Valuing a Legal Practice in Queensland for Stamp Duty Purposes

When ownership interests in a legal practice changes hands, stamp duty can become a key consideration. In Queensland, the Queensland Revenue Office (QRO) requires the value of “goodwill” and other dutiable property of the practice to be determined. This makes the process of valuing a legal practice not only important but also highly specialised.

What makes a legal practice valuation unique?

Unlike many businesses, law firms operate within a professional partnership structure and are subject to regulatory obligations imposed by the Legal Profession Act 2007 (Qld) and the Queensland Law Society.

This means traditional valuation methods—such as EBIT multiples—need to be carefully adapted to reflect both the profitability and the sustainability of the practice.

Key factors considered include:

• Profitability and partner remuneration – Understanding the true commercial profit of the firm, after adjusting for equity partner salaries.

• Sustainability of earnings – Assessing the practice’s ability to maintain profitability over time, taking into account client base, practice areas, and market position.

• Goodwill – The reputation, client relationships, referral networks, and systems that support the ongoing success of the practice.

• Market evidence – Benchmarking against transactions in professional services firms, while recognising that legal practices often transact at more conservative multiples due to regulatory constraints.

Why it matters for stamp duty The QRO’s Practice Directions make it clear that goodwill and other intangibles are dutiable. Getting the valuation right ensures that:

• The correct amount of duty is assessed.
• Both incoming and outgoing partners have certainty about their financial position.
• Disputes with the QRO are minimised.
• Common challenges

We often see firms encounter issues where:

• Partner drawings are mistaken for profit, overstating firm value.
• No allowance is made for a commercial salary to equity partners.
• Inconsistent approaches are taken to valuing work in progress and unbilled time.
• Market multiples are applied without considering firm-specific risk factors.

How we can help Valuing a legal practice for stamp duty purposes requires a balance of technical expertise, industry knowledge, and practical understanding of how law firms operate.

At WCT Advisory, we assist legal practices across Queensland in preparing valuations that are defensible, compliant, and tailored to their circumstances.

If you are considering a change in ownership, restructuring your firm, or responding to a QRO query, seeking an independent valuation is a crucial step in ensuring the transition is smooth and tax obligations are properly managed.