Law Firm Succession in Germany: Why the Market Isn’t Working

“I’ve been looking for a successor for two years. Nothing happens on the online platforms, my colleagues don’t know anyone, and the bar association doesn’t help either.” This is how Dr. Schmidt*, a tax law specialist from Frankfurt, describes his frustrating search for a successor. His experience is not unique.

The German law firm market suffers from a structural problem: while business sales in other industries are handled professionally, law firm successions are still dominated by chance, personal contacts, and luck. This leads to failed handovers, missed opportunities, and frustrated parties on both sides.

After conversations with more than twenty firm owners, young lawyers, and M&A advisors, it becomes clear: the market is failing—but not for the reasons you might expect.

The Reality: Law Firm Succession Is a Relationship Business

Unlike other business sales, law firm successions are highly personal matters. “I’m not just handing over a business, but 30 years of client relationships,” explains attorney Meyer from Hamburg, who successfully transferred her family law firm.

Clients follow people, not firms. This fundamental rule makes law firm successions more complex than other transactions. A mechanical engineering company has customers; a law firm has clients—and they can leave at any time if they don’t like the new lawyer.

Professional regulations complicate transactions. Law firms are often partnerships or associations. Shares cannot simply be sold like GmbH shares. Licenses, bar memberships, and professional regulations must be observed.

Cultural fit determines success. “You can catch up on professional qualifications, but if the chemistry isn’t right, the handover won’t work,” says Dr. Weber, who successfully transferred his corporate law firm to a younger partner.

Why Online Platforms Fail with Law Firms

Existing law firm marketplaces theoretically serve their purpose: they list available firms. In practice, however, they don’t work because they ignore the market’s unique characteristics.

Problem 1: Publicity does more harm than good
Firm owners don’t want clients, employees, or competitors to learn about their sales intentions. “As soon as it becomes known that the firm is for sale, rumors start,” explains a firm owner from Munich. “Clients become uncertain, and good employees start looking for alternatives.”

Problem 2: Relevant information is missing
Most platforms only show revenue and location. But for law firm successors, other factors are crucial: client structure, specialization, employee quality, office equipment, ongoing cases. “I’m not buying revenue; I’m buying relationships and know-how,” says a young lawyer planning a firm succession.

Problem 3: Matching doesn’t work
A tax advisor from Bavaria doesn’t automatically fit a tax consultancy firm in Schleswig-Holstein. Regional networking, client base, and local market knowledge are often more important than professional alignment.

Failed Successions: What Really Happens

Dr. Müller from Düsseldorf wanted to sell his labor law firm. After a year on various platforms, he had three serious interested parties. All three discussions failed—but not because of price.

Case 1: The interested party was professionally qualified but too theoretical. “He had no idea about practical client handling. My clients wouldn’t have trusted him.”

Case 2: The chemistry was right, but their ideas about firm management were completely different. “She wanted to digitize and modernize everything. That would have scared off my traditional clients.”

Case 3: Everything seemed fine on the surface, but the purchase price was to be financed entirely through an earn-out. “I was supposed to bear the risk that she could manage my clients. That was too uncertain for me.”

Dr. Müller ultimately sold to his office manager—a solution that would never have come about through a platform.

Why Young Lawyers Don’t Buy Law Firms

“I would like to take over an established firm, but I can’t find suitable offers,” explains Dr. Lisa Weber, a fully qualified lawyer with five years of experience. Many young colleagues share her frustration.

Information asymmetry: Sellers don’t know what successors really need to know. Successors don’t know which questions to ask. “I didn’t know there were still three old legal disputes in the firm that could cause me trouble.”

Financing problems: Banks don’t understand law firm financing. “My bank wanted the client list as collateral. That’s not allowed under professional regulations,” says an unsuccessful firm buyer.

Lack of support: Law firm successions are complex, but there are no specialized advisors. “Regular M&A advisors don’t understand the specifics, and lawyers don’t provide M&A advice for colleagues.”

The Role of Bar Associations: Well-Intentioned, Poorly Executed

Bar and tax advisor chambers sometimes offer succession services. The reality is sobering.

Bulletin boards don’t work digitally. Many chambers have simply transferred their analog notice boards to the internet. The result: confusing lists without search functions or structure.

Data protection prevents mediation. Chambers often cannot share detailed information. “The chamber could only tell me that ‘a firm in the region’ is looking for a successor. Nothing more,” reports an interested party.

Lack of market orientation. Chambers see themselves as professional regulators, not brokers. “The lady at the chamber was very friendly, but she had no knowledge of business valuation or purchase contracts.”

What Works: Successful Succession Models

Despite all problems, there are successful law firm successions. However, they work differently than expected.

Internal successions dominate. Over 60% of all successful law firm successions happen internally: employed lawyers, office managers, or long-term staff take over. “My office manager knew the clients, the processes, and the issues. That was best for everyone involved.”

Personal networks are crucial. Successful external successions almost always arise through personal contacts. “I met my successor at a lawyers’ conference. We talked for two years before signing the contract.”

Gradual handovers work better. Instead of complete sales, partnership models are established. The senior remains as a consultant, while the junior gradually takes on responsibility.

Structural Solutions: What the Market Needs

The law firm market doesn’t need new online platforms but structural changes.

Specialized advisors for law firm M&A. Other industries have M&A boutiques; the legal market needs them too. These advisors must have both M&A expertise and deep understanding of professional regulations and law firm structures.

Closed networks instead of public platforms. Successful mediation requires discretion and trust. Closed, quality-controlled networks could work—but only with personal support.

Financing models for law firm purchases. Specialized financing partners who understand law firm specifics could enable more young lawyers to become buyers.

Training in law firm management. Many lawyers are excellent technically but have no idea about business management. This makes both selling and buying more difficult.

Why Standard Solutions Don’t Work

“We need something like Immobilienscout24 for law firms”—this sentence is often heard. It reveals a fundamental misunderstanding.

Law firms are not real estate. Real estate has objective criteria: location, size, equipment. Law firms are relationship businesses with subjective evaluation criteria.

Standardization contradicts reality. Every firm is different: different clients, different specialization, different culture. What works for a large firm fails for a solo practice.

Technology cannot replace relationships. Matching algorithms can help, but the final decision remains emotional and personal.

The Way Forward: Realistic Expectations

The law firm market will not be revolutionized by new technology but by better understanding of market mechanisms.

Acceptance of market peculiarities. Law firm successions are complex, personal, and time-consuming. This is not inefficient but necessary.

Focus on relationship building. Successful mediation requires time to build trust among all parties.

Professional support. Specialized advisors with both M&A and legal expertise could professionalize the market.

Realistic price expectations. Many firm owners overestimate the value of their practice. Honest valuations could enable more transactions.

Conclusion: A Market in Transition Needs New Approaches

The German law firm succession market is not working—but not because of a lack of technology, rather due to structural problems and unrealistic expectations.

The solution lies not in better platforms but in more professional support. Law firm successions require specialized expertise, personal care, and realistic timelines.

Lawyers and tax advisors planning a succession should start early, leverage personal networks, and seek professional help. The perfect online platform will not exist—but that’s not necessary.

*Names have been changed for data protection reasons.

Are you planning a law firm succession or looking for a takeover? Let’s talk about realistic approaches that actually work.