Few firms are immune. As Debra Weiss noted in her Is the Law Firm Pyramid Collapsing? Big Law is Aging with More Partners than Associates, law firms are aging and strategies to avert the consequences may cause valuable partners to “leave the firm, leading to a Heller-Howrey-Dewey-type run on the bank.” The risk is even greater for the struggling law firm trying to calm the troops after experiencing a steady diet of bad news, declining economics and unanticipated departures. Add to those shaky dynamics the inability to execute on a saving merger or other transaction, and it becomes critical to find a finger big enough to plug the dike.
Stemming the tide in order to achieve some semblance of stability is a matter of survival. Arrest the run, and the firm may survive. Fail to staunch the flow, and demise is a certainty.
The good news is that when a run shows signs of beginning, a few swift and decisive actions on the part of management can have dramatic and universal value.
Communicate With Your People. Management needs to constantly communicate with the people that matter. In many instances, that could mean most of your personnel, but it at minimum it means talking to your foundation for the future — the lawyers that remain a part of your firm. Leaders that communicate connote control of the situation. Management holed up in its bunker attempting to adjust the dials will not instill confidence, and cannot lead.
Enlist Major Players In the Defense of the Firm. Reach out to the major players in the firm and develop a transition plan that draws on their thoughts. Leaders know it is impossible to accommodate everyone’s list of Top 10 Priorities, but inclusion and collaboration are essential to success.
Eliminate Departure Incentives. If partners are leaving because they have a financial incentive to do so, take a hard look at whether those incentives can be eliminated or suspended. Paying back capital as partners leave may be the firm’s obligation, but it may also be gasoline on a fire.
Communicate With the Bank, Landlords and Other Important Third Parties. These folks are, in effect, your partners, too. You can be certain they will hear about your situation. Be proactive. Control the message. Maintaining good relations with these third parties can prove critical as you go through the process.
Triage. In some cases you may not be able to address every issue at once. Like an emergency room physician treating injuries in a disaster, rank the critical issues and address them. Reserve the lesser issues for a more stable day and time.
Nothing causes a sense of panic more than a “run on the bank.” With a plan in place, and with an informed and collaborative team — inside the law firm and among outside parties vested in your success — firm management will be in a position to lead. Survival demands it.
In your firm’s past, have you averted a “run on the bank?” What action was critical to stopping the panic?