Selling a Legal Services Business

Most legal services businesses price off a multiple of earnings, but the multiple usually rises or falls based on handoff risk. Buyers look at how portable client relationships are, how predictable collections are (especially for settlement- or milestone-tied payments), and whether delivery depends on a small number of licensed people. Firms with consistent engagement letters, clean billing routines, and strong deadline controls often sell at better multiples than a founder-centered book of business. For a starting range, try Rejigg’s free valuation calculator, then adjust for matter mix, client concentration, and claims history.

You do not need a broker, though some owners prefer one for process help. Traditional brokers often charge 5–10% and handle buyer outreach, NDAs, and deal coordination. Rejigg covers much of that workflow with pre-vetted buyers, digital NDAs before sensitive details are shared, a secure data room, and a dashboard to compare terms side-by-side. If you want to run the process yourself, start with the preparation guide and build your diligence package before you market the business.

In many jurisdictions, nonlawyer ownership and fee sharing in a law practice are restricted, so a nonlawyer often cannot buy a law firm outright. Some states allow alternative business structures under specific rules, and some deals separate legal work from legal-adjacent service lines using an asset sale, an affiliated management company, or other compliant structures. The right approach depends on your jurisdiction, your client engagement terms, and any panel requirements. Use Rejigg to share the proposed structure and known constraints under NDA so you do not spend months on an LOI that cannot close.

Buyers usually underwrite contingency practices based on case inventory, not a simple revenue run-rate. Expect requests for a matter-by-matter pipeline showing stage, expected timing, costs advanced, and how referral or co-counsel splits work after the sale. Because outcomes and timing vary, deal terms often share risk through earnouts, escrows, or special treatment for a few large cases. A clean pipeline report plus a cost ledger helps buyers price the portfolio and speeds diligence, which can improve your negotiating position.

Most buyers split A/R into routine invoices versus case-tied receivables that pay after milestones, insurer cycles, or settlement. The case-tied bucket is usually discounted for timing and collectability, and it can drive working capital negotiations. Buyers will ask what slows payment, how often you discount to get paid, and whether you pause work when balances age. Rejigg’s data room helps you present A/R with context: aging, client-type payment patterns, and notes on disputed or documentation-driven delays.

Due diligence for legal services leans heavily into ethics and operational controls. Buyers typically focus on conflicts procedures, client notice and consent, file custody and secure transfer, engagement letter consistency, malpractice or complaint history, and trust accounting routines if you handle client funds. They also review licensing coverage and who can supervise or sign work, since you cannot replace that capacity overnight. If you organize these items early, diligence moves faster. Rejigg’s data room is built to share sensitive documents with tight permissions and clean access logs.

Many transactions take 4–9 months, but legal services can run longer when client consent, panel recredentialing, or file migration is involved. Timelines usually improve when you prepare the handoff materials early: a matter-level view of open work, deadline controls, standardized engagement and billing practices, and a client communication plan for close week. Rejigg helps keep momentum by centralizing NDAs, documents, buyer Q&A, and offer tracking, which reduces repeat requests and scattered email threads.

Asset purchases are common in legal services because they can limit liability transfer and often fit more cleanly with ethics and jurisdiction constraints. Equity deals still happen when contracts, licenses, or continuity considerations make a stock sale simpler, but they usually bring heavier diligence and more detailed reps. For contingency-heavy practices, buyers often propose special treatment for case inventory, including earnouts or case-by-case allocations. Rejigg’s offer comparison view helps you evaluate structure, holdbacks, and risk sharing alongside headline price.

SBA 7(a) loans can fund eligible service-business acquisitions, but lenders look closely at cash flow quality, client concentration, and how dependent revenue is on a specific licensed professional. They usually expect clean financial statements, a well-supported add-back schedule, and a clear working capital picture if collections are slow or case-tied. Model the buyer’s payment coverage with Rejigg’s SBA loan calculator, then use the data room to package lender-ready financials and supporting schedules.

