There is no need to bring in a rainmaker or pull an attorney away from practicing law and push them into a rainmaking position. The CEO partner can realize a steady stream of payments from profits and the senior attorney can focus her attention on servicing an existing client base.
By reducing the constant pressure to bring in more clients, the recurring revenue should be sufficient to meet the revenue goals of the firm. The CEO partner’s profits result from the retention of clients, the on-going stability and profitability dependent upon providing quality services.
This is not to say that the firm’s profits will remain at a steady level. To the contrary, the amount of work increases through a number of different revenue channels:
- There’s the recurring revenue from renewing clients—at our firm, about 90%.
- New business from existing clients.
- Family members and fiduciaries who participate in family planning meetings engage or refer the firm.
- Professional trusted advisors who attend family planning meetings lead to increased referrals.
- Trust administration after the client dies stays at the firm
A client care program increases the value of an estate planning practice, making it more attractive to potential buyers or merger possibilities. And if you are looking down the road to easing your way out of your practice, wouldn’t you rather be in as strong a position as possible?
You can get started on the road to recurring revenue and profitability with our Foundations Workshop. Here’s what’s coming up this month and in November:
Note that workshop prices will be going up in 2019, so this fall is your best time to attend!
If you can’t make either workshop, check out my book, How an Ordinary Lawyer Creates and Sustains an Extraordinary Client Care Program.
If you have any questions, please call Megan Davitt, Program Coordinator and she can help with any questions you might have: firstname.lastname@example.org, or call 888-637-3055.