1779 – The Art of Buying and Selling Law Firms with Victoria Collier of Quid Pro Quo

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0:59with us right now victoria collier victoria you are the founder of quid pro quo law you're found on the web at quid pro quo law.com victoria thank you so much for joining us josh it's great to be here thank you uh and also i always want to give a shout out to my fellow veteran business owners of which you are. You served in the Air Force. So it's great to have you. Victoria, give us a quick overview of the work you do with quid pro quo law. Yeah. So primarily, I help lawyers find their life after law. So what that means is that I help them position their law firm so they can then sell them. And then I act as like a broker to find a buyer to help them sell so they can get on with their life after law.

1:44Wow. You know, just thinking about this from the buyer's perspective of why they might want to buy an existing law firm versus kind of start from scratch on their own. I mean, obviously there's some different models. They can still have their own, but you know, they can again, step into something that's perhaps a little bit more turnkey for them rather than, you know, having to start or try to figure out all that market share on their own. Sure. And I do actually represent buyers as well. And I've got four buyers currently. And each of them, for example, one wants to get into different geographical markets, which can include different states even.

2:24Another one isn't necessarily interested in different geographical markets, but really just wants to expand a particular service type that they have in their office with complementary services. And then there's various other reasons, but those are two very specific reasons why buyers are interested in buying and they don't have to start from scratch. It's like you're starting, as I like to say, on second base instead of at home plate. Are there, just thinking about folks that might have a small law firm, they have a decent book of business. They've got a good presence in their local community.

2:57Are there larger law firms that growth through acquisition is absolutely part of their strategy? Absolutely. Absolutely. And there is kind of a sweet spot depending on what size that larger law firm is. But I would say the sweet spot is somewhere between$750 to$1.5 million. But then there's other much larger law firms that are looking for law firms that are making$5 million or more with like 40 % net revenue, net profit. Yeah. So if let's say that I've got a small practice myself and maybe I'm not ready to sell just yet, but let's say I want to take the next few years and I want to really position myself well.

3:39I bet you like this question. Well, you're already talking about language. You sound like a smart person. What things should I be doing today to make myself very attractive for acquisition in a few years? Right. And so one of the things that I suggest that it has to be the first step, and that is change your mindset and stop thinking that you are just a lawyer, for example, or just a practitioner in your business, whatever that is, and become a business owner. And when you make that shift from being the person who works in the business to the person who works on the business, all of your decisions become different and you become a visionary about the future versus stuck in the weeds of today.

4:28So that's number one. Number two would be look at your business as an asset. And the asset goes beyond just the revenue that you bring in. And so the goal between now and the next few years that you want to then exit is how can I build the assets within my firm beyond just revenue? And so we have to look at the different components that are considered assets that someone would want to buy. And then we need to increase the value of those. Yeah. So tell me more about the, maybe the operational, the systems that we'd want to lock down. Cause I don't think any buyer wants to step into something that's a mess.

5:09What are maybe some of those structural systems, workflow people that you would say, yeah, you better get this stuff locked down? Right. So what buyers want to buy is predictability. And so whatever systems you can have to make sure that there's predictability. So number one is predictability and income. So how is the income coming into the door? So that would be predictability in your marketing and marketing that is not dependent on the owner. Right. So. whatever you can systematize that it is working all the time to bring people in the door, that would be number one. Number two would be how do you systematize your production so that kind of like, you know, these fast food places, every hamburger, whether it sucks or is good, is always going to be the same, right?

5:59And so your work product to always be the same. And you can only do that if you have policies and procedures that are actually being worked. So those are the top too, I would say. Yeah. And Victoria, where do you, like, if someone's listening to our conversation right now and they're interested, they're like, look, I don't want to do this forever. You know, I'm in my fifties. I'm late fifties. I don't want to do this for decades more. I think I've got a pretty good operation here. What is that engagement process like with you? I'm going to get to the second part of that question separately, where I talk about what life is like after law.

6:39Let's talk about like what that journey is like with you first. Sure. And so the first thing is we try to clarify, are you burned out or do you really want to get out? Because those are two different things. And if you're burned out, you actually can recover from that and still have a business that is thriving that you love. If you actually do want to get out, then we want to create the path for that. So we want to do a personal assessment to find out how ready are you emotionally to exit your firm. And there are actual tools you can put in place to increase your emotional readiness. So that may be part of the process.

