Law Practice Management Asked and Answered Blog

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Jan 14, 2026

Law Firm Administrator and Firm Size

Question: 

I am the owner of a three attorney law firm in Rockford, Illinois. While we do a lot of business litigation we are primary a general practice firm that serves individual clients. There are two associates in the firm in addition to myself, two paralegals, and a receptionist. We outsource the bookkeeping work to an accounting firm. We have been having issues with the accounting firm and I am considering bringing the accounting in house and hiring a bookkeeper that can also handle office management responsibilities as well that I currently have to perform. I know that many law firms now days have law firm administrators. Should I consider hiring a professional firm administrator?

Response:

Generally a firm your size would have a office manager/bookkeeper as opposed to a firm administrator. A firm administrator is generally a higher level position with responsibilities and expectations such as the following:

  1. Expected to act and think like an owner/partner.
  2. A quick learner.
  3. Expected to provide a higher level of management insight and bring business training and experience to the table.
  4. Accepted as a peer professional by all the attorneys in the firm.
  5. Expected to innovate and be willing to question the status quo.
  6. Expected to provide recommendations concerning new methods for  improving the firm’s operations and profitability.
  7. Expected to be able to resolve most administrative issues with minimal guidance from the managing partner or executive committee.

A firm administrator usually has a strong financial background, higher level of education than a office manager/bookkeeper, and often a CPA or MBA in larger firms that facilitates the candidate’s acceptance by other attorneys in the firm as a peer professional as well as provide the candidate with the academic tools needed to carry out the expectations of the position.

A firm administrator is rare in a firm your size and for firms under 10-15 attorneys. Many firms your size have  office managers/bookkeepers. The downside to establishing an administrator such a position in your firm will be the salary that you will have to pay – more than some of your attorneys – and turnover in the position when an opportunity from a much larger firm comes along.

I have a few client firms your size that do have firm administrators. Sometimes for the first year or two there is a lot of administrative work  – employees handbooks and procedural manuals to be written, new billing systems to implement, office space renovations and relocations, etc. But after major projects are completed there is not enough work to keep them busy. These firms have made the position work by adding client billable functions to their role. For example:

There is no magic size. We just completed an engagement recruiting an administrator for a seven attorney firm. We also have law firm clients with over 40 attorneys that don’t have an administrator. I believe that an administrator, or office manager, is appropriate in firms of all sizes. It is a matter of attitude and commitment on the part of the partners and whether they are willing to delegate responsibility and authority to an administrator to run the day-to-day operations of the firm. The firm should start with a job description and then decide whether the firm is willing to delegate responsibility and authority. If not, the firm should not hire an administrator.

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John W. Olmstead, MBA, Ph.D, CMC

Jan 07, 2026

Law Firm Succession Planning and Retirement – Coming to Terms with Aging

Question:

I am a partner in a seven lawyer firm in Mesa, Arizona. There are five partners in the firm. We are a boutique business litigation firm that was formed seven years ago.  I am 64 and the others partners are 62, 60, 55, and 53 respectively. I would like to retire in the next few years and our firm has never really discussed or planned for partner retirements. We don’t even have a partnership agreement. I would appreciate you thoughts.

Response:

At a personal level, you should admit to yourself that, regardless of your current age, you are getting older and you will eventually retire – one way or another. The sooner you begin thinking about this the better prepared you will be. I have many clients that have started their succession/transition planning in their mid-forties and early fifties. Unfortunately, many have waited until their mid-sixties and early seventies. For these folks there has been little time to make adequate preparation and often adverse consequences have resulted. At an absolute minimum, you should start your succession/transition planning five years before you plan to begin your transition. It simply takes this long to put your house in order, to locate or groom succession/transition candidates, find a candidate law firm interested in your practice, and transition clients and management responsibilities. Here are a few ideas that I suggest to multi-partner firms and sole owner/solo firms:

