Managing Law Firms in Transition

Managing Law Firms in Transition

Two Keys to Effective Law Firm Leadership

Posted in Law Firm Growth, Law Firm Leadership, Law Firm Transition, Uncategorized

If people like you, they’ll listen to you, but if they trust you, they’ll do business with you. – Zig Ziegler

 

A number of things can cause one to land in a law firm leadership position; such as success in building a legal practice, ability to build consensus and advance initiatives or even political acumen. But two factors are essential if one is to seize the role and provide enduring leadership: trust and respect.

Neither is an automatic byproduct of the position.

Trust is earned when you do what you say you are going to do – when deeds match rhetoric, and align with the values of your organization. At a practical level, this means a few things must be accomplished.

  1. A leader must be prepared to put a stake in the ground, defining goals, timetables and specific actions
  2. These goals and action steps must be communicated (and re-communicated) to the firm
  3. The leader must maintain focus, and follow through on promised action, and then be certain the organization is aware of critical benchmarks and accomplishments
  4. Trust is earned by embracing responsibility when things go wrong and graciously distributing credit when they go well

To conduct ones self in a manner consistent with firm values presumes a crystal clear understanding of said values, and the commitment to conduct business in a manner consistent with these cultural cornerstones.

Gaining respect is an incremental process. It requires consistency as well as a measure of success in moving the organization forward. Practically speaking, this means:

  1. Establishing realistic as well as measurable objectives that are consistent with the aspirations of the firm
  2. Ensuring firm values are adhered to no matter the influence of the person in question
  3. Treating everyone with an equal level of dignity and respect no matter their role or performance
  4. Walking the talk, being the example for others

How do you see leaders earning trust and respect?

 

Four Key Components to Law Firm Financial Health-Meeting the Universal Objective

Posted in Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition

Law firms come in all shapes and sizes.  Some consciously specialize in distinct areas of the law while others are more reactionary-willing to do anything they feel generally competent to do.  Firms can be local in scope, only serving a home town populace from its home town address.  Geographically expansive law firms can have a footprint beyond a single zip code and compete nationally, or even internationally for name brand clients.  There can be firms singularly dedicated to making their owners a lot of money while a firm next door might prefer to deliver community based legal services as a non-profit.  Profit driven or not, all firms have a universal need to be financially healthy.

Law firm financial health should be a goal for all law firms regardless of culture or objectives about wealth.  Even a so-called “life-style law firm” that values a relaxed atmosphere must be mindful about its financial health.  It can be relaxed about a lot of things, but disregarding the key elements that make it possible to exist can be risky and unwise.

There are many ways to assure a firm’s financial footing.  Certainly, being attentive and focused on dollars and cents issues endemic to any business helps.  But being admonished to “keep your eye on the ball” alone does not provide the clarity a law firm leader typically needs.  More is required.

Law firm leaders committed to their firm’s financial health would be wise to focus on four fundamental elements of operating a law firm as a business.  Understanding and integrating the following four financial and operational components can go a long way to achieving financial health, no matter the firm’s personality, make-up, or culture.

Debt/Capital.  The levels of debt and capital at a law firm directly affects its financial health.  While some debt may be justified and sustainable, too much can impose a burden that becomes hard to overcome.  Purchased furniture, fixtures and equipment should not be financed at amounts over their unamortized asset value.  A modest line of credit may be used to counteract cyclical collections (for example, at the beginning of the year), but leadership alternatively could consider increasing the firm’s capital or adjusting draws downward. In virtually no circumstance should a firm borrow to pay owner “profits.”  As for capital, having capital levels at a rational ledge can greatly contribute to a firm’s financial health.

Systems and Processes. The mundane world of systems and processes can be an exciting contributor to a firm’s financial health.  A firm with a consistent approach to client intake, time entry, sending out bills and collecting bills improves its lie greatly.  Having the ability and discipline to monitor compliance with these systems and processes, as well as articulating clearly the consequences for non-compliance, points a firm in the right direction.  Finally, having a compensation system that encourages financial contributions of all attorneys is an important feature of responsive firm systems and processes.