7:16But beyond that, the first step is really, we got to know what this business is worth because number one, if it's not worth what you need in order to find life after law, then we need to get it to the value to where you can. If it's already at that value, then we can go ahead and go to market. But obviously there's things to do with that. But number one is get a valuation. Yes. Yeah. What is the sales process? or no, I was saying sale. What is the kind of the acquisition process? Like when it's, okay, we have a buyer and they're interested. Like when it starts to get really serious, what is that usually like from the seller's perspective?

7:58Well, emotional for one, but I would say, the goal is to get a letter of intent signed, which has the key terms of the agreement. And so then due diligence begins And due diligence is the hardest emotional part through the entire journey because you're all excited from a seller standpoint. You're excited somebody's interested. They've signed a letter of intent with a purchase and some key terms. But then in the due diligence, it drags on. The buyer is asking all kinds of questions. They want all kinds of documents. And a seller will get anxious and almost even defiant, defensive to where they can kill a deal just because the other person is trying to do their due diligence.

8:49You know, I mean, when you're putting down a million dollars, you should be asking questions. So it can be stressful. And so that's why having an advisor to go through that can be helpful. and so many people try to do it on their own while still working full-time, trying to not minimize their revenue and going through all those emotions, it can be stressful and definitely kill deals that otherwise could be successful. Yeah, so let's say you get it past the finish line. What, I'm just so curious, like from your observation, what do you see the seller's life, like that 30 days, like they get the check, They're holding the check or they got the wire transfer.

9:31It's in the account. What are those next 30, 60, 90 days like for that seller? Well, it all depends on the terms of the agreement because some of them have transition periods. Most of them do. And so they're still involved. Some of them do get a check up front. Some of them actually are getting our self-financing. And so they're getting paid over time. But it's a new dance with an owner coming in and you're still there. So it's kind of like the step parents and the original parent living under the same household, trying to manage these kids and they don't know who to listen to. And so part of that transition plan, much of that transition plan needs to be ironed out in advance so that everyone has clear expectations as to what is our role?

10:13What do we expect from each other after the closing table? And I would imagine then, so yeah, we think about what that post-sale looks like. What percentage are going to be, no, no, no, as the principal, the former principal of the seller, most of the time you're going to be pretty involved for a transition period. What are some of the most common models that you see? The most common model I see is a transition period of six months where the outgoing seller has a limited role in essentially introducing the buyers to their clients, their current clients, and to their referral sources, and then being there as needed to answer questions on operations or, you know, just weird things going on that only, you know, somebody who's been there for some years would know.

11:08So really as an advisor consultant role. Now, some also like, you know, they want to stay on. The seller wants to stay on for a year, two, three years. But then they're only choosing to do the things that they enjoy doing versus everything. So a seller might say, look, I'll still do the consultations because that's what I love about this. I just don't want to do any of the work. I don't want to manage the people. Or they may say, look, I'll be out in the community and I'll bring people in, but I don't want to even step foot in the office. So it's very personalized and it's part of what the buyer and the seller from the very beginning need to iron out as far as what are each of their goals with these roles.

11:51Yeah. Yeah. I would imagine, you know, as the is a buyer, you want to have some assurances. It's probably very rare that you're like, OK, here's the check. Give me the keys. See ya. Yeah. You know, because the principal's got relationships with the staff, you know, the team, obviously the clients, because you don't want to, you know, have all the clients say, well, I loved working with Lou. And if Lou's gone, I'm out of here. Right, right. Well, interestingly, I just went under contract with someone and the buyer did not even ask for a transition period. And so we actually put one into the contract because it's important enough for my seller to stay for a period of time.

12:34And so we actually added it. All right. Your website is quidproquolaw.com. To someone who's been listening to our conversation, what would you recommend they do next? I would say that if they're a lawyer, even if they don't plan to sell their firm anytime soon, they'll get a lot of benefit by becoming a member of our private Facebook group called The Art of Buying and Selling Law Firms. Because it just gives great information on how to best operate your law firm to position it at some point for transition. Yeah. When they go to your website, what should they click on? So that's not at the website.

13:13That's on Facebook. So it's the Art of Buying and Selling Law Firms, our private Facebook group. Oh, nice, nice. Yes. But certainly at our website at quidproquolaw.com, we do have our services listed there. And we also have certain products listed there under the store. You have a list, by the way, for some of those looking to buy. You've got a list of law firms that are for sale and kind of tells you where they're based and what area of law there are big descriptions. So if you want to just do a little shopping, you're welcome to browse through the directory that you have as well. Again, Victoria Collier, you're the principal and founder of Quid Pro Quo Law, your website, quidproquolaw.com.

14:00Thank you so much, Victoria, for joining us. Thanks, Josh.

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