Multi-Owner Firms

  1. Stop giving succession and transition lip service – if you are serious – put in place organizational systems that will facilitate the process.
  2. Put in place a firm strategic plan that incorporates a succession plan.
  3. Host a partner brainstorming retreat to address key questions surrounding your firm’s plan and identify a course of action that will be supported by all.
  4. Make long-term plans for the firm.
  5. Insure partner accountability.
  6. Implement funded retirement plan for partners and other employees in the firm.
  7. Consider Key-Personal life insurance to fund buy-out of ownership interests of partners that die or are disabled.
  8. Execute partnership/operating/shareholder and buy-sell agreements.
  9. Consider buy-out plans that are not funded out of future earnings (post retirement) and are paid by the end of the wind-down or transition period.
  10. Urge partners to think about and plan for retirement. They should start early and start on a wind-down program at least five years before they are ready to retire or exit. Each partner should decide when they want to exit the practice and begin a disciplined phase-down (wind-down) in which legal skills; leadership and management, and client relationships are transitioned to the next generation of attorneys in the firm.
  11. Provide financial incentives for partners to transition clients.

Sole Owner & Solo Practices

  1. Decide when you want to retire and leave your firm.
  2. Determine how much cash or annual cash flow you need when you exit the firm.
  3. Fund a retirement plan in the early years of your practice and project how much income it will generate at various exit points.
  4. Determine who you would like to transfer the practice. (Family members in law school, other attorneys in the firm, another firm, etc.)
  5. Based on future cash flow, ascertain how much the firm is worth today. Value the practice.
  6. Begin implementing management strategies that will maximize the future value of the firm – before you exit and afterward.
  7. Institutionalize the firm so that it is not uniquely you.
  8. Determine if the firm is even saleable.
  9. Draft and implement a succession/exit plan. Insure that it incorporates safeguards for your clients, employees, and family if the unexpected happens to you.
  10. Take steps to protect your family’s wealth.
  11. To retire and exit successfully you need:

A plan – a roadmap that outlines the process and helps you decide on where you want to
go and how you will get there.

Timeline – a disciplined implementation timetable keyed to your
Succession/Transition/Exit Plan.

Start Early – Getting ready for exit takes time. Start early – 5- 8 years before you are
ready to retire or exit.

Decide – When do you want to leave the practice?

Decide – How much cash you will need when you exit.

Decide – To whom you want to transfer your clients or practice.

At a firm level, especially if you are a member of a multi-partner firm, start sharing your ideas and plans with your partners. Have an ongoing dialog with you partners. Review the firm’s partnership/operating/shareholder agreement. If the firm has a succession/transition plan review the plan. After reviewing these documents, determine how the firm’s policy regarding retirement will affect your retirement timeline, compensation, and payout. Does the policy require mandatory retirement at a certain age? Ascertain whether the policy provides for phasedown. How does the phasedown handle management and client transition? Is there an “Of Counsel” provision after retirement? Reach an agreement with your partners concerning your retirement timeline, client and management transition, and retirement payout or return on invested capital.

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John W. Olmstead, MBA, Ph.D, CMC

Dec 31, 2025

Law Firm Succession Planning – Retire or Continue Working?

Question:

I am a 64 year old lawyer that owns a small general practice law firm in Springfield, Illinois. There are two associates in the firm and two staff members. I have been thinking about retirement and how I should begin planning for it which I have not done. I love the work that I do for clients and have very few other interests. I get satisfaction and fulfillment from my work. I really want to work for ever. I would appreciate you thoughts.

Response:

You are not along. I have many lawyer clients that are in the 80’s and still working and going strong. I had a personal injury plaintiff attorney in his mid 80’s that tried a large medical malpractice case last year and obtained a very large jury verdict in the case.

Many lawyers, more so than many other professionals, are high achievers that are married and addicted to their law practices.  They believe that their self-worth is reduced if they are not accomplishing something important. Psychologists refer to this as “achievement addiction.” In his book, The Psychology of Retirement, Derek Milne advises that surveys in the United States suggest that over sixty percent of retirees “un-retire” and continue to work in some form of paid work, then “re-retire” or semi-retire” later on in their retirement (Milne 2012, 11-05). A major challenge for lawyers that have an achievement-focused personality will be to find ways to replace the sense of achievement that they have experienced from the practice of law after they retire. While playing golf may be a worthwhile recreational activity for those that enjoy it, it will not be enough to fulfil the needs of those with an achievement-focused personality. These individuals will need activities where they can contribute and make a difference and continue to fulfil their self-actualization and self-esteem needs. Activities such as mediation, teaching, consulting, volunteer work and community leadership often fulfil these needs.