Productivity and People.  A common malady is underperformance by attorneys and other personnel.  Despite lagging performance, too many firms are slow to address the overcapacity that dilutes financial health.  Challenges must be addressed by establishing clear standards and expectations for all personnel, monitoring performance against these markers, and taking appropriate measures when expectations are not met. Reducing an underperformer’s compensation, providing him or her improved training, and ultimately, removing the incorrigible from the firm, are effective actions a firm can take to address underperformance.

Margin/Overhead.  Client work is beneficial if it contributes to the firm’s financial health.  If it does not, it may not be worth keeping.  Clients and the work the firm does for them should be analyzed for any contribution to the firm’s financial health.  Similarly, personnel who produce the legal services must be assessed for their contribution to the work that generates revenues.  A lawyer or paralegal whose contribution to firm revenues is exceeded by the expenditures he or she requires (compensation, benefits, overhead) is not a positive for the firm.  All costs the firm incurs in operations should be examined.  If expenditures do not directly contribute to the delivery of superior client service they should be questioned.

These financial and operational components are relevant to a firm’s financial health.  None can be considered in isolation; rather all relate to each other.  They must be brought into alignment around consistent principles that focus on a firm’s financial health.  Does your firm exercise that kind of discipline?

 

 

Is Your Managing Partner Becoming More Effective?

Posted in Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring

 

To become more effective , to improve — in any position in any organization — begins with and is dependent on periodic feedback and performance evaluation. Without the objective assessment that comes with these two elements, attention to areas in need of focus is limited. Improvement is left to the realizations that arise from self-reflection.

It is a paradox that organizational health is most tied to effectiveness at the top of the pyramid, while formal evaluation systems are typically utilized only to assess the work of those lower in the structure.

All serious leaders need feedback.

Yet, whether the byproduct of pride, insecurity or simple organizational oversight, few in leadership roles actually receive regular objective assessments of performance.

What A Leadership Evaluation System Looks Like

 In a post on Bloomberg Law, Donald Mrozek does a great job of describing an approach to scoring the performance of managing partners. It is a worthwhile read for all who have accepted the fact that evaluation is needed.

I don’t have any quibble with the specific evaluation criteria or weighting described by Mr. Mrozek, though I would suggest the specifics should probably vary by the particular needs of the organization and its priorities. That said, there are three areas in which all leaders routinely need feedback. If nothing else, Managing Partners should seek to determine how the members of the firm feel about their effectiveness on three fronts.

  1. Vision, values and strategy. An effective firm leader ensures these components are developed, communicated, and understood throughout the firm.
  2. Progress. A leader ensures that core organizational objectives are clearly understood, are delegated, and met.
  3. People and needs. The effective leader stays in touch with the “heartbeat” of the organization. This is an intentional process that incorporates listening to a broad cross section, probing diverse perspectives, and engaging in what are often difficult conversations.

 

A leadership-evaluation system need not be public. A private and confidential communication from the firm’s owners to the leader that objectively reviews the job being done by those elected to serve, and provides constructive thoughts on areas for focus can suffice. The truth is that effective leaders embrace feedback, value insight from peers, and seek accountability.

 

Does your firm provide formal feedback to its leader? If not, why not?

Law Firm Innovation: A Concept Within Every Law Firm’s Grasp

Posted in Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition

Law firm innovation.  The idea of innovation is lauded, discussed and encouraged.  When it happens, either through technological advances, the launch of a start-up alternative service provider, or the unveiling of an approach never thought about before, the legal services industry takes note.  In an industry searching for a new stability after 10 years of something less, the idea that new ways are needed for “doing the law” finds little argument.  Innovation already has brought a great deal of change-there is no indication it will stop.

For law firms only comfortable with the status quo, the avalanche of innovation can be both unwelcome and threatening.  Every mention of an advancement or breakthrough can add to a sense of helplessness. Many firms once successful in the old ways don’t know where to begin when it comes to innovation.

