Lawyerist, a company that offers business resources and coaching for small law firms, has made a strategic investment in The Law Practice Exchange, a company that facilitates the buying and selling of law practices.
Aaron Street, Lawyerist’s cofounder and CEO, told me that his company has made a significant cash investment in The Law Practice Exchange, but not a controlling interest. It will also provide LPE with staff and marketing support.
The North Carolina-based LPE is owned and run by Tom Lenfestey, an attorney and CPA who founded the company in 2013.
The focus of LPE is on helping lawyers transition their practices though sales or internal succession, offering business valuation, marketing, and deal negotiation services.
Lawyerist, meanwhile, provides an array of resources designed to educate small firm lawyers about managing a practice. It also provides a subscription coaching service, Lawyerist Lab, that helps lawyers market and build their practices.
It makes sense for the two companies to have a strategic relationship, they say, because Lawyerist is well poised to educate lawyers on the value and mechanics of buying or selling their business through a brokerage firm such as The Law Practice Exchange.
An Expanding Market
While the law firm brokerage business has been steadily growing in recent years, Street told me that he believes three trends will contribute to an ever greater surge in law firm sales in the coming years.
One is that an increasing number of small-firm lawyers are starting and building firms with the specific goal of building a business and selling it, much as entrepreneurs in any industry start businesses with their eyes on an eventual exit, he said.
And just as there are lawyers who are looking to build and sell their firms, there are other firms looking to acquire smaller firms in order to build up their own practices. In some cases, Street said, the lawyers who sell their firms stay on as practitioners, but hand off management responsibility to the acquiring firm.
A second trend is the liberalization of law firm ownership rules, such as occurred last year in Arizona, allowing non-lawyers to have ownership interests in law practices. That is likely to expand the marketplace for selling law firms and therefore the need for the services of a brokerage company such as LPE.
The final trend, Street said, is simply that a generation of Baby Boomer lawyers is reaching retirement age and they will be looking to develop strategies to transition their practices internally or sell them externally.
In addition to Lawyerist providing support to LPE, Street said that Lenfestey will provide education and coaching through Lawyerist.
“We’re super excited,” Street said. “As we’ve laid out in our book and podcast, we have a number of theses about where the future of law practice might look different than in the past.
“This is a piece of it. We think the future of law practice needs to include a more liquid marketplace.”