Identifying Other Interests

Many of us have heard some of the stories of unhappy retirees ranging from poor health, depression, and premature death. Years ago when my mother passed away my father’s boss asked my father what he could do and how he could help. My father told him, “keep me working.” My father’s boss kept my dad working and he worked every day of his life until he passed away at 84. Dad used to tell me that when you enjoy your work and your work is your hobby, it is not work. For some people the best way to retire may be to continue working.

For others, rather than being a time of easing back and retiring into old age or continuing to work in one’s old job or career, it can be a time of personal growth and an opportunity to explore other interests, callings, and vocations. It can be a time of freedom to do what you always wanted to do but could not because you had to earn money and the pressure of work prevented you from pursuing you dreams and interests that were in tune with you values and beliefs. Here is a list of a few areas that you might want to explore:

  1. Teaching courses at a local law school or university
  2. Mediation
  3. Pro-bono work
  4. Writing
  5. Photography, gardening, travel, or other hobbies
  6. Serving as a director on a profit or non-profit board
  7. Counseling
  8. Volunteering

Planning Your Retirement

One way to begin to visualize getting older, your mortality, and retirement is to think about the amount of time that you have left on this earth. If you are sixty-five you may live to be eighty. Thus, you have fifteen years left and this is your planning horizon. Retirement planning is deciding on how to use this time. It is about the process of deciding what you will do in your retirement and putting a plan into practice. As the amount of time left to you decreases, its value increases to the point where it will be more valuable to monetary assets.  It will be more valuable that a new house, a new car, a new boat, or a chest full of cash. Time enjoying life, being with your family, and spiritual renewal will become more important than earning money. The greatest change when you retire is how you will use your time.

Retirement planning begins with taking the time to think about how you will use you time. If you live fifteen years beyond your retirement your will have 28,800 hours that will have to be filled with retirement activities. (five days a week, eight hours a day, 48 weeks, for fifteen years)  Start by creating an interest activity list, a time plan, and then DECIDE, PLAN, and ACT.

Options include:

  1. Continue working in your present situation;
  2. Continue to work for compensation but in another occupation; or
  3. Retire and pursue recreational and other retirement activities without compensation.

If you decide to keep working you need to begin thinking about your succession plan when and if something happens to you. It may be time to consider bring lawyers in the firm into equity ownership or at least have in place an arrangement or agreement with them in event that something would happen to you – a practice continuation agreement. 

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John W. Olmstead, MBA, Ph.D, CMC

 

Dec 24, 2025

Law Firm Talent Management – Acquiring, Training and Retaining Paralegal Staff

Question: 

Our firm is a four attorney estate planning firm in Orlando, Florida. I am the owner of the firm and the other three attorneys are associates. We have three paralegals, a bookkeeper, and two administrative assistants. Approximately sixty percent of our practice is estate planning, thirty percent probate and trust administration, and ten percent elder law and special needs planning.

Our major challenge is finding and retaining paralegals. Over the years it has been our practice to hire experienced paralegals with three to five years experience. While this worked for us in the past we are currently experiencing high turnover, poor quality of work and performance, and high compensation cost resulting in our overhead getting totally out of control. What are other firms doing? Any suggestions and recommendation that you may have will be most appreciated.

Response: 

These are tough times for finding, attracting and retaining paralegal and lawyer talent. Law firms are having difficulty hiring experienced paralegals at an affordable salary and then retaining them. You may want to consider growing your own and begin hiring recent graduates from paralegal programs at colleges, junior colleges, and paralegal schools. These schools offer bachelor degrees in legal/paralegal studies, two year associate degrees, and post bachelor graduate programs.

Small law firms generally do not have effective training programs and the training resources needed to do effective on the job training. This is the primary reason that small law firms hire experienced paralegals rather than growing their own. Larger firms have training resources such as paralegal supervisors, trainers, written procedural manuals, and other training tools. While a small firm such as yours can’t have all of these resources maybe it is time to begin to develop some of the following tools so you can grow your own.

