MML #068: Most Attorneys Skip This Step — Here's Why It Matters

Last week, I outlined what a real attorney transition plan looks like — and promised to go deeper on each phase.

This is where it starts. Phase 1: Clarity. 

Most attorneys who've been "almost ready" for a while have skipped it — not intentionally, but because no one told them it existed. And before we get to the numbers, there's a question that comes first — one that changes everything that follows.

Why are you leaving?

Brooke Lively, author of Exit on Top, makes the case that before any attorney can build a real transition plan, they need to understand their own motivation for leaving. The real one.

Are you leaving because you financially need to stop? Because you want to do something else with the time you have left? Are you ready to hand your practice off to another attorney, a team member, or a family member? Are you stepping away with an eye toward taking care of the clients and colleagues who've depended on you? Or is this about legacy — what you leave behind and how you're remembered in the profession?

Most attorneys I talk to haven't answered that question out loud. They've felt the pull toward the exit, they've run the mental math a hundred times, but they haven't named the reason. And it matters — more than they expect.

Because here's what happens when you skip it: the financial planning feels abstract. You're building a plan around a destination you haven't actually defined. Every number is theoretical until you know what the numbers are supposed to fund.

The "why" isn't just philosophical — it shapes the bottom line.

An attorney leaving to travel extensively spends differently in retirement than one who plans to consult part-time and stay professionally active. 

Someone stepping away with a commitment to protect their team and transition clients thoughtfully has different timing constraints than someone with no succession considerations. 

An attorney motivated by legacy may approach practice valuation and deal structure completely differently than one who just wants out cleanly.

The reason Brooke Lively's framework belongs at the front of this process is that your "why" determines what your financial plan needs to accomplish. Get clear on the motivation first, and the financial picture becomes something you're building toward — a target with actual meaning behind it.

Now the financial picture — your honest baseline.

Once you know why you're leaving, you need to know where you actually stand. And this is where most planning falls short — attorneys have often saved diligently for years, but they've never seen the full picture assembled in one place.

Real financial clarity at this stage means being able to answer four questions:

What does your income look like today, and what does it need to look like in retirement? This means understanding your actual take-home, how your compensation structure works, and how that changes the moment you stop practicing.

What does your balance sheet actually say? Retirement accounts, taxable investments, real estate, the value of the practice itself — all of it, with realistic assumptions.

How does your firm structure affect your financial position? For solo practitioners and small firm partners, the way your practice is structured has real implications for how you exit — and what you walk away with.

What does your initial tax picture look like? This is the one most attorneys underestimate — and the one that tends to produce the biggest surprises.

The tax point that usually catches attorneys off guard.

The difference between a well-timed and a poorly-timed exit can be large, sometimes six figures. That's not an exaggeration — it's what happens when large pre-tax account balances, practice sale proceeds, and the loss of business deductions all land in the same tax year without a plan.

Most attorneys don't see it coming because they've spent their careers focused on earning, not on the tax architecture of winding down. The Roth conversion window, the timing of a buyout, the year you stop generating self-employment income — these aren't just planning details. 

They're decisions that compound in one direction or the other depending on whether you've mapped them out in advance.

Clarity means seeing that picture before you're inside it — while there's still time to act.

Next up: Design.

Once you know why you're leaving and where you actually stand financially, you can start building the transition itself — timing scenarios, income replacement, the tax strategy that connects all of it. That's Phase 2, and it's where the plan stops being theoretical.

More on that next time. If anything here landed, reply and tell me where you are. I read every one.

— David