Whatever your reasoning behind such a purchase, whether it’s to build on your current client base or whether it’s to help you get a footing in the legal sector, there are a host of benefits to be gotten from buying an already established law practice.

You should never invest in a practice, however, without thinking it through first. It is one of the biggest decisions you will make in your career as an attorney, so it’s not a decision that can be madelightly. You have to consider a number of elements to ensure that it is the right course of action for you.

Here are three of the things you need to consider before you go ahead and buy a law practice.

Is it the right time for you to buy?

In today’s climate, as stated on Lawbiz, there are more and more opportunities arising to buy law practices, as opposed to in the 1980s where the sale of this kind of business was strictly prohibited. It’s not a case of whether you are allowed to buy law practices, then, as it is now legal to do so — it’s a case of whether it is the right time for you to buy.

Before you take the leap and invest in a practice, you need to determine if you are truly ready to buy. Do you have enough confidence in your legal abilities and strengths? Do you think you have what it takes to manage a team of lawyers, not just yourself? Do you think you will be able to handle the increased workload that comes attached to owning a law practice? You have to ask yourself these all-important questions, and then answer them as honestly as you can.

Is the price right?

Make no mistake about it, the person who is selling the law practice will try to drum up as much business for his or herself as he or she can, so they might be liable to fabricate the truth from time to time. You should meet most of what the seller says with skepticism, then, if you want to unearth the true value of the practice in question.

Determining how much a law practice is worth — not how valuable its seller deems it to be — is challenging. First and foremost, you have to conduct a thorough analysis of the practice cash flows and deem for yourself whether they co-align with the sale price. You also have to study the key value-drivers of the practice to see whether or not they still meet the demands of the day — you don’t want to be lumbered with an outdated practice, do you?

Is there a transition plan in place?

Your law firm purchase could be more trouble than it is worth if there is not a documented transition plan in place with regards to it. In this plan, there should be a deadline specified that states when the purchase must be made by. There should also be a clause in this plan that allows you to back out of the deal if any fabrication of the practice’s financial capabilities comes to light.

Before you go ahead and buy a law practice, make sure to consider the three points listed above.