  1. Write a procedure/training manual for each practice area:
    1. Estate Planning
    2. Probate and Trust Administration
    3. Elder Law
    4. Special Needs Planning
  2. Identify a paralegal in your firm to onboard and train new paralegals.
  3. Develop relationships with paralegal schools to help you identify the best graduates and candidates.
    1. Form relationships with school paralegal program and career center directors.
    2. Serve as a guest lecturer and make presentations to law clubs, classes, etc.
    3. Conduct on campus recruiting.
    4. Solicit referrals from program and career center directors.
    5. Implement a paralegal intern program.

Homegrown employees often prove to not only be less costly but in the long more committed to your culture and processes, more dedicated and loyal, and more likely to stay with your firm for many years.

Many of my law firm clients are telling me that finding clients is no longer their primary concern – their top strategic concern is now finding, hiring, and retaining lawyer and staff talent. During these times it is imperative that law firms get creative and think outside of the box. Flexibility is key. Here are a few things that some of my small law firm clients have done that has resulted in successful experienced paralegal and attorney hires:

  1. Paid for sponsoring with Indeed ad placements.
  2. LinkedIn ad.
  3. Took out a paid ad with their state bar association.
  4. Used a recruiter.
  5. Increased starting salary/bonuses.
  6. Added medical insurance as a benefit.
  7. Paid a signing bonus.
  8. Provided reimbursement for moving/relocation costs.
  9. Implemented a permanent remote work policy allowing all personnel to work at home a certain number of days per week.
  10. Increased number of vacation/personal time off days.
  11. Added 401k plan.
  12. Hiring offshore lawyers and paralegals.

Successful law firms must attract both clients and talent in order to be successful. All law firms are suffering and having a hard time attracting and retaining attorneys and staff. This also means that other law firms are desperate and may try to steal you lawyers and staff with better pay or other incentives. You need to review all of your benefits and policies as well as compensation to make sure that you are more that just competitive – you need to be on the cutting edge and ahead of the pack. Employees now expect more flexibility, remote work, etc. than ever before.

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John W. Olmstead, MBA, Ph.D, CMC

Dec 17, 2025

Law Firm Management Structure and Governance

Question:

Our firm is a twelve lawyer business law firm in San Antonio, Texas. We handle business transactions as well as ligation. Three of us partners started the firm seven years ago and the firm has grown since then. Currently there are seven equity partners and five associates in the firm as well as six legal assistants/paralegals and a bookkeeper. One partner serves as managing partner. The managing partner handles all of the administration except for the basic bookkeeping. Many management decisions require the approval of all of the partners. We are beginning to feel that we have outgrown our management structure. Excessive time is spent by the managing partner. He is spending 40 percent of his time on firm administration. His practice is suffering as well as revenues. An inordinate amount of time is spent by the rest of the partners on administrative and management decisions. We have monthly firm meetings and virtually all of the time is spent on administrative matters. It takes us forever to reach consensus. Recently it took us six months to reach a decision on getting the carpet cleaned.

We would appreciate any thoughts or suggestions that you might have.

Response: 

While the firm’s management structure worked for the firm in the past when the firm was smaller, more structure will be required if the firm hopes to grow and be more profitable in the future. Growth will require structure at the partnership and administrative level. The managing partner is spending way too much time on administration as well as the other partners.

The partners should consider hiring a firm administrator to handle all administrative matters and the managing partner or a three partner management committee should focus on higher level management matters. The full partnership should weight in only on matters reserved for their vote and approval. As the firm grows the partners should involve others in management without micro-managing.

A problem facing most firms is lack of long-range focus and the amount of partner time that is being spent on administrative matters as opposed to higher level management issues.

Partners in many law firms spend more time on administrative management matters rather than higher level management/leadership concerns such as lawyer management, attorney compensation, process, business development, mentoring, and long-range planning.

Management deals with those issues that relate to overall control of the firm, including those decisions that should be made by equity partners and the selection of an individual or individuals who will manage and administer the firm. The clear trend today is for centralized management, with substantial authority being delegated to whoever is selected for management and administration.

