Dark Clouds and Silver Linings
We lost a client last week. Now usually that would be a bad thing (and on the face of it, it was), but I was delighted to lose this client! You see this particular client retired, and not only did she retire, she did so on her terms, passing her business on to a firm of her choosing, and receiving value for it.
This is rare. As I wander around the country, speaking to solicitors, one issue which arises is “succession”, and by this I mean the ability to “exit” from your firm and effectively retire. The cost of winding up a firm is often prohibitive, attracting younger solicitors into some firms to “take over” is difficult, and you can forget about persuading somebody to pay for “goodwill”.
Well, this solicitor, who was a sole practitioner in a small rural town, did it – so what was her secret? Over a very pleasant lunch last Friday she explained.
Four years ago she was a partner in a small rural firm. There was one other partner and there was a lot of tension. This did not improve when the recession hit, and the firm started to make a loss. Finally, enough was enough and our client decided to set up by herself, taking her PA/Paralegal with her.
It was a brave decision at the height of the recession, and she wasn’t sure how things would work out. However, she soon realised she was in the enviable position of starting a law firm with a blank sheet of paper, without the “baggage” of inherited people, or working practices. It was liberating, and it allowed her to make some key decisions, early in the process.
- She decided to focus on what she did well – conveyancing, wills, powers of attorney executories, and commercial leases. Anything else that came in she passed on. She joined a net work of firms to facilitate those cross referrals.
- She had the benefit of existing accommodation, however that worked well. It was in a small town, which on the face of it, seemed a little unappealing. However, it was within easy commuting distance of a large city, and had seen a dramatic increase in population, with a number of new housing estates build on its outskirts. The office was quite literally on the High Street, and provided serviceable accommodation at a price that would make the Managing Partners of some larger law firms weep.
- She outsourced her IT, put it all on “the Cloud” and used the Cashroom, keeping her overheads and infrastructure as cheap and simple as possible.
- She agreed with her paralegal that, while she took a first tranche of profit, anything over that would be shared between them 80/20.
- She shared her premises with 2 other professionals – a mortgage broker and an estate agent. No formal ties (other than a sublease), but lots of cross referrals, and an even lower rent.
- She networked continuously in her local community.
And she was very successful – with profits that would make those same Managing Partners blush.
And she was so successful, she decided to retire sooner than planned, but again she did it right. She researched the local market and chose the firm she wanted to “sell” to. She established a referral relationship with that firm well before she intended to retire. She even chose the person she wanted to sit in her seat and deal with her clients. So, when it came to suggesting that they take over her firm, and pay a price for doing so, negotiations were pretty straight forward.
The “secret” of that success? Being small, being niche, and keeping her overheads at an absolute minimum. But more importantly a focus on client service – doing the simple things very well – returning phone calls, being available, never leaving people waiting, always being prepared for meetings, knowing her clients, their children and their parents. Common sense really, but not necessarily common practise.
All simple stuff really!
My (ex) client is now planning a (very) long trip with her husband (who has also just retired), which is I suspect being financed by the money paid for her firm. And she’ll have cash left over I’m sure.