Most sellers start with three years of financials plus year-to-date results, a clear add-back schedule, and an A/R aging report with notes for large or slow items. Buyers also ask for anonymized client concentration, an org chart with key roles, a systems and portal inventory showing who owns admin access, engagement letter templates, conflicts and confidentiality procedures, and a matter-level summary of open work with stages and deadlines. Rejigg helps by pulling financials from QuickBooks when applicable and giving you a secure place to organize files before buyer questions begin.

Earnouts show up when the biggest uncertainty is whether clients and matters stay after close, or when results depend on case timing. Terms often tie payouts to collected revenue, gross profit, or earnings over 6–24 months, with carve-outs for pre-close work or specific large matters. Definitions drive real value, including what counts as collected, how write-downs are treated, and who controls pricing and collections post-close. Rejigg helps you compare earnout terms across offers so you can see payout risk, not just the headline number.

Working capital is the short-term net resources needed to run the firm, usually A/R (and sometimes WIP), minus payables and accrued expenses. In legal services, timing swings are common due to insurer cycles, settlement timing, and disputed invoices, so the business can face a cash squeeze right after close. Many deals set a normalized working capital target and adjust price dollar-for-dollar at closing based on what you deliver. If you can show A/R behavior by client type and a steady billing cadence, this negotiation is usually smoother.

Files and systems can often transfer, but the process needs to match ethics duties, privacy obligations, and any notice or consent requirements in your engagement terms. Buyers typically ask where data is stored, who controls admin access, how exports and migrations preserve audit trails, how retention and deletion requests are handled, and how you avoid access gaps during the transition week. Contractor or offshore access is also a common diligence focus because supervision and permissions need to be tight. Rejigg’s NDA gates and permission controls help you share a transfer plan without broadly exposing sensitive client information.

This varies by state and by professional responsibility rules, and law practices can face added limits on restricting a lawyer’s right to practice. Buyers still often ask for practical protections, such as non-solicitation of clients and employees, limits on marketing under the old brand, and specific transition obligations that support client choice and continuity. The right answer depends on enforceability in your jurisdiction and how your role changes after close. Rejigg helps keep draft terms organized so you can compare restrictive covenants across offers.

If you hold client funds, trust accounting becomes a major diligence item because errors can trigger discipline and repayment exposure. Buyers often review who has disbursement authority, how often reconciliations happen, how funds are segregated, and whether you have had any prior issues. Closing steps may include a final reconciliation, client-by-client balance schedules, and a plan for ongoing authority and signers after close. In some cases, the account itself cannot be assigned like a typical operating account, so planning early helps avoid delays and special escrows.

Buyers walk when handoff risk or ethics risk is unclear. Common issues include weak deadline and docket controls, inconsistent engagement letters and billing practices, messy file custody, unclear ownership of templates or software, surprises around claims or complaints, and unclear ability to transfer client relationships or contracts. Heavy dependence on one rainmaker or one key paralegal without coverage is another frequent deal killer. Rejigg helps by prompting a buyer-ready diligence package up front and keeping questions and answers centralized so critical items do not get missed.

It depends on how concentrated your results are and how quickly you replenish the pipeline. If a few matters drive earnings, waiting may improve trailing results, but it can also make the post-close pipeline look thin if those matters resolve and new files are not ramping. Buyers will ask what share of revenue is tied to a small set of outcomes and where your case inventory sits by stage. Many sellers build a matter-level forecast and show both scenarios: value in the current pipeline and a credible plan to refill it.

Most owners use staged disclosure. Early on, share anonymized financials and operations summaries, then share client names, matter details, and key staff information only with a short list of serious buyers. Rejigg supports this approach with pre-vetted buyers, digital NDAs before access, and folder-by-folder permissions in the data room. That helps you keep the process moving without putting client relationships or employee retention at risk from a leak.