Buying and Selling Your Law Firm

Victoria Collier

Victoria Collier is the CEO of Quid Pro Quo Law, a team of professionals helping lawyers build and sell valuable law firms. She owned and operated a law firm for 18 years, where she focused on elder law estate planning and taught veterans’ benefits for seniors to national elder law attorneys.

As a serial entrepreneur, Victoria co-owns an eight-figure business that helps veterans and previously owned an insurance firm, publishing company, and real estate business. As a Certified Exit Planning Advisor and Certified Value Builder, she specializes in the valuation, purchase, merger, and sale of businesses.

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Here’s a glimpse of what you’ll learn:

  • How Victoria Collier began buying and selling law firms
  • Early-stage challenges of building a seven-figure firm
  • How to prepare your firm for a sale
  • The difference between burning out and wanting to exit
  • Evaluating your law firm’s value 
  • When are law firm owners ready to acquire another firm?

In this episode…

Many law firm owners experience burnout in their careers, but how do you know if this fatigue is actually a desire to exit your business? How can you prepare your firm and be ready for a sale when the time is right?

According to versatile business and law veteran Victoria Collier, law firm entrepreneurs experiencing burnout lack a clear vision and appear stagnant. Conversely, those wanting to exit can formulate a vision for the future — namely, a life following the sale. If you’re truly ready to exit your firm, Victoria says to develop a predictable business model with fixed revenue, a codified P&L statement, and a solid, motivated team. 

In today’s installment of The Guts and Glory Show, Luis Scott invites Victoria Collier, the CEO of Quid Pro Quo Law, to speak about buying and selling law firms. Victoria shares the early-stage challenges of growing profitable firms, how to evaluate business value, and when you should consider buying another firm.

Resources mentioned in this episode: 

Sponsor for this episode…

This episode is brought to you by 8 Figure Firm.

Co-founded by Luis Scott and Seth Bader of Bader Scott Injury Lawyers, 8 Figure Firm helps transform your law firm into a seven-figure or even eight-figure firm.

After their own law firm scaled from $3.5 million to $30 million in annual revenue in just two years, Luis and Seth started 8 Figure Firm to share their strategies and help other law firms achieve exponential growth.

Visit www.8figurefirm.com to receive a consult call and start scaling your business today.

Episode Transcript

Victoria Collier 0:00

I think I mean, certainly that’s what I do is I help people sell their law firms. And as it relates to that, I would say more so than the selling part, but the actually getting ready to sell it to the positioning and what that what that means. Because you don’t just wake up one day and say, I’m going to sell my law firm. I mean, it feels that way sometimes, but you know, there’s years of, of, you know, emotional drudgery that someone goes through it sometimes, you know, if they feel burned out, but there’s a difference between being burned out and actually wanting to exit.

Intro 0:35

Get ready to be amazed. Get ready to be transformed. Get ready to believe it is possible. You’re entering the growth zone, on The Guts and Glory Show with your host Luis Scott.

Luis Scott 0:57

Hey, guys, it’s Luis, I am the host of The Guts and Glory Show a show dedicated to help you learn more, so that you can be bigger and better than you were before. Today, I’m excited to have a guest. And we’re gonna be talking about law firm, ownership, law, firm sales, law, firm buying law firm selling, I mean, we’re going to talk about all things getting rid of your law firm. Maybe hopefully, for the right reasons, we’ll see what happens. But I have Victoria Collier here from Quid Pro Quo. And I’m excited to have her on the on the show, because she has sold a law firm now getting ready to buy a law firm. I mean, there’s just so many things going on that we could talk about today. So Victoria, thanks for being on the show.

Victoria Collier 1:33

I appreciate it, Luis. Sure. All right. So

Luis Scott 1:35

tell us your backstory, because you sold a law firm. And now you’d before the show, you told me you were going to be buying a law firm. I think people want to know, what’s your backstory? How did you even get into this?

Victoria Collier 1:46

So my backstory, as I before I sold a law firm, I built a law firm. So I started my own law firm right out of law school in 22,002. And built it up to seven-figure firm for at least five years before I sold it. And it was specifically an estate planning. And then within that I created my own niche in veterans benefits and taught lawyers across the nation, that but in 2018, I started thinking, you know, I need to transition. And so I specifically hired a PLA, professional legal administrator to help me position my firm to sell, and I sold it in 2020. And so, you know, I love love, love practicing law. I love being a lawyer, and I loved my clients. But sometimes that gets to a point where you don’t love the business that you’re in. And that became my law firm.

