Eduardo Reyes makes a number of valid points in ‘How to close a law firm’.
In my experience, it is never too soon for smaller firms to address this issue because by doing so their exit options are massively increased.
I recommend that all firms give themselves at least five years to plan for the retirement of a sole/majority equity partner. A phased transfer of ownership over this timescale can be tax-efficient and eliminates the need for the firm to purchase run-off cover from their PI insurer. It is also a great way of motivating young lawyers who are already working in the business as well as attracting new talent.
David Thorpe, Director, Financial Eye, Hildenborough