A law firm’s task in tackling innovation is not to change the industry or seek its acclaim.  Rather, every law firm can innovate by advancing its delivery of legal services to where clients perceive greater value and law firm owners enjoy better financial stability.  Law firm innovation does not need to transform the industry, it only needs to transform the firm.  Because most firms have room to become more efficient, more effective in delivering value, and more profitable, innovation is within the grasp of every law firm.

Innovation for a firm stuck in the status quo requires the following five important steps:

Recognizing that Standing Pat is Not the Answer.  Law firms worried about falling behind must subscribe to the Zig Ziglar admonition “the first step in solving a problem is to recognize that it does exist.”  This is especially true for law firms weighed down by the hide-bound ways of the past and struggling with moving to the future.  Once leadership recognizes that change in approach is necessary, innovation is possible.  But until that occurs, there is little chance a firm will be able to keep pace with the changing legal services world.

Reflecting on the Firm’s Strengths, its Clients and its Financial Condition.  Upon realizing that change is needed, the firm must take stock of itself, its clients, and its financial standing.  Understanding what it does well and what it does not will bring into focus its strengths and weaknesses.  The firm’s lifeblood, its clients, must also be understood to make progress.  Any plan must focus on nurturing and expanding client relationships. The firm’s financial performance must be assessed and dissected before a path to greater financial strength can be created.

Committing to Create a Plan to Improve Value Delivery and Profitability.  For a firm to innovate, it must be committed to improving the delivery of legal services.  Improved delivery enhances the value clients perceive, improves the firm’s chance for repeat business, and grows the firm’s reputation.  Client growth must improve the firm’s profitability or it is counterproductive.  For this reason, all client relationships should be looked at holistically to test whether they improve a firm’s financial performance.  If any do not, their continuation should be questioned.

Welcoming New Ideas-Be Willing to Be Bold.  In its purest form, innovation involves the implementation of new ideas that improve results.  A firm thinking about moving its practice to a better place must be ready and willing to consider new ideas.  Leadership must create an atmosphere where “outside the box thinking” is welcome.  Not all new ideas will be adopted, but freedom to suggest them is essential.

Considering Best Practices of Other Firms or Known Innovators.  Worth considering are the best practices of other firms that have moved on from stale to more dynamic practices.  Transformative techniques or practices of other businesses not in the legal services industry may also provide useful guidance.  In other words, innovation need not be original thought-it just needs to be a way to better results for the firm.

Every law firm is ripe for innovation.  Sometimes innovation is dramatic; other times less so.  What is your firm doing?

 

 

 

Relieving Pressure in the Law Firm Restructure/Turnaround

Posted in Law Firm Crisis, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition

Whenever you see a successful business, someone once made a courageous decision. – Peter Drucker

We have previously written  about the unique nature of the law firm turnaround and how commitment from owners is one of the keys to turnaround success. In Part 2 we will look at resource management (or cost management) as a second key to success.

Cost Management – Relieve the Pressure

Turning-around a troubled law firm, or any business for that matter, is difficult. To give the challenged firm the greatest chance of success it is critical to relieve the organization of as much financial pressure as possible.

Although there are other steps that we will discuss, managing a firm’s cash commitments to as low a level as practical is the first and most important step in minimizing financial stress. Typically, the two largest demands on the financial resources of law firms are:

• The cost associated with personnel

• The cost associated with lease space.

Managing People Cost Continue Reading

Finding the Right Law Firm Merger Candidate-Five Fundamentals

Posted in Law Firm Growth, Law Firm Leadership, Law Firm Merger, Law Firm Transition

Law firm mergers are a regular occurrence in today’s American legal landscape.  Large or small, they happen because law firms and their leaders see merger has meeting a perceived need.  Whether seeking greater market share, pursuing untapped lucrative markets, responding to a demographic challenge, or fixing inadequate succession preparations, a merger can represent the right solution.  But mergers are neither easy nor assured of success.  Indeed, many mergers don’t achieve their desired goals and in some cases, render a firm worse off.