Specific policy matters that might be reserved for full equity partner vote include:

Specific policy matters that might be the domain of managing partner or management committee might include:

A firm administrator appointed by the managing member or co-managing members would direct the business/operational affairs of the firm and would report directly to the managing member/partner or co-managing members/partners.

Administration 

When we discuss administration, we are referring to the everyday management of the firm as it relates to finance, staff, and systems. Clearly, today’s trend in administration is to hire competent professionals at the level that suits the firm. Administration is the execution of management policies established by the equity-members and the managing member/partner, co-managing members/partners, or executive/management committee.

At your size I believe that you are ready for a firm administrator. The firm revenues presently being lost will more than pay the salary of an administrator and still leave additional profit to pay additional compensation to the partners.

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John W. Olmstead, MBA, Ph.D, CMC

 

Dec 10, 2025

Law Firm Succession – Encouraging Partners to Transition Clients

Question: 

I am one of eight partners in a fourteen lawyer insurance defense firm located in Indianapolis, Indiana. Besides the partners there are six associates working in the firm all of which are newbies. The partners ages are 70, 68, 65, 62, 60, 58, 54, and 51 respectively. We have several partners at retirement age and we are looking for ideas on succession planning and how to encourage retiring partners to properly transition clients. We have had partners retire in the past and we did a poor job of client transition and the firm lost clients as a result. We appreciate any thoughts that you might share with us.

Response: 

There needs to be a process established for retiring partners with specific agreed to activities on the part of the retiring partner with firm management. Steps should be taken to allow and assist other designated partners (transition partners) within the firm to develop a direct relationship and have responsibility for managing these clients. Such a process should include:

  1. Notification by retiring partners of intended retirement date – three to five years before actual retirement. At this time client transition should begin.
  2. Identify clients that will be transitioned and to whom. Specify specific transitioning tasks that are to be performed by the retiring partner and transition partner, or partners and timelines.
  3. Consider assigning Co-Responsible Attorneys to each client matter that will be transitioned. Have the attorney to which the clients are to be transitioned begin approving client invoices for services performed.
  4. Ongoing follow-up and evaluation on at least an annual basis by firm management as to the status and level of success of agreed to client transition activities.

Don’t Forget the Money – Financial Incentives To Transition Clients 
Generally, the compensation of those partners who are transitioning towards retirement will be determined in the same manner as compensation for all other partners, taking into account partner origination collections, client liaison collections, matter origination collections and working attorney collections, together with other factors that the managing partner and members of the management/compensation committee may consider relevant. However, with respect to the retiring partner, the managing partner and members of the management/compensation committee will pay particular attention to the former’s performance of the transitioning duties assigned. If it is determined that the retiring partner is satisfactorily performing the transitioning activities, the retiring partner will continue to receive full credit for those fee collections from clients being transitioned, in the various categories considered by the managing partner and members of the management/compensation committee in setting compensation. However if it is determined that the retiring partner is not satisfactorily performing the transitioning activities, or if the fees generated from these clients increase or decline, those factors will also be considered by the managing partner and the management/compensation committee in setting the retiring partner’s compensation, and the compensation may be increased or reduced appropriately.

Consider Dual Credit for Client Collections
In order to provide incentive to those partners to whom clients are being transitioned, and to insure that those attorneys are fairly compensated for their efforts in transitioning and maintaining these client relationships, the partners designated to be the transitioning partners for the client to be transitioned will also receive credit under the categories as may be applicable, for the fees generated by these clients during the transition period, provided that the managing partner and the members of the management/compensation committee determines that the transitioning partners are making satisfactory efforts to  accomplish the transitioning of clients.

Assignment of credit to the transitioning partner should not reduce the amount of credit allocated to the retiring partner, unless the retiring partner is not satisfactorily performing the agreed to transition activities.

