Charles Darwin said  so profoundly “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”

Our practice is seeing an increasing number of firms tested by their ability to adapt. The news reflects a growing number of firms in obvious transition. From high-profile names to lesser-known partnerships, the leaders of each firm faces pivotal decisions. Some of these firms will restructure or otherwise embark on a turnaround strategy.  Others opt for merging with another group or offering themselves as an acquisition target in an effort to  avoid dissolution. History has shown far too many end in a messy liquidation.

Identifying The Path That Leads To Decline

The decline of a once vibrant partnership rarely has much to do with the quality of lawyers engaged in the practice.  And though the marketplace is certainly tumultuous, what is at the heart of survival and success for some, and the dire straits of a struggle to survive for others?

In his book Corporate Turnaround, Dan Bibeault identifies four key mistakes that lead to organizational decline. These mistakes, paraphrased to the legal profession are:

  • Failure to respond effectively to a changing competitive environment
  • Poor control over operations
  • Overexpansion
  • Operating with excessive financial leverage

Let’s look at each one a bit more closely.
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The typical press release announcing a law firm merger extolls the excitement, the opportunity to have one plus one equal three, and the great fit of culture, practices and people.  It’s perfect until it is not.  In fact, by some measures more than half of all law firm mergers fail. When the realization sets in that your law firm merger is a bad one and not the combination of your dreams, what can you do?

Besides whistling past the graveyard, you’ve got to do something.  And while a solution stimulated by panic is not recommended, prompt action is advisable. As action plan options go, the following three options generally are presented and often are considered:


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As the calendar year comes to a close, there is a lot to do at most law firms. Activities like collecting bills, distributing profits and casting next year’s budget can occupy many a leadership team. The tasks at hand can be time consuming and all engrossing. Given the importance of these short-term issues, thinking about

Don’t waste your time trying to control the uncontrollable, or trying to solve the unsolvable, or think about what could have been. Instead, think about what you can control and solve the problem you can solve with the wisdom you have gained from both your victories and your defeats in the past.  – David Mahoney

As business organizations go, law firms are different because they can face greater stability challenges.  Sure, law firms with iconic names seem to rock along year after year.  But for every bedrock firm there are others that struggle to survive.  And even some of the firms regarded for their steady state are like the proverbial

Running a law firm successfully is no easy task.  It is a multi-dimensional effort that requires leadership, discipline, vision, and some luck.  Getting all firm lawyers to row a boat in unison can be tough.  Even if some of the oars irregularly go into the water, progress is still possible.

When attentive leaders work hard

For many law firms, succession to the next generation presents a formidable and daunting challenge.  Leadership may have been too busy to plan ahead for succession.  Turnover at the firm may have dealt a blow to the goal of grooming someone to step in as the next leader.  Sometimes the next generation’s business development abilities

As firms consider their strategic position , a number of law firms are finding themselves underperforming relative to peer firms. For some, it is deja vu…for the second, third or fourth consecutive year.

You don’t need anyone to tell you that this is not a great way to navigate in this increasingly volatile environment. A

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
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