Luis Scott 2:43

I can see that now you started. You started right out of law school. That’s not very common. What What made you take that leap? Because I’ve seen I have friends who have done that. And I see how miserable it is in the first few years. So like what made you go into kind of your own practice right out of law school, I think

Victoria Collier 3:00

it’s a combination of, I think three things. One is, I’m from Texas, and we and I’m an Aries. So you combine those two attitudes of arrogance or confidence, or the first two leg up. And then also I will had been a paralegal both in the military and on the private sector for some years before going to law school. So I felt like I you know, had some knowledge. But ultimately, it was not my plan to start my own practice right out of law school. I had a plan to work for other law firms. But when I clerked for somebody for a year, my third year in law school, I had presented him with a business plan, so that I could show him that I could bring in three times my salary that I was requesting, which back at the time, I recall, it was in 2002. I was asking for 65,000 a year. And so I could bring him in three times that. And I had it all outlined, which is interesting, because he had no business plan. And he essentially laughed at me. And so I was like, Okay, fine, then I’ll just take my business plan, do it on my own. But not before I went and I interviewed I interviewed judges, I interviewed attorneys, I interviewed all kinds of people. And the main story I was getting, which is aligned with what you’re saying is, most people were telling me, oh, you should work for someone else. First, you don’t know what you don’t know. And you need to cut your teeth and all these things until I finally had lunch with this one lawyer. And he had said that he had started with someone else first and worked there for three years. And then he started his own firm. And he said I just wish I had done it from the beginning. I wish I had done it three years sooner. And that’s all I needed to hear. You know, I can’t tell you how many lunches I had until I heard that one thing and I was like, of course that’s what I’ll do. So

Luis Scott 4:59

yeah, he’s Just needed permission to go out on your own. And sometimes it’s like, it’s the one catalyst that really gets you to the next next point. 65,000 By the way, that’s a dream to find a lawyer for. Like, you can’t find that today, like lawyers right out of law school are asking for 100 110. No experience. It’s it’s, it’s it’s a crazy world today. So, but it all worked out for you. I’m curious, when you were building your firm, because there are listeners who listened to the show, who are maybe not lawyers, but they’re but they’re building other types of service based businesses like one of the things that we work with people who own like accounting firms, tax firms, as well. And the challenges seem to be all the same. And so I’m curious to hear your experience when it when when we talk about starting that firm, possibly with not a lot of money, not a lot of resources, like what were the early stage challenges? And then what were the challenges as you became a seven figure firm? Yes,

Victoria Collier 5:56

so I had zero money. When I started my firm, I got my pay for my first month’s rent my last month’s rent and my furniture with my very first client, which was $4,500. And in from there, I knew that I should not be the one answering the phones. And so I hired someone to answer the phones. But my challenge was doing the accounting and QuickBooks, because I thought I could do that I was a numbers person, but I started entering double entries and voiding things and all kinds of nightmarish things. So it was really, I guess, the beginning challenge was trying to figure out, what are my skill sets? And what are they not, and hiring those that I did not spend too well at? So an accountant was the good hire that I that I made. As I grew, I really believed in the model of growing with paralegals. And while I tried to hire associates, I never could hire Well, in associates. And I think it’s because I could hire paralegals. Well, because I was one, I knew what I could expect of them, I could hold them accountable. But with associates, I saw them more as my peers, and I wasn’t emotionally mature enough to hold them accountable. Because I felt that they were adult, and they should have as much drive as I have, and enough, you know, the same initiative that I have. But the fact of the matter is, they weren’t the business owner. And, and they didn’t have any of those things. And they were still looking for leadership. And so as I scaled, I would say that my biggest success was learning how to become a leader, and less of a manager. So that way I could hire people at all levels, not just people that I considered roles beneath lawyer. Yeah,