Not all law firms pursue merger with the right level of discipline or knowledge. This can be especially true for law firms embarking on merger for the first time.  By being new to this dramatic form of law firm transition, leadership may be uncertain about the process or a tad overwhelmed.  Merger as an initiative can seem daunting, especially when leadership thinks about how important it is to get the merger right.  In almost every instance, getting the merger right is a function of finding the right merger partner.

How does a law firm find the right merger partner?  There are five fundamentals that increase the likelihood of finding the right merger partner, and if followed, improve a law firm’s odds in getting the merger right.  The five fundamentals are:

Have a Strategy That a Combination Serves.  The most important fundamental when considering merger is to have a strategy that merger serves.  The idea that merger itself is a strategy is wrongheaded.  Merger should be a tactic to further a firm’s strategy, whether it be a need to add needed substantive abilities, build-out existing specialties, or become more deeply rooted in a client’s business that is growing in a currently unserved market.  The merger can be the jump start on the underlying strategy.  But merger should not be the strategy itself.

Be Faithful to the Firm’s Strategy in the Search. Upon deciding that merger can implement a firm’s strategy, it is essential that prospective merger candidates have the characteristics that are consonant with the firm’s objectives.  Simply put, a firm needs to know what kind of firm it is looking for in a merger candidate and only look at those kinds of firms.  It takes discipline to remain faithful to pursuing firms with the identified characteristics, especially when firms attractive in other ways indicate a willingness to merge.  Yet an attractive firm missing the elements that further the firm’s strategy is not a suitable candidate for advancing the firm to where it wants to go.

Test Compatibility Thoroughly.  When a prospective merger partner appears to meet strategic requirements, it may be far from clear that the right choice has been found.  Upon identifying a potential candidate (because it checks most or all the boxes for advancing the underlying strategy), its compatibility needs to be tested.  In most instances, compatibility can be assessed by focusing on five compatibility metrics:  culture, finances, clients, compensation and operations.  If the two firms do not fit well when considering these five metrics, it is advisable to decline the opportunity.  Two incompatible firms do not make for a good match no matter how perfect the strategic fit may seem.

Think Beyond the Closing Date. A merger that comes together is a wonderful thing.  But the job of making a merger succeed, even ones whose compatibility is evident, requires a great deal of work beyond the courting and closing.  Any two firms brought together should invest heavily in integration and assimilation preparations so they become one.  In addition, the two firms will need to create systems, processes and procedures that facilitates the uniform treatment of all personnel.  Treating everyone alike will encourage consistent behaviors and can go a long way to forging a single culture out of two firms.

Be Ready to Walk Away.  Merger discussions are time consuming, can create excitement, and can generate a lot of reasons “to do the deal.”  Yet for a merger to be worthwhile it must be compelling.  If the match falls short of that standard, it is best that it not be pursued.  Despite the momentum towards a deal that makes some of sense, if it does not speak strongly for its consummation then serious consideration should be given to calling it off. Walking away from a deal does not mean failure, it means that the search for the right match continues.

Getting a merger right is a function of finding the right candidate.  Following these five fundamentals will guide leadership to the right result.  Why make it more complicated?

Denial and Law Firm Demise

Posted in Law Firm Crisis, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition, Uncategorized

“Hope is the denial of reality. It is the carrot dangled before the draft horse to keep him plodding along in a vain attempt to reach it.”  – Margaret Weis

Most business people are familiar with Built to Last and Good to Great, both terrific books by Jim Collins. He published a less known book, How The Mighty Fall, that I like a lot. In it Collins describes a phase that many struggling companies go through — the phase of Denial of Risk and Peril.

Denial is a phase that I have seen many-troubled law firms go through; unfortunately for some it is the final phase prior to dissolution.

There are two primary scenarios in which denial can seem to magnify (or even hasten) the decline, and intensify the struggle:

  1. Undervaluing (or underestimating) the risk associated with a significant undertaking; or,
  2. Disregarding mounting evidence of decline.

