Professional & B2B Services · Buyer guide
Buying a Law Firm business
Published · Reviewed by The Diligence Standard Team · Updated
a Law Firm can look attractive on a summary P&L while the operating details underneath it change the cash flow, transferability and capital a buyer will actually own. Diligence should connect the reported earnings to the business-specific drivers that create them.
How the business works
Client originations, recurring institutional clients, attorney productivity, realization, matter mix and partner dependence determine transferability.
Risks to test
- Client portability/ethics rules
- Owner/partner originations
- Attorney retention
- Contingent-fee valuation
- WIP/AR quality
- Licensing/jurisdiction
Evidence to request and reconcile
- Client/matter revenue
- Originations
- Attorney roster
- WIP/AR
- Engagement terms
- Ethics/licensing
Decision questions
- Which clients follow specific partners?
- What WIP/AR is collectible?
- What ethical/consent requirements affect transfer?
- What attorney capacity exists?
- How recurring is revenue?