During Question 2. of Ep. 39 of the Ask the Law Firm Seller Show, Jeremy E. Poock, Esq. addresses the following question: When should I let my staff know that I am considering selling my law firm? As Poock points out at the outset, this question raises the following 2 questions: 1. When should a law firm owner let their potential internal successors know that the owner has begun considering to sell the law firm? and 2. How can an owner know whether an internal successor prefers to remain as a key employee lawyer? As Poock explains, rather than aspire to succeeding to owning their boss’ law firm, the vast majority of key employee lawyers want the following: A reliable, predictable, and safe job In terms of when a law firm owner should consider informing key employee lawyers about planning to sell the firm, Poock explains the following: (a) When providing 2-4+ years notice, owners can learn whether key employee lawyers want to purchase their boss’ law firm, or not, if they follow-up by expressing interest in acquiring ownership, as compared to a more typical non-responsiveness, changing the subject, and otherwise not stepping-up to the proverbial plate to succeed to an ownership role. When providing 2-4+ years notice about contemplating selling, Poock also shares the following: Key employee lawyers continue to consider their jobs as reliable, predictable, and safe because they assume that their boss does not plan to sell or retire in the short-term. (b) When law firm owners provide a shorter timeframe for planning to sell their law firm, such as before an upcoming lease termination date, the end of a given calendar year, or when the law firm owner turns a certain age, key employees suddenly no longer feel that their job remains reliable, predictable, and safe. “[A]s a result, those key employee lawyers, they start thinking to themselves, ‘Wow, we think we should go and try to find another job, because we think that our boss really means it.’” When that happens, Poock explains, key employees can (will) seek to restore their need for a reliable, predictable, and safe job by providing their boss with a 2 or 4 week notice on a Random Tuesday about accepting a new job at another law firm, which impacts the owner and the law firm as follows: 1. Short-term loss of revenues as a result of losing 1 or more key employee lawyers. 2. Long-term loss of value due to key employee lawyers and staff representing a significant component of a law firm’s value because of their revenue generating capabilities, skill sets, and familiarity with a selling law firm’s clients. 3. Prolong the timeframe for a law firm owner to sell a law firm whose value decreases as a result of the departure of 1 more key employee lawyers. In contrast to prematurely informing key employee lawyers and staff about plans to sell a law firm, Poock poses the following: “[W]hat if [a] Senior Attorney seller does not inform the key employee lawyers and staff throughout the process of selling the law firm?” Poock points out that acquiring firms often hire a selling law firm’s entire lawyer and non-lawyer staff to ensure continuity of representing the clients of a selling law firm, together with benefiting from the experience and know-how that a selling law firm’s staff presents to a purchasing law firm. Also, when key employee lawyers and staff learn that a purchasing firm plans to hire them, such news typically results in “a huge sense of relief because they are able to restore what they want and need, which is a reliable, predictable and safe job.” As Poock concludes, “So, in short, when it comes to whether Senior Attorney sellers should . . . inform their staff about selling the law firm, we really recommend waiting as long as you can so that you can avoid the potential Random Tuesday of a key employee lawyer or staff person leaving before a sale happens.” And, “[b]ecause the sales often include the key employee lawyers and staff being hired [by a purchasing law firm] . . . that is what your staff wants: they want that reliable, predictable and safe job.”