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John W. Olmstead, MBA, Ph.D, CMC

Dec 03, 2025

Law Firm Succession Planning – Spouse Having to Windup a Husband’s Practice

Question:

My husband’s ( Robert) practice is located in Alexandria, Virginia. The practice is a general practice with a focus on estate planning, family law, and real estate. He is now sixty and suffering from Alzheimer’s.  He has three legal assistants and two associate attorneys. The associates are newbies each out of law school less than three years, are risk adverse, have no client book of business, and have no desire to own a law firm.  As my husband’s physical health has declined his mental acuity has declined as well. However, rather than examining possible succession alternatives he has continued to practice and the quality of his services to clients has declined. Clients have taken notice and many have taken their business to other law firms. Recently I, who serves as the firm’s office manager,  approached several law firms regarding possible sale of the practice. All of the law firms that I approached have rejected my proposals advising me that since the firm is “uniquely my husband” and without a lengthy transition, they do not believe that there is sufficient value to warrant a practice acquisition. Four weeks ago, I approached both of the associates and both advised me that they did not wish to acquire this or any other law practice. Last week both associates gave their notice and advised that they were joining other law firms in the area. Based upon the medical advice of my husband’s  doctor he has decide to close the practice and has asked me to handle the logistics of closing down the practice.

Response:

Unfortunately Robert’s failure to plan for his succession and transition has resulted in:

  1. Loss of compensation for the goodwill of his practice and the sweat equity that he invested because of the need for a hasty practice sale;
  2. A one generation law firm;
  3. Loss of peace of mind for Richard’s family and employees;
  4. Failure to provide continuity for clients and employees; and
  5. Failure to continue the legacy of the firm that Robert built.

Had Robert reconsidered his attitude of having partners, hired and groomed entrepreneurial associates with a desire to own a law firm, institutionalized the firm’s brand to be less uniquely Robert, and put in place both a short-term practice continuation plan and a long-term succession plan, the story may have ended differently.

You may not have much choice but to close the doors and windup the practice. You should check with your state bar association regarding your state court’s rules for the proper procedures for doing this. In many states a court may step in when a solo attorney:

Because clients’ cases, funds, and confidential information must be protected, the court ensures there is a responsible lawyer to manage the transition. Typically the court-appointed attorney (sometimes called a practice administrator, trustee, or receiver) is authorized to:

  1. Secure and inventory client files
  2. Notify clients of the situation and their options
  3. Return client files and property
  4. Manage trust accounts and distribute funds properly
  5. Seek continuances or withdraw from cases appropriately
  6. Close the office, handle billing, and deal with vendors
  7. Ensure ethical obligations are honored

They do not usually take over the cases themselves unless the clients choose to hire them separately.

The goals are to:

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John W. Olmstead, MBA, Ph.D, CMC

Nov 26, 2025

Law Firm Succession Planning and Transitional Work

Question:

I am the owner of a 16 lawyer litigation firm in San Diego, California. There are 6 non-equity partners and 9 associates. I am 65 and hoping to retire in the next five years. I am planning on offering equity to two non-equity partners next year and possibly offering equity to other non-equity partners in the next few years. In addition to working out the financial arrangements and partnership structure issues that are typically documented in a partnership agreement, what sort of transitional issues should I be concerned about and plan for. Your advice is appreciated.

Response: 

Transitional work typically falls into three general categories:

  1. Legal (lawyering) skills
  2. Client and Referral Sources
  3. Firm Management

Legal Skills

Frequently this is a major issue that requires attention in small sole owner/founder firms. There are no other lawyers in the firm with the legal skills that the owner has and will be required for the firm to be successful in the future. For example, I have worked with some litigation firms where the other attorneys in the firm (associates and non-equity partners) have not ever tried a case. In such situations several years of training and development in this area will be required and seasoned laterals may have to be hired or the firm sold or merged with another firm. In your case since you have several non-equity partners on board I assume that they are seasoned lawyers and this is not an issue at your firm. If this is the case there be no to little transitional time needed in this area.

Client and Referral Sources

This is an area of concern for most firms. Typically, the firm owner/founder has brought in most, if not all, of the client business into the firm and he or she controls the clients and the relationships with clients and referral sources. In these firms if the owner/founder were to leave the firm abruptly it is questionable whether the firm could survive after the owner/founder is no longer there. If this is your situation you will need to begin a focused and planned transition with specific clients and referral sources, tasks, timelines, and assigned lawyers. How long this will take will be dependent upon the number of clients, number of relationships that you have within the client organization for institutional clients, and the number of referral sources that you have that send the firm business.