Luis Scott 7:53

I mean, one of the things that I think you’re alluding to, which is this idea of having the confidence to lead because I think, I think what what happens is that we’re always very good at leading people who we view and I don’t say this in a in a negative way, but beneath us, right? Who’s beneath us, like, it’s easy to be a parent to children who are young, it becomes more difficult to be a parent to children who are adults in our age and want to do whatever they want, right? Like, they’re no longer beneath you. They’re not in your household anymore. They have their own lives and becomes much more challenging. And I think even in like the personal relationships, space, where I see a lot of challenges is generally once your kids become adults, like a lot of people have trouble with that. And I think that that really applies to the to the law firm, it’s like we have to build ourselves to the confidence level where we can actually manage people who are not beneath us, but who are actually our our CO CO equals, and I love to use this concept of like their CO creators, co collaborators with us in this business, especially as we’re, we’re scaling up and growing. Now one of the things that you alluded to at the beginning, you were talking about creating the environment for selling so like preparing to sell your firm. So now you’ve you started your firm, it’s something that you clearly had, like the burning desire for you start your firm, you grow and you have all these challenges, you then get to seven figures, successfully managing that for several years, and then you had to prepare to actually sell your firm. I think this is something of great interest to a lot of people because I am hearing about a significant amount of burnout overwhelm from CEOs and law firm owners. So what was that process like, of preparing the firm for growth for sales season? Well,

Victoria Collier 9:35

I would like to tell you what it should look like and that is from I’m not even going to go so far as to say from the beginning. But at some point when your firm is healthy and you are comfortable or complacent. You have to think at some point you’re not going to be here and you’re not going to be operating firm. And I’d like to think that you’re not still 50 years ago thinking that I’ll just shut down my doors like everybody before me has. Or I’ll just hand my cases over to a good friend. Good friends don’t want your cases, right. And so what they want is a business and people who want businesses are willing to pay a pretty penny for it. So I would say that the transition starts with the realization that I am not going to always be here. And therefore, what should I be planning for in the future, whether that’s three years from now or 30 years from now? What does that look like? So that way, then if I’ve got a plan, then I can also then plan for the awareness. And I think, Luis, it’s all about awareness at every stage, and it’s awareness of, Am I burned out? Or do I want to get out? Because burnout is temporary, we can change that. But if I really want to get out, then we don’t want to change that. We want to make the best situation after that. Whereas we never want to make the best situation of being burned out. I mean, there’s no best situation it’s get out of it, but not so. So it’s, it’s, it’s, it’s having that vision for the future, not of just how much money can I make? What kind of house can I live in? But what is my legacy? And how do I want this firm to end? Or transition when I’m not here?

Luis Scott 11:24

What is the difference between burnout and wanting to get out? How do you know? Like, because that because I know, I mean, I work with people all the time, and they’re just like, I My business is, you know, it’s, it’s sucks? It’s like, oh, it’s draining me. And so it’s like, how do you know if the person is in burnout, or if they’re just, they’re just not made for it anymore? Right.

Victoria Collier 11:43

So it’s complicated. But I will say this, the most simplistic way to explain it is someone who’s burned out has zero vision and zero energy, someone who wants to exit, they can see a vision of something different, they’re going towards something. And they may not have all the details in place. But they’re excited about what that could look like. And they still have the energy to put towards that. Whereas people that are burned out, they can’t see Ford, they can’t see backwards, they are literally just stuck.

Intermission 12:18

This show has been brought to you by 8 Figure Firm Consulting, at 8 Figure Firm, we help law firms turn into law businesses. Stop wasting your time with gurus who’ve never built a successful business at 8 Figure Firm will show you how to unleash the power of your law firm for personal and financial freedom. For more information, go to 8figurefirm.com. Welcome back to The Guts and Glory Show with your host, Luis Scott.

Luis Scott 12:54

So if I was like, let’s just suppose that I’m feeling overwhelmed, and I have a vision, and I have energy just not for my firm. I’m probably the type of person that wants to get out, not necessarily burned out. Is that kind of how you would

Victoria Collier 13:08

you would see that? Yes. Kind of like that. Yeah, exactly.

Luis Scott 13:11

When you were in the process of kind of preparing your your firm for sale? You know, this is the question that I get, because I we get approached by lawyers like, Hey, by my firm, and a lot of times, you know, it’s like, you don’t have a firm, you have a couple of cases, right? And it’s to your point that we don’t want to buy cases, we want to buy a firm. What is the law firm worth? How do we get to that? How do we get to that valuation and I and I know you may say, well find a evaluator or hire, you know, a company like yours, which which we’re going to recommend, you know, at the end of this, this the show, but how does a person understand what a firm is worth? Like? Give me the the factors that we have to look at.