Denying the Risk Associated With Major Initiatives

Struggling law firms often entertain significant changes (to the firm or in its culture) in order to “right the ship.” I define a major change as one that, if it were to go very wrong, might trigger the demise of the organization. Some examples include:

  • Downsizing through the termination of individuals, groups or offices;
  • Acquisition of another firm or practice;
  • Being acquired;
  • Restructuring management/governance; or,
  • Modifying the compensation system.

Major changes are often necessary for a struggling firm, to be sure. However, a move from the frying pan into the fire is to be avoided. The overwhelming tendency is to undervalue the risk associated with major moves. To counter that tendency the prudent leader will seek to have the “worst case” scenario fully developed and discussed prior to decision-making. It is best to initiate major change with caution and counsel.

Denial of the Evidence of Decline

By definition, struggling law firms are operating in variance to desired levels. In the most extreme of cases – failed law firms — it is typical to find that there was mounting evidence indicating a decline – evidence that was discounted or ignored.  Examples of mounting decline include:

  • An increase in the level of undesired attrition/turnover
  • Increased debt
  • Declining profit margins
  • Falling revenue levels
  • Loss of meaningful client relationships.

SUCCESSFUL LEADERS RESIST DENIAL

Law firm leaders must be vigilant in monitoring the performance of the organization. Steps should be taken to ensure that the firm doesn’t veer too far for too long, from operating performance norms or targets. The longer the firm operates in variance, or the greater the degree of that variance, the stronger the corrective action needs to be.  And the more frequently the performance needs to be monitored.

Often the leader of a law firm in decline becomes more insular, protecting the firm from “bad news” and trying to prevent alarm. The prudent leader will honestly communicate with confidence and conviction, while broadening the number of people from whom input and advice is solicited.

Is denial adversely impacting your firm?

 

Considering Law Firm Merger? Four Disciplined Steps to Getting It Right

Posted in Law Firm Growth, Law Firm Leadership, Law Firm Merger, Law Firm Transition

In the case of many law firms competing in today’s legal environment, growth is important.  Some growth is done quietly while other expansion is discussed widely.  Growth in the form of law firm merger gets everyone’s attention-indeed announcements about law firms joining together in merger seem to be made weekly.

For every merger announced there are many others that don’t make and go quietly into the night.  Most failing efforts can be traced to the numerous factors that make merger so complex. Make no mistake, mergers are complicated and sometimes difficult.  When law firms are inexperienced in merger, the idea of merger can seem daunting and leaves the novice firm unsure how to make a merger work.

While all mergers and their negotiations are unique, virtually all mergers go through four distinct steps that help determine whether merger will succeed.  Within these four steps, law firm leadership must exercise discipline to assure that each step is carefully vetted and examined before moving to the next step.  A lack of discipline, or moving prematurely onto the next step due to excitement or deal fever, can lead to a risky merger.  Performed with discipline, however, and these four steps can improve a law firm’s chances in the merger game.  The four important steps are:

Making an Informed Decision About Merger.  Even though merger can be transformative for a law firm, thinking that merger can be a panacea for various ills is unsound.  Thoughtful reflection is required. There must be a clearly articulated business reason to consider the tactic of merger.  Some firms look to merger to provide a rescue, others need additional capabilities or have identified another geographic market with promise.  The adding of market share in a single boost may be needed because organic growth is too slow.  Merger also can be succession tool as existing leadership or business generators are reaching the end of the road.  Making an informed decision on whether to pursue merger must be premised on a thorough analysis about a firm’s business objectives.  If that rationale is missing, merger is not a tactic to pursue.

Identifying the Important Criteria.  Once merger is accepted as a possible tactic to implement the firm’s business imperative, the criteria for a potential merger partner must be identified.  Pursuit of a merger candidate should not begin until the criteria are settled.  Moreover, once the important features of a potential merger target are established, any search for a merger candidate must be strictly faithful to the criteria selected.  Discipline in searching for the merger partner meeting these characteristics also means being willing to walk away from a potential deal if the criteria don’t match up.  By staying true to its criteria, the firm will avoid making emotional and irrational decisions.

