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How and Why Do Law Firms Die, And What Can You as a Lawyer Do About It

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Summary: Scandal, client-lawyer die off, a change in practice area –these events in your law firm can greatly affect your practice.

How and Why Do Law Firms Die, And What Can You as a Lawyer Do About It
 
  • There are many reasons why law firms die.
  • Illegal actions and practices, apathy, client die off, lawyer die off or a wholesale change in a firm’s practice area can collectively kill the firm itself.
  • And then there are the lawyers:
  • Those who panic and jump ship at a moment’s notice…
  • …And others who bravely stick around to right the ship with hope the law firm can be salvaged.
  • The question then becomes what kind of lawyer are you when faced with the failure of your firm?

These days it seems as if more and more lawyers have to have their heads on a proverbial swivel: If an attorney isn’t in fear of his own back being stabbed by opposing lawyers, if not by a lawyer within his own firm, his billable hours need to increase, clients are leveling continuous pressure onto him, and his personal life…well…that’s in shambles.

Life as a lawyer can no doubt twist a lawyer all about. Is it worth it? It seems that such a question depends greatly upon the legal practitioner’s personality.
 
  • Are they fighters?
  • Are they survivalists?
  • Are they cowards?
  • Or are they scavengers who stand the sidelines, waiting for the careers of others to settle into death?

A dying law firm can display a whole host of lawyer types, not just the four above. Nonetheless, contingent on the lawyer’s personality, these same character traits are more likely to be the most prevalent in the event of a law firm’s death.

Why Do Law Firms Die?

Businesses – any business for that matter – are as a whole so fragile today, that the slightest deviation from what society deems as acceptable or even normal, can cause an establishment, whether new or old, to go down in flames.

It’s true: To a very large degree, society dictates whether a business lives or dies. This notion affects law firms as well. For no matter how much good the firm has done for people and causes that have been legally compromised, even the slightest and most vague failure of character can cause irreparable damage to that firm.

Case in point are the following five reasons most law firms shutter up themselves, and how you as an associate have little to no control over any outcome but your own.
 
  1. Scandal: Scandals such as illegal actions and practices, sexual scandals, or scandals involving finances can rock the very foundation a company is built upon. But worse yet, a law firm wrought with scandal can put a big knock on an individual lawyer’s career. Of course, we all know almost any act of behavior can provide the perfect fodder for a lawyer’s suddenly imperfect work situation. From lawyers on the take to those who can’t keep their pants up, once we reach the lion share of a firm’s attorneys who simply no longer gives a damn, the firm will collapse. With that, the sails of these non-involved lawyers, as well as others in the firm are doomed to stagnate with all wind completely left out of them. 
  2. The cancer of apathy: Within chaos, particularly the type of deep-seeded in-office chaos that overwhelms unassociated individuals, certain apathy sets in. Call apathy the rigor mortis of the working world, it is when a worker (in this case, a lawyer) sees no way out of the questionable practices of a law firm, but by association alone, has become part of the problem.
 
Who wants to work in a situation like that? In fact, who can work in a situation like that?
 
Workers see managers slough off just in the same way lawyers see senior associates and partners slough off. Any and all illegalities are turned away from and morals soon completely thrown out the window. So no wonder no one gives a damn once that occurs, and because of that, an associate’s apathetic stiffness quickly begins to set in. That apathy can be shown through…
 
  • Showing up late, if at all, to work.
  • Missing deadlines for work pertaining to new or existing cases.
  • Failure to return phone calls to fellow attorneys as well as clients.
  • Adoption of a general attitude of disrespect that goes hand-in-hand with the disrespect an associate him or herself may feel.

Thus, the apathy sets in. The energy is zapped, and the lawyers become zombies. And if a client were to see this, whoa nelly!

If a lawyer feels his or her career may be threatened by a law firm that suffers any type of ethics issue, that lawyer may best serve themselves by addressing or getting out of that situation as soon as possible.
 
  1. Client-lawyer die off: Some law firms, particularly older firms tend to rest on client-related laurels they’ve achieved years, if not decades in the past. As a consequence, these one-trick-pony types of firm milks off those same clients with, let’s face it, impunity. Of course, doing this is a sure-fire way to eventually bring a law firm to its knees.
 