Victoria Collier 13:50

So the factors we look at, is certainly a history of income. Let’s just start there, because that’s where everybody wants to believe that your entire value is just based on what you’ve done historically. And that’s a starting point. But let’s just look at the realism is it of it, you’re not going to be there anymore, and what you’ve done historically, it has nothing to do with what a buyer can do going forward. So we have to look at what’s predictable. So has that income been predictable? Therefore, a buyer can say, well, then at least it should continue to do this, if I as the buyer do certain things. I also look at who is on your team, are they going to realistically still be there on the team, assuming the culture stays the same or gets better? And that you treat them? Well? Because the team is what makes the world go round, if you will, you know, I mean? At least from an entrepreneur standpoint, and entrepreneurs is going to come in and say I want to be able to buy a firm that I don’t have to step in and do anything other than lead manage. Check the numbers right now. So you can’t do that if you don’t have a team of some sort. Then of course, there’s the what brings the cases into the door, what do you do for that, the more you can automate, the more you can make it towards the firm and not the owner so that the firm’s not dependent on the owner or the owners reputation or their owners face, the better. Now, that doesn’t mean that the owner can’t still be on the billboards. I mean, look at the finance companies like Charles Schwab, and you know, all of those their names out there, but nobody ever meets with that person. So it can be done right. But all of those things and more take into account what the firm is worth. And of course, you’re here where the database, how big is the database? And how warm are they? Do you touch them all that that certainly is important, and and more important in some types of firms than others, those that have repeat type of business. So we’re looking at repeat business as well. Because if you have repeat business, then that’s more valuable than someone’s type of service that doesn’t have repeat business. Yeah, so I’d like to say, you know, well, it’s, you know, like people want to throw out there. The rules of thumb, well, it’s one times your gross or three times net, it’d be nice if we could sum it up like that nobody would ever have to get a valuation. But it’s not that easy.

Luis Scott 16:26

Yeah, just just do the factor. It wouldn’t be nice if that was the case. But unfortunately, people are, they’re always looking for a deal. And so they’re not going to just submit to that, you know, that standard? Look, if you had it narrowed down to one thing, because I do have an idea on this. And I’m curious to hear if you believe the same thing that I believe, without me necessarily telling you, but it’s going to be in the question. a predictable way of generating business is probably your most valuable asset, true or false. And within the sale, if you have a predictable way of generating business that is not dependent on the owner, is the most valuable asset in the sale of the firm.

Victoria Collier 17:06

I would say that that is in the top two most valuable aspects of the firm, if you can verify that it’s predictable and not dependent on the owner.

Luis Scott 17:16

Yeah, what was the other one? You said top two? So it’d be the other? Again, I’m

Victoria Collier 17:20

gonna say it’s the team because you’ve got to have someone who does the work? Yeah.

Luis Scott 17:23

So the reason I say that is because I one of the things that we stress at 8 Figure Firm is make your business predictable, create more predictability in every aspect, whether it’s lead generation, sales, conversions, hiring, whatever it is production, make it predictable, it’s going to be more valuable, and you’re raising the equity of the business. But you would agree if you did that, then that would create the greatest level of value?

Victoria Collier 17:48

Well, this is what I would say is it creates the more likelihood that it would be sold, I can’t say necessarily, it would be more valuable, although I believe it will. But from $1 cent standpoint, I wouldn’t be able to tell you Well, that’s exponentially more, what I can say is that the more predictable you can show, the more likely someone will want to buy it.

Luis Scott 18:12

And that makes sense. I mean, you know, when I think about our law firm, it’s, it’s a big law firm. So no matter how predictable, and it is, you may not have a buyer in the market who wants to pay the factors that we want, right? Like, I may say, the business is worth 3x, our our gross or 3x, our net, and there may not be a buyer that exists in the marketplace that’s willing to pay that. And so at the end of the day, the buyer may only be willing to pay 1x. And then you’re kind of stuck with that. Well,

Victoria Collier 18:40

and that comes down to the positioning and the timing, because if you want to hold out for your 3x, there probably is a buyer out there somewhere at some point, it just may not be as early as the one that comes in at 1x. And for firms like yours, for example, I would say in the next five or 10 years, you know, firms like yours should be positioning to sell to VCs, non attorney owners. Because I think that’s the wave of the future.

Luis Scott 19:06

I love I love what you’re saying. Now I want to sell my firm, I’m listening to the show, and I realized I’m not overwhelmed. I’m not I’m not burned out, I just want to put my energy somewhere else tell me the three things I need to start doing immediately.