Testing Every Prospect for Compatibility.  Even a prospect that meets a firm’s search criteria might be a poor fit if the two firms are not compatible.  Here, firms should test in a disciplined way whether compatibility exists on matters of culture, finances, compensation systems, clients and operations.  Compatibility in leadership styles, succession planning and vision should also be tested.  If compatibility is wanting in too many of these important areas, the merger should be avoided.

Blending the Two Firms Together.  While the firms are still talking and before the deal is sealed, it is essential that both firms get together and develop conceptual plans for the assimilation and integration of the two firms.   If preliminary talks reveal that integration will be difficult, it is a warning sign that more work needs to be done.  And once the deal has closed, the unified firm must take the conceptual plans and develop them further with sufficient detail to bring together disparate groups to make the firm one.  Included in this process is the need to build a single culture, create processes and procedures to gauge, motivate and reward the performance that leadership expects from the firm’s personnel, and look to the future.

Merger is a lot more than just finding a firm that is interested in joining yours.  To make a merger work, exercising the discipline to implement these four steps is critical.  Can you think of other similarly important steps?

Adapt or Die – 4 Steps to Law Firm Sustainability

Posted in Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition

The measure of intelligence is the ability to change – Einstein

 

 

Adapting to change – At first blush the need to adapt is so obvious there would seem to be no need to discuss it. Then we see firm after firm, small to large, fail because of a reluctance, unwillingness or sheer inability to adapt.

In our experience there are 4 steps to adapting:

  1. Acceptance
  2. Evaluation
  3. Planning
  4. Execution

Step 1 -Acceptance

It has been long understood that all species operate in an environment of constant change.  The same is true for business. There are two choices, adapt or die.

In slowly changing environments, like the legal market during most of its history; responding to change doesn’t need to be hurried. In an environment like the legal market of the last several years, where change is rapid and accelerating, the appropriate response must be developed with a sense of urgency.

I found this short and insightful post by Eric Fletcher to provide a great example.

So, if the constant nature of change is an absolute, why do so many firms fail to adapt. I suggest that it can only be one of two things, lack of understanding of the effect on their firm, or a lack of the knowledge/capability necessary to do anything about it.

Step 2 – Evaluating Impact

There are numerous ways in which change may impact a law firm;

  • New competitors – this might include new law firms as well as a growing list of non-traditional service providers
  • Changing methods of service delivery fueled in large part by innovations in technology and/or process
  • Shrinking demand for certain types of services
  • Increasing experience and expertise among clients, in particular General Counsel, who are utilizing their power of choice —  resulting in pricing pressure, and in some cases the loss of an important client

Law firms must regularly engage in an evaluation process that attempts to understand the specific nature and ultimate impact of the changes their firms are facing.

Step 3 – Planning for Adaptation

This step includes discussing options for how a firm will respond to the primary changes it is facing.  Often this is a difficult step because the plan will almost always include the reallocation of resources in a way that improves the odds of success. A third party participant in the process can be very helpful in maintaining a level of objectivity.

Step 4 – Execution of the Plan

As is so often the case, execution can be the point of failure. A firm can expend all the resources — time and money – and end up with a killer-strategy that addresses change and scopes new opportunities. But we’ve all seen great plans fall victim to the pressures of daily realities. The plan winds up collecting dust in a desk drawer.

Meanwhile, change continues its march.

Firms that beat the “desk-drawer” fate typically do three things well:

  • Set up “short fuse” milestones for the implementation of the change plan,
  • Include a process designed to build consensus, and
  • Put the right people in charge of driving the plan.

It all begins with a full acceptance that our choices are to adapt or die.

Are you adapting?

