Why I sold my law firm
This site is a creative outlet, while also a space for me to lift the curtain on life as an entrepreneur, legal advisor to startups, law firm partner, and just mom / dog person / human. So, with this inaugural post, let’s address the burning question I get the most lately: why did I sell my law firm?
Background: After graduating law school, I practiced at a large NYC law firm, doing a mixture of M&A and other work. I loved it, but there was an itch I couldn’t scratch. tl;dr, Agatha Kluk Law was born – the vestige of a single referral from a PE client who flocked to entrepreneurship after he finished business school. Over the next five years, AK Law became Kluk Farber Law with about 25 employees, a lease, a CFO and an actual brand. At KFL, we closed hundreds of venture financings, took many clients from 0 to 1 (exit), and dealt with every startup fire in the playbook.
But after about six years, my partners and I decided it was time to find a larger and more supportive platform for our clients. Without going too heavily into the mechanics of the deal, there were a few tipping points that led us to our decision:
1 — Internal Growth Could Not Keep Up With External Demand.
In 2020 and 2021, the legal market exploded. Deals were on fire, and so was legal hiring at every level – junior associates through senior partners. Several of our associates were poached by big law firms and lucrative in-house positions. We found it nearly impossible to hire at the caliber and speed that we expected. While the same issue was consistent at big firms, the impact at our smaller scale was greater.
In early 2022, the venture market pendulum swung the other way. Even though our team was very nimble and deal flow was drying up, we were still having a hard time meeting demand. For work that is generated solely by referrals, it was difficult to constantly say no to new projects, and I was concerned that if we continued to do so, the funnel would dry up. Plus, we were working really, really hard to keep up with demand. It was not a sustainable, long term model.
2 — Close advisors told me it was time to make a change.
One of the reasons I love working with startups so much, is because I know firsthand how god damn hard it is. A 14 hour startup day is NOTHING like a 14 hour day anywhere else. Your day is an emotional rollercoaster, and you have very little control over outcomes. I was on my own entrepreneurial roller coaster while also advising hundreds of founders on theirs, every single day. Over the past six years, we (meaning KFL AND all of my clients) experienced so many existential dread moments – two highly electric election cycles, COVID, mass layoffs, a looming recession, bank failures. I can keep going! It was time to start taking out some of the risk.
3 — I got money.
I don’t think female founders are transparent enough about compensation, so here I go. Yes, this exit was a financial event for me, and most importantly for my growing family. I was nine months pregnant when we closed the deal and I gave birth to my second son 10 days after closing. While I will certainly need to continue working, I am proud that we were able to buy a family home and have a nest egg for emergencies. Oh, also, for a year after I hired my first associate, I didn’t pay myself any salary. I watched my law school friends take out mortgages and travel– while I put every dollar I had back into my firm. It ultimately worked out, but I had to stay laser focused and ignore the noise around me.
4 — I get to do the work I enjoy doing.
At a certain point on any entrepreneur’s journey, you move away from the exciting, roll the dice everyday narrative to … well, just running a business. While it was certainly nice to be in charge, it was frankly exhausting. And it took me away from the work that I wanted to be doing – which is advising more startup founders and entrepreneurs. Right before the merger closed, I was spending about 70% of my time on various ‘firm management’ – which is really a nice way to describe very important, but administrative work. Like making sure people were logging in their hours, and chasing partners to send out their bills and negotiating with our vendors. I was lucky to have a really strong support team behind me, but we were still at a size where I was involved at some level in every single decision that was made at the firm. It goes back to point 1 – we couldn’t hire into the senior roles we needed and so we couldn’t get the operational staff. Now, I would say that I’m “lawyering” 70% of the time with about 30% devoted to marketing and administrative work. I feel more excited about my days, which is paramount when you spend so much of your life at work.