Victoria Collier 19:24

Number one would be to make sure that your financials are clean as they can be on the p&l. And I don’t mean just that, you know, you’re running the right things through it. But if you for example, do estate planning, list out how the income comes in for what services because you’re gonna have for example, some lawyers that want to buy an estate planning firm that say, we only do trust and we don’t do well plans and 50% of your revenue is from wells, which is great because then it can you know, it’s like speed dating. I’m interested, I’m not interested. But if you don’t even have the data, you’re wasting everybody’s time. So that’s number one is clean p&l. Number two is the data, like the how many people are calling your firm? How many people scheduled appointments? What is your marketing doing for you. And so you’ve got to start collecting data so that people can analyze that for themselves. So that’s number two. And number three would be get your key position roles in place and make sure that those people are going to stay with the firm. So incentives

Luis Scott 20:30

are love that when you’re when you’re on the opposite end, you’re not thinking about selling you you want to buy. I mean, it’s something that’s been on our vision board now for a couple of years is buying a firm, we haven’t found the right, firm, probably because we don’t know what to look for. How do you know that you’re ready to buy? So like, forget about how do we know if we should buy? How do you know you’re ready to buy? What law firm owner is truly ready to buy another firm?

Victoria Collier 20:56

That’s interesting, because I have I am helping some lawyers by firms right now. And I think it’s going to be part of our business model that we get rid of. But and that’s because lawyers don’t know what they want to buy, they just know they want to expand, either geographically expands, you know, financially, or in services. So those are the three things that we generally think of is why would you want to buy a firm, you either want another location, you want more money, or you want to add services? You don’t already do. But it goes beyond that. And I would say that any prospective buyer should really be thinking to themselves and asking themselves, how does acquiring another firm fit into my overall mission over the next 1020 years? And so you have to really know what your vision is for your own business and your firm. And then how does that fit into that? Because if it doesn’t, you shouldn’t be acquiring it. And so the unfortunate thing is that it just sounds cool. You know, well, I’m buying up firms, you know, I can buy up firms, and it’s like the shiny object syndrome. And so I would, I would caution against that you don’t just buy firm because you can, or because it sounds good. In fact, I was just talking with a person today, they’ve only been in practice for less than a year. And they’re already talking about buying firms and other counties. And I was like, you know, why don’t you build your firm first, and then expand from there? Yeah,

Luis Scott 22:31

I mean, the thing is that a lot of times, what people see is they see what they believe to be an easy way to grow fast. Like that’s what they see, they don’t realize there’s a tremendous amount of complexity to buying a firm that has a different core values, different culture. And, frankly, none of the people were hired by you. So like, you want to make sure that you’re, you know, looking at all those things.

Victoria Collier 22:55

Absolutely. But I would say my answer would be different. If we were talking about, for example, a senior associate buying a firm that they’ve been at for a while, that’s a whole different answer. Or a brand new attorney, who has business acumen, and may be or maybe not a brand new attorney, but they’ve been working for other firms. And now they want to go out on their own. I do think still, it makes sense to buy a firm versus building your own in that scenario, as well. But that’s meeting their personal mission is not a person who already owns a firm gobbling up other firms. That was the answer from before, how does it fit in your mission? But if you’ve been an attorney, you know what you’re doing on the attorney side. And now you want to have your own Firm? I’m a big believer in buying versus building.

Luis Scott 23:42

Yeah. And it is faster, you know, if you think about it is going to be faster. So that’s, that’s always a good thing. Awesome. Well, thank you so much for shedding light on this. I think it’s huge. I think a lot of a lot of people want to know how they can buy and sell their firm. They want to know how they can value their firm, either for sale or to value firm to buy it. And I think that the wave of the future is going to be a lot of consolidation. I think people are going to be consolidating their firms. And as people do become disenfranchised with their law firms, they’re going to be wanting to sell and as people continue to retire, and I think it’s a great opportunity as well. We’re looking for that that great opportunity. We’ll see if it happens in the next couple of years. If people want to know how they can get your information, how they can work with you how they can find out more about buying and selling a firm. How can they reach you? Absolutely.

Victoria Collier 24:29

So the first place to start is to go to our website, which is quidproquolaw.com. Awesome.

Luis Scott 24:36

Sounds good. Well, thanks for being on the show. And you guys have heard it here. First, you can buy a firm, you can sell a firm, but you just have to make sure that it’s part of your vision and your mission. And if it is, that’s the wave of the future. And so be excited because 2024 Could be your year. Thank you again, Victoria for being on the show.

Outro 24:55

You’ve been listening to The Guts and Glory Show for more and to learn more We’re about Luis hit the website at LuisScottjr.com. For consulting opportunities, hit 8figurefirm.com That’s the number 8figurefirm.com. We hope you’ve enjoyed this show. Make sure to like rate and review, and we’ll see you next time on The Guts and Glory Show