Five Keys to an Effective Law Firm Divorce-Being Smart When the Thrill is Gone

Posted in Law Firm Leadership, Law Firm Liquidation, Law Firm Transition

“A discord of personalities” sometimes describes the genesis for marital divorce.  It also can be an apt way to explain law firm break-ups when partners decide to go their separate ways.  Although law firm break-ups happen regularly, the low level of publicity surrounding most can be due to partners acting rationally even though they can’t continue together any longer.  Quiet separations and wind-downs occur when the splitting of the sheets is unemotional and professionally executed.  Publicized break-ups, with all their ugliness, arise when emotion and shortsightedness mix together to fuel what becomes an explosive process.

Successful break-ups (perhaps an oxymoron) universally share common strains.  They come about because tenets that auger in favor of conciliation and dispatch are followed.  Although the disappointment that leads to the break-up may make following these principles unnatural, adherence to them keeps unproductive behavior and tendencies to a minimum.

Historically, smoothly executed law firm wind-downs have five things in common.  These common traits are instructive to law firm leaders facing a law firm divorce.  In learning from what others have done, any law firm leader staring at law firm divorce would be wise to encourage the firm’s owners to act in the five following ways:

Agree on a Neutral Expert to Navigate the Course.  Winding down a firm is neither intuitive nor easy.  It is best accomplished if it is managed by an independent professional that has wound down law firms before.  An independent and dispassionate professional that has no agenda other than efficiently wrapping up the firm’s affairs serves all owners well. While some owners may argue for cost savings from a “Do it Yourself” approach, in-house people tasked with the DIY effort frequently have non-neutral agendas, are perceived to be non-neutral, and otherwise lack the trust of all owners.  A neutral expert can move the firm to a fruitful conclusion even while disputes between partners’ percolate and need to be resolved.

Retain Experienced Advisors.  Many law firm divorces involve anger, distrust or disappointment.  Diffusing that volatile mix is critical. Step one is to tamp down the emotions by getting the owners off the front lines.  Each identifiably different owner interest should retain an experienced representative that understands the vagaries of law firm liquidations and that has a track record of being solution oriented and collaborative.  While there is nothing to prevent the disparate interests from retaining as their representatives’ litigators quick to drop the cudgel, going that direction is neither smart nor cheap.  And as experience has shown, it seldom is quick.

Think About the Future as You Settle the Past.  If a law firm’s past was so great, there wouldn’t be any sentiment to shutter the firm.  Indeed, the decision to break up a law firm is driven by a view that a different future is better than the status quo.  If the past is not worth continuing, the future should be the focus on virtually all levels.  While every law firm wind-down necessarily involves a settling of accounts, the objective should be to settle quickly.  Rather than dwelling on past misdeeds and transgressions, the owners should wrap up the old firm expeditiously and economically.  In a world in which the maxim “time is money” encourages people to move smartly to the next goal, moving to the new day of a new firm allows the future to be realized.

Think About the Children.  Like matrimonial divorce, in law firm divorce peoples’ lives are impacted.  Taking care of the associates, contract attorneys and staff not only is the right thing to do but because non-owner cooperation is needed in wind-down, it also tends to make the process smoother.  An honorable end to the firm which fairly addresses severance, benefits, and outplacement tends to pay dividends over a long period of time.  In contrast, harsh or uncaring treatment to the non-owners is not only unfair, but can interminably impact owner reputations and pocket books.

Communicate (Talk it Out).  Like so many aspects of law firm transition, a clear and constant flow of communication serves a divorcing law firm well.  Advisors need to communicate with owners, owners need to communicate with each other, and non-owners need to be kept apprised until their interests are addressed.  In addition, as the wind-down progresses, clients, third-party vendors, banks and contract counter-parties (including landlords) must hear about and be engaged in the wind-down.  In law firm wind-down, silence is not golden.  Rather, it can become the spark that ignites an explosion.

When the thrill is gone, and a law firm calls it a day, risk to the firm’s owners can depend on their approach to winding-down their firm.  Would your firm and its owners be willing to do these five things that reduce their risk and make dissolution smooth?

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