In this inspiring episode of the NewLaw Podcast for Entrepreneurial Lawyers, host Ali Katz welcomes Tom Lenfestey, founder of The Law Practice Exchange LLC and a practicing attorney from North Carolina. Tom has successfully transitioned from running his own law firm to helping lawyers with revenues ranging from $200,000 to $50 million build and sell their practices. Tune in as Ali and Tom dive deep into what it takes to create a sellable law business with lasting value—not just for today, but for life and legacy.

Key Takeaways:

• Building Value Beyond Revenue: Understand the difference between generating immediate income and building long-term business value that can be sold or passed on.
• The Importance of Succession Planning: Why law firm owners need to establish clear succession plans to ensure the firm's longevity and avoid losing talented associates.
• The Power of Recurring Revenue: How implementing recurring revenue streams can increase a law firm's value, making it more attractive and sellable to future buyers.
• Exploring Different Exit Strategies: Discover various paths for law firm owners, from gradual transitions with partners to outright sales and strategic mergers.
• Thinking Outside the Box: How lawyers can creatively shape their careers and practices by not confining themselves to traditional roles or expectations.

Tune in to gain actionable insights on how to build, grow, and eventually sell a law firm that not only provides a comfortable income but also leaves a lasting legacy.

01:42 Tom Lenfestey introduces himself and explains his background in law, accounting, and his transition from working in a mid-sized firm to starting the Law Practice Exchange.

05:00 Ali shares her own experience of becoming a tax attorney unexpectedly and later transitioning into estate planning, highlighting a common path in the legal field.

10:47 Ali and Tom discuss the importance of succession planning for law firm owners, particularly when hiring associates with the intent for them to become future partners.

14:00 Tom describes the importance of mentorship and guidance in the legal industry, noting his own regrets about not seeking advice early in his career.

16:07 Ali shares her own experience of selling her practice without proper guidance, leading to financial loss, and stresses the importance of understanding the sale process.

29:06 Tom discusses the significance of law firm valuation, including not just the financial aspects, but also successful transition, compensation, potential buyers, and appropriate payment terms.

32:27 Tom advises lawyers to start planning for a sale at least five years before they intend to leave, so they can build significant value and ensure a smooth transition.