Let’s face it, law firms are living and breathing souls that constantly evolve and change. Change can be good. But some changes or patterns signal that a law firm is facing transition. And that kind of change can present challenges that are best addressed early if the firms evolution is to continue.

Dealing with transition can put your law firm in the news, even if a decisive plan is articulated and is well underway.  In other instances, an inability to control the forces of transition can lead to undesirable consequences.  But few people would question the wisdom of addressing the root causes of transition. Sometimes, however, recognizing the signs of transition is not intuitive and the opportunity to develop a timely and well thought out response is squandered.

Recognizing the signs of transition is critically important to the longevity of a firm. By recognizing these signs, a firm can design a solution that decisively fixes what ails it. As is often suggested in another context, “the first step to dealing with a problem is to acknowledge its existence.”

The warning signs of transition can be many, but here are some of the most common.

Production declines are addressed by raising billing rates. If your firm has a budget target largely met by raising billing rates in order to offset a decline in production, you either did not pass Economics 101 or you were an art major. There is a ceiling, and any benefit to the firm will be short lived.

Turnover is increasing or layoffs have become necessary. Law firms lose lawyers many ways. Sometimes a law firm experiences a spate of unexpected departures.  In other situations, a law firm’s metrics compel it to conduct layoffs in order to reduce variable costs. If you keep losing people, something is amiss. Not only does a loss of people-for any reason-increase your fixed costs per lawyer, but departures can create an unease that causes the rank and file to perceive that all is not well. And perception can equal reality.

Interest from quality laterals and law students has waned. If you are good, people want to join you. If you are not, most talent will take a pass. The market for talent can be fierce and how you fare in that market can speak volumes on how your firm is perceived by those that have the choice on where they want to work. And if the outside does not want in, the inside may soon want out.

Your metrics show a year over year flatness or downward trend. Flat or downward metrics excite no one and place your institution at risk. Your best and brightest may be placated for a while by financial engineering, but pulling on levers in an out of ordinary way is not sustainable.

 Although not an exclusive list of indicia of transition, if one or more of these signs sound familiar, careful attention is in order. Your law firm may already be wrestling with the challenges of transition.

What signs of transition have you seen in your own firm or other firms in your market? Do some call out for more urgent action than others?