Law Firm Management

Law schools do not train lawyers in management. Highly competent attorneys do not necessarily make good managing partners or lawyer managers. Some of the best lawyers are the worst managers. It has been my  experience that lawyers who are “loners” have traditionally been poor managers. You are going to have to decide who will be good manager, or managers, and begin training and transitioning appropriate functions over to them.

The following are recommended areas in which the management skills should be developed:

  1. Client relations, including origination, development and retention.
  2. Acceptance of new clients and matters and the management of performance of legal work in substantive practice areas and sub-specialties.
  3. Associate recruitment, training and development of a personal and professional nature, promotion, evaluation and compensation and termination.
  4. Administrative staff organization, relationships and utilization.
  5. Financial management including budgeting for revenue, expenses, capital expenditures; billings and collections; financial and variance reporting and utilization of resultant financial data and management information to manage and run the firm.
  6. Technology including computers, software, other equipment and technical support from non-lawyer specialists.
  7. Leases, space utilization, negotiations and construction.

Techniques for Developing Skills

On-the-job-training is the most effective technique for developing and refining the management skills that will be required.

I suggest that your develop a transition project plan in Excel with a breakout of tasks, responsibility for accomplishment, start date, and end date under the following broad categories:

Legal skills
Client and Referral Source
Firm Management

Under the client and referral source category each client/referral source contact should be listed.

You should also begin bringing other lawyers into your cases in order the your clients can experience working with them. Assign them as co-responsible attorneys on cases and gradually have them be responsible for billing and communications with your clients.

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John W. Olmstead, MBA, Ph.D, CMC

Nov 19, 2025

Law Firm Succession Planning – Selling Practice to Non-Equity Partners or Associates in the Firm

Question:

I am the sole owner of a five lawyer business transactional law firm in Cincinnati, Ohio. I  am sixty-seven and hoping to retire in the next three to five years. Besides myself there are two non-equity partners and two associates in the firm. I have not properly saved for my retirement and I am hoping to sell my practice to the two non-equity partners in the firm for a substantial sum. I founded the firm thirty years ago and believe that I have invested substantial sweat-equity in building the firm up to where it is today. I am not sure where to start and whether my expectations are realistic. Your suggestions and recommendations are most welcomed.

Response:

Years ago when interviewing non-equity partners or associates in a law firm I would never have asked them if they were interested in equity ownership or partnership since the answer would have been yes. Today, this is another story. Many non-equity partners and associates today do not want to own a law firm as sole owners or even have equity in a equity partnership. Don’t assume that your attorneys even have an interest.

So your first step will be to talk with each of them and determine their level of interest.

Your next step will be to determine the value of the firm and what you hope to ask for and how you want to be paid. Some firms have substantial goodwill value and others have little goodwill value at all. Firms that have little value are those where all the business is originated by the owner and he or she controls the referral sources. In these firms when the owner leaves there may be little to no future business.

In the final analysis the value of the practice is what an outside buyer or an attorney working for the firm will pay for (or invest) the practice. A balance often has to be struck between valuation and affordability. The valuation process is simply a tool to use to help you begin discussions and get to this point.

You also have to keep in mind that many of your competitor law firms are offering equity partnership with no buy-in at all.

I believe that firm value has to be balanced with affordability and a prospective equity member’s ability to pay for the shares. It all comes down to compensation. Generally, I find that a prospective equity member or partner must be able to see a significant compensation increase with a breakeven/payback period of around three years – no more than five. I also believe that when shares are seller financed the period should be no longer than five years. Many firms do not sell shares based on formal valuation – other methods are used.

Questions that equity member candidates usually raise:

1. Is the breakeven/payback from the investment in say three years as a result of the compensation gap?
2. How much more will he or she earn as an equity member?
3. Can he or she earn enough as an equity member to justify the investment?
4. Can he or she earn more as a partner somewhere else with as large investment, a smaller investment, or even with no buy-in at all?
5. Can he or she earn more somewhere else as an associate or non-equity partner?

