Succession
Valuing a legal firm is not about assigning a number to years of work. It is about recognising the professional legacy that has been built and ensuring that it continues in the right way. Neal Morrison looks beyond the balance sheet
Every law firm will, at some point, face a conversation about succession.
It may come gradually, triggered by a partner’s upcoming retirement or a change in personal priorities. Or it may arrive without much notice, prompted by illness, an unexpected opportunity, or shifts in the marketplace.
Whatever the circumstances, one issue always comes into focus: what is the firm worth?
For many legal partners, the idea of valuation may feel unfamiliar. It is rarely part of daily practice and is often postponed in favour of client deadlines or operational demands.
Yet it is precisely because legal firms are built on reputation, relationships, and continuity that valuation deserves thoughtful attention. The question is not just what the firm is worth, but how that worth is recognised, protected, and passed on.
Valuation, in this context, is not just a technical exercise. It is part of a broader leadership responsibility. For long-standing practices in particular, it is essential to ensure that the value built over decades is understood and respected.
A clear, well-considered approach helps prevent rushed decisions, protects the firm’s integrity, and supports confidence at every stage of transition.
What drives value?
In simple terms, value is driven by profit, people, and process. However, in law firms, especially those with strong reputations or niche practices, much of the value lies in areas that are harder to measure.
These include the strength of client relationships, the trust built up over time, the calibre and independence of the team, and the tone of leadership
Buyers or successors will typically look at maintainable earnings. Still, they also consider client concentration, staff retention, recurring income, and the extent to which the firm is systemised rather than reliant on individual partners.
If a firm’s revenue is tied too closely to one person or a small group, it raises risk. If processes are informal or relationships are undocumented, that risk increases.
On the other hand, firms that demonstrate consistent performance, structured handovers, defined service lines, and strong team engagement tend to be viewed more favourably.
They signal readiness. They demonstrate that the firm is not only viable, but also sustainable.
Methods and limits
There is no universal formula for valuing a legal firm. Certain methods are referenced in the professional-services sector, such as multiples of adjusted earnings, or capitalisation of recurring fees.
These approaches provide a framework, but not a fixed answer. In the Irish market, especially, deal terms are often bespoke and shaped by realworld factors such as geography, practice area, market reputation, and future potential.
Where a firm has clear financial records, good governance, and a stable operating model, valuation becomes more straightforward. However, this process still depends heavily on judgement.
In many cases, a blended or triangulated view is taken, where earnings are assessed alongside qualitative factors like leadership continuity and client longevity.
The key point is this: valuation is not just a number on a page. It is the outcome of a conversation.
That conversation must take account of the firm’s identity, structure, and potential. It must also reflect its people. The numbers matter, but they are not the whole story.
Timing and preparation
In the best outcomes I have seen, valuation is approached early. It becomes part of the wider planning process, not a last-minute hurdle.
When partners take the time to prepare, they enhance the firm’s position, manage expectations more effectively, and create viable options.
That preparation does not need to be complicated. It might involve cleaning up financial records, reviewing partnership agreements, documenting systems and handovers, or formalising staff roles.
Each of these steps builds confidence and contributes to a stronger narrative when the time comes to talk about the firm’s future.
Waiting until retirement is imminent can limit choice. It can also increase stress. By contrast, a steady and thoughtful approach allows transitions to occur with clarity and fairness. This protects not only the individual partner but the firm as a whole.
The role of leadership
Valuation is not just a financial matter. It is a leadership act. It reflects how the firm thinks about its future, how it communicates with its people, and how it prepares for change.
Firms that approach succession proactively and transparently tend to foster greater internal trust. They signal to the market and their teams that they are planning ahead with purpose.
Leadership is also what prevents distraction. Capital can turn heads, especially in a market where external investment is becoming more visible. But it is not the capital that defines the outcome. It is what leaders choose to do with it.
The strongest firms retain their focus on clients, people, and long-term quality, even as new structures or models are explored.
Clarity of purpose is the difference between a transition that unsettles and one that strengthens. Leadership ensures that valuation does not become a narrow exercise, but a wider opportunity to reinforce what the firm stands for.
A changing legal market
The Irish legal market is evolving. New entrants are arriving. Larger firms are becoming more acquisitive. Clients are becoming more price aware. International brands are expanding. Technology is altering the rhythm of delivery.
At the same time, broader trends such as private equity are starting to reshape how firms think about ownership and growth.
In this context, understanding your firm’s value becomes a matter of strategic positioning.
It is not about preparing for sale, unless that is your chosen path. It is about knowing where you stand, how you compare, and what levers are available to you.
For mid-sized and independent firms, this matters. It enables more informed choices. It makes space for collaboration or consolidation. It supports stronger conversations with potential successors or partners. And it allows firms to move at their own pace, from a place of confidence rather than uncertainty.
Every firm is different
There is no template. That is why the valuation conversation needs to be tailored to each individual’s specific needs.
Each firm has its unique rhythm, client base, and internal culture. That complexity is not a weakness. It is exactly what gives a firm its identity.
What matters is taking the time to understand it. This might involve an informal review, a structured discussion with partners, or a sounding board to explore different scenarios. It does not need to be driven by urgency. It can start with curiosity.
Even when a transition is not yet on the horizon, thinking about value can unlock insight. It can highlight where the firm is strong. It can bring to the surface risks or gaps that are easily addressed. It can help align internal expectations before difficult decisions need to be made.
Start the conversation
Valuing a legal firm is not about assigning a number to years of work. It is about recognising the professional legacy that has been built and ensuring that it continues in the right way.
It is about clarity, fairness, and thoughtful planning. You do not need to have all the answers. You simply need a place to begin.
Whether you are years away from stepping back or want to understand how others are approaching this, now may be the right time to take stock.
Every firm is different. If you would find it helpful to explore what this means for you, or want an experienced sounding board, I would be happy to speak with you. There is no pressure. Just a conversation.
Neal Morrison is the regional managing director of Dains Ireland. He can be emailed at nmorrison@dains.ie or visit .