Law firms generally do not pay as much attention to their value
as technology companies or public corporations, but a variety of
circumstances can trigger the need for a firm valuation. Although
attorneys may often deal with business valuations in the course of
their work for clients, they might be surprised to learn how law
firm valuations can differ.
When Do You Need a Valuation?
A firm valuation may be in order for:
- A partner buyout;
- Tax purposes;
- Partnership disputes;
- Divorces involving partners;
- Life insurance purposes;
- Buy-sell agreements;
- Financial reporting; or
- Bankruptcy proceedings.
One of the most common scenarios for a law firm valuation is the
sale of the firm, even when the sale is not imminent. For solo
practitioners or partners in smaller firms, for example, the sales
price, as based on a valuation, could be an important part of
retirement planning.
