What is Your Law Practice Worth? An Interview with Christopher A. Cahill, J.D., CFP® of Twelve Points Wealth Management

In this interview, Chris Cahill, J.D., CFP® of Twelve Points Wealth Management discusses how lawyers can achieve their wealth planning goals for retirement by capitalizing upon the value that their law practices present.

Cahill and Poock discuss a case study involving fictional Attorney Bill Turner, a 67 year old attorney who earns $400k/yr. based upon his $1M/yr. in revenues law practice.

Attorney Turner seeks to retire by Age 72 and needs an additional $1.5M to reach his retirement goal of $2.8M in total assets.

Cahill provides 2 cash flow forecasting models for Attorney Turner to meet his retirement goal by Age 72: (1) By maintaining his Status Quo, Atty. Turner has a 77% propensity for success; and (2) By joining a Growing Law Firm, Atty. Turner has a 95% probability of success.

Cahill attributes the success rate differences to Atty. Turner’s law practice becoming a depreciating asset in Status Quo, as compared to its appreciating value by joining a Growing Law Firm that can offer: (i) Younger attorneys capable of succeeding to representing his clients and referral sources; (ii) New income generated from internal cross-referrals; and (iii) Fee sharing during retirement for a negotiated number of years.

For those attorneys between Ages 55-65, Cahill refers to that age range as “critical” for wealth planning and suggests that they: (i) Have a plan to save; (ii) Create a risk mitigation plan; and (iii) For those attorneys who earn high income, consider opening a pension plan in light of potential changes in tax laws.