In many law firms’ compensation is based upon performance and contribution and ownership shares have little or no bearing on member or partner compensation. Their primary goal is to acquire and retain talent.

Your expectations may be realistic if the clients and referral sources stay with the firm when you are no longer there and if your non-equity partners care about equity and owning a law firm and are willing to make the investment and take the risk.

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John W. Olmstead, MBA, Ph.D, CMC

 

 

Nov 12, 2025

Law Firm Marketing – Referral Networks

Question: 

Our firm is a six lawyer firm in ChicagoLand that specializes in the areas of estate planning, estate and trust administration, and elder law. Four of the six lawyers in the firm are equity partners and two are associates. Our firm was formed ten years ago and almost all of our business comes from the internet. While we are grateful for the success and business that we have developed we believe we have missed the boat is getting more business from referrals from lawyers and other professionals as well as past clients. We are spending a fortune on marketing and would like to take advantage of less costly means of acquiring business. Your suggestions are appreciated.

Response:

Past client, lawyer and other professional referrals are still are very viable methods for acquiring business even in the internet age. I have many estate planning/administration/elder law firm clients that obtain all of their business through these referral sources and spend very little on marketing.

Referrals from former and current clients and friendly third parties are among the most desirable sources of new business.

It has been my experience that referrals generally occur because of the efforts of the attorney who is receiving such referrals. You should not expect such referrals to “fall into your lap.” You must initiate certain actions to try to make them occur.

There are two kinds of referral networks. One is an attorney referral source. The other is referral from clients or other “friendly third parties” who are not attorneys. Both types of referral networks are important to an estate planning/administration/elder law practice.

Attorney Referrals

To be in a position to receive such referrals, an attorney should develop an expertise in one or more areas of legal work and become recognized by other attorneys as being especially skilled in those areas. It is also necessary to inform attorneys who may be referral sources that you have such expertise and that you are interested in accepting referrals in these areas. To the extent you are interested in receiving referrals, you should get to know attorneys likely to be in a position to refer such matters. This may be accomplished by participating in bar associations, by writing on estate planning/administration/elder law issues, by speaking at CLE programs and by maintaining an active role in selected committees. Having your firm listed in legal directories may also help.

Once an attorney referral base has been established, it is important to maintain your network.

Non-Attorney Referrals/”Friendly Third Parties”

The first step is to identify potential referral sources. The best referral sources will have significant and repetitive contact with individuals who need your legal services. Examples for an estate planning/administration practice include accountants, financial planners, bank trust departments, etc. These sources should be able to identify the needs of potential clients and have their trust in order to make a referral. Identifying friendly third parties and cultivating their confidence is time consuming. Patience and perseverance is essential.

The initial contact with potential non-lawyer referral sources may be made by joining a professional, trade, social, civic, service or religious organization. You may be recognized by maintaining an active profile on influential committees.

Once these referral sources have been identified, you should develop and reinforce a personal relationship with these friendly third parties who come in contact with potential clients.

Maintaining the Referral Network

Once referrals from non-attorney sources are received, it is important that you work to maintain that base. Providing good service to referred clients and keeping them happy will reflect well on the friendly third party and encourage them to make additional referrals.

Maintain contact with referral sources even when you are not working on a referred matter. This keeps your name in front of that source for the next referral. A phone call, letter or lunch is easy to do and can be valuable in maintaining and reinforcing your relationship.

Set monthly goals for the number of referral sources contacted. Allocate time for this important activity. Make it part of your regular routine.

Satisfied Client as a Referral Source

Most satisfied clients are willing to make referrals.

The development and maintenance of a referral network is an excellent technique for marketing your practice and obtaining legal business from attorney and non-attorney sources. A successful referral base will require work and take time to establish. You must have patience and persistence. Most referrals go to those attorneys who have worked to establish and maintain their referral network.

Another successful approach used by estate planning/administration/elder law firms over the years has been seminars sponsored by the law firm. Today I am seeing more and more firms doing webinars and they are finding webinars to be a suitable replacement for live seminars and at a lower cost and time investment.

Don’t forget the importance of having a program to encourage Google reviews from completed client engagements.

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John W. Olmstead, MBA, Ph.D, CMC

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