In some cases, firms like this tend to have one or two main clients that generate a high percentage of the law firm’s work. Think in this instance of a bicycle shop, where 20% of the shop’s clientele fork over 80% of the store’s income. The rest are browsers or riders who just need air put in their tires or oil spread on their chain. In other words what keeps the bike shop’s doors open is a very low client percentage that is depended upon for the bike shop’s revenue.
 
Law firms that rely on only a handful of clients should be a red flag to any associate who wants to exist in the practice of law. To the contrary, these firms have not:
 
  • Considered their future and are instead content with the clients they have now and because of that…
  • …Have not sought out new clients which means…
  • …They have not diversified their practice area(s).

Any combination of the three bullet points above can signal the pending end of a law firm.
 
  1. In many cases, older clients die off and with that, so will the business they bring into the law firm that represents them. 
  2. Or, in other cases, newer representatives of those older clients, such as employees if the client is a business or family members if the legal issues are of domestic importance may not feel the law firm that now represents them is or has adequately done so in the past, is the correct law firm now simply because they have not evolved. 
  3. Change for the sake of change can sometimes be a good thing for a client’s interest. So why stick with the same old firm a business or private interest has been with for years, if not decades?

If you feel the law firm you work with suffers from these symptoms now might be a good time to consider your options.
 
  1. Changing Practice Areas: It’s not out of the ordinary for a lawyer to be known as an opportunist. After all, lawyers are for the most part businesspeople, and a businessperson who is not aware of new and/or innovative ways in which they can turn a profit usually stagnate and die.
 
While this is not a terrible way for a lawyer to conduct his/her legal practice, nor even for a law firm to conduct its general business, firms that transition from their current practice areas to another potentially more lucrative practice area should be regarded warily. In every sense of the word, this sort of “gamble” because it is a gamble, can result in a law firm’s loss of its brand identity.
 
Once that loss occurs, long-term clients who are the firm’s bread and butter may jump ship for other firms. At the same time, what managing partner or anyone else of authority within the law firm has the right to say that the firm will excel within the new practice area? Look around yourself and determine:
 
  • Does the law firm have lawyers who are familiar with the newly targeted practice area?
  • Do any of the lawyers have a strong book of business highlighting clients within the newly targeted practice area?
  • If they do not have attorneys with strong books of business or who are experts within the newly targeted practice area, can a worthy brace of lawyers be hired who will bring in new clients as well as help train existing lawyers in the new practice area?

Changing practice areas is never as easy as it seems. A firm needs to consider the learning curve it will need to overcome, how to attract clients, and most importantly how it will rebuild its brand in such a way as to show it has strong expertise in that practice area.

Will the rebranding stick? Will it attract new clients? And can the firm’s employees, who are your fellow lawyers, back up the claim of being expert in this newly targeted practice area?

Again, if your law firm can’t do this, the writing of its downfall may be on the wall, and you – you better look into a change of legal practice atmosphere.
 
  1. Failure to Adapt to Modern Times: Much like the law firms who suffer client-lawyer die off, those firms that fail to adapt to modern times are often old and bloated establishments who somehow feel entitled through their style of client. The problem is while law may be static in practice, society and personalities are not. Law firms have to adapt to changing attitudes, desire and needs within the world at large. This also means that they should adopt as many new clients with varied legal needs as they have in old clients with already known legal needs.
 
The world is changing and law firms have to change within the world. To not do so is a self-imposed death sentence.
 
Are you the type of lawyer to “survive” a law firm’s death?

If you feel you are playing witness to your law firm’s pending death, you need to ask yourself what sort of lawyer you are.

Granted, it can be difficult to sway the minds of your more established senior associates and partners into thinking that the firm may be heading toward its own defeat, but that’s up to you to determine.

You can be the attorney who sticks around to fight the good fight and try your best to not allow the law firm to sink itself, or you can be the attorney who decides to jump ship.

Opinions within the legal community vary, but as a lawyer who’s just starting out, or who is a veteran in the practice of law, you nonetheless need to be responsible for yourself. Whether you are a fighter or a jumper, neither is incorrect, wrong or less respectable.

Just know you will have to do something when faced with the pending death of your law firm, but that whatever you decide it has to benefit you first and the firm (if at all) second.

In this difficult and competitive world of law, breaks and second chances are rarely given. In short, no matter what the atmosphere is in your law firm, at the end of the day, you have to look out for yourself.

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