Succession and succession planning is a subject that is being addressed in many law firm leadership forums. One statistic explains the intense focus on the topic – only about 30% of law firms make it beyond the first generation.
Why Do So Many Law Firms Fail?
Why do so few law firms make it
For law firm leaders, continuing a firm’s success is about constant monitoring, clear vision, perspective, and the willingness to act.
Well-run businesses, including law firms, stay abreast of changes in the marketplace by monitoring shifting client needs. Successful businesses track the initiatives of competitors and seek to secure the premium assets needed to compete. For law firms, that means keeping clients, getting new ones, and preserving the talent in the workforce.
There are many ways to achieve this, but for nearly all law firms it includes staying focused on the bottom line. If a law firm operates profitably, it can be more responsive to its client’s needs, it can respond to its competition, it can innovate where appropriate and necessary, and it can retain its most valuable attorneys. Call it “staying focused,” “being on top of things,” or “keeping your eye on the ball”—each speaks to operating as if nothing is assured. Yesterday’s success is no guarantee of tomorrow’s survival.
A successful law firm is a busy one. New clients are landed, matters are opened, and legal advice gets delivered. The success enjoyed may be traced to the principles that drove the firm’s formation, the drive of the lawyers that came together as a firm, or a little of both. A brisk practice might also be due to increasing client demand. Whatever the impetus for the good fortune, few law firm leaders are naïve enough to assume that present success is a guarantee of future prosperity.
But if the fleeting nature of success is recognized, why do some firms fail to sustain the momentum they worked so hard to build?
Sustaining a law firm’s success, or even just ensuring that a firm survives, is a challenge faced by every law firm—every day of every year. And wherever the significance of the task is understood, focused and dedicated leadership can act and plan in firm-sustaining ways. For some firms, however, finding a way to continue the good times escapes leadership’s attention. And a struggling firm is an unstable one, less and less able to sustain its reputation and market position and increasingly putting itself at great risk.
Four fundamental lessons, if followed, can reduce risk and improve a law firm’s chances of surviving.
Continue Reading Thoughts on Building Long-Term Law Firm Health
If you practice law, there is one eventuality that should be added to that familiar duo of Death and Taxes. No one talks much about it, but it warrants the same attention to detail. The subject? The end of your practice.
As is the case with its two more familiar rivals for attention, ignoring it
Growth through lateral additions is a hit or miss proposition at best. Numerous survey reports indicate that far fewer that 50% of lateral additions meet the expectations of the hiring firm. There are a number of reasons for this poor performance. Three that almost always foreshadow disappointment in the near term include:
Following a pandemic driven drop in the number of law firm mergers in 2020, based on what our practice is seeing, 2021 will see a substantial increase in combinations. It seems like scarcely a week passes without an announcement of another law firm merger.
We have been particularly interested in the pending Thompson Knight
It has been a good while since I have written on this topic but two recent events prompted me to address it again.
The first: last week, Bruce Matson, former General Counsel of LeClair Ryan, reportedly (subscription required) admitted embezzling $2.5 million dollars from a client trust account.
The second situation relates to a
One of the most underappreciated factors associated with law firm success or failure is the effectiveness of leadership.
The fact is, no single factor has a greater impact on the success or failure of a business than the quality of its leadership. During a period of increasing change in the legal services industry a well-defined
First generation law firm leaders find themselves confronted by a classic “good news-bad-news reality.” The good news is that they are nearing the end of what for many has been a rewarding career. The bad? Most have no clear path of succession— for client relationships or leadership responsibilities.
There are a host of reasons
“Adaptability is the simple secret of survival.” – Jessica Hagedorn
The above quote from the writer and poet Jessica Hagedorn speaks to the incredible circumstances that most law firms have faced in the last year or so. In our practice we see clients responding to the environment in many ways, some are
For the last decade plus, merger has been a strategic choice for many law firms. The 2020 pandemic had a negative impact on the quantity of mergers but, many including our firm expect there to be a major uptick in 2021.
Given the probability that firms will at least be considering merger as part of
