If falling into desperation worked to make things better, then I would say, ‘Let’s all jump into despair.’ But it doesn’t help. The only way to truly find meaning and fulfillment is to look at the disaster, the pain, the difficulty, and know with complete certainty that good can come from this.  Yehuda Berg


This is part 4 in a 5-part series reviewing the typical stages of law firm decline.  The entire series is drawn from Jim Collins’ book How the Mighty Fall. See the previous posts:

  • Part 1 –Overconfidence and Law Firm Decline, here
  • Part 2, Aggressive Growth and Law Firm Decline, here and
  • Part 3, Denial and Law Firm Decline. here

In Stage 4 of decline, a firm has been struggling for some time.  The issue being faced is “if we don’t turn the performance of this firm around soon, it will be too late.” This stage is often reflected in one or more of the following:

  • a major change in the management and leadership team has resulted in significantly differing perspective, personal style and / or opposite  view from that of prior leadership;
  • failed initiatives, each taxing the firm’s resources;
  • panic and poorly thought through decisions;
  • drastic moves such as radical shifts in strategy;
  •  mergers; or,
  • significant loss of personnel.

No doubt, Stage 4 is the time for serious action; but alarmist thinking and reactionary steps will only serve to accelerate the decline. Instead what is needed is calm, clear-headed leadership through which the major threats to the organization might be addressed. This is not the time for innovative strategy changes.

Keys To Survival

If you know of a firm in (or approaching) Stage 4, here are the keys to facing the realities, and maximizing the likelihood of survival.

  • Quickly and honestly assess the core strengths of the firm. It is essential to ensure that time and resources are dedicated to calming and supporting the core.
  • In the event that a leadership change is necessary, select someone that is calm, methodical and has the deep trust and confidence of the firm. This is no time for playing politics, or blindly following someone simply because of personal charisma.
  • Avoid (unless it is the only option for survival) a merger of equals. A merger at a time of weakness is rarely the solution and a merger of equals in which the prospective merger partner         has its own set of challenges that are every bit as serious is a recipe for certain disaster.
  • Identify quantifiable areas for improvement. Progress that is demonstrable is of value in enhancing the bottom-line, decreasing risk and serves to create calm and confidence in the organization.

Collins says,  When we find ourselves in trouble, on the cusp of falling, our survival instinct — and our fear — can evoke lurching, reactive behavior absolutely contrary to survival. The very moment when we need to take calm, deliberate action, we run the risk of doing the exact opposite, and bring about the outcomes we most fear(Emphasis added).

Is your firm managed with calm and discipline?