WHEN THE END IS NEAR
Watch for Telltale Signs That The Firm Is in Trouble

BY THE RODENT

Worse than the recent news that major law firms are laying off staff and associates is word that entire firms are closing their doors. Like lawyers themselves, law firms now come and go. In today’s legal market, they dissolve, merge with other firms, reorganize and declare bankruptcy.

Much like other disasters, it is difficult to predict the collapse of a law firm. While things may be precarious, partners are unlikely to tip their hands about the state of affairs at The Firm. Associates must therefore look for indicators that the end may be near. Some clues–such as skipped partnership draws and the departures of certain power partners–are hard to miss. Others are even more obvious.

1. The partners put out a press release dismissing rumors that The Firm is having financial difficulties. While they proclaim that all is wonderful, it is often an act of desperation to discount information about The Firm’s finances that has been leaked to outsiders. Astute associates able to read between the press release lines can discern that the rumors are true and that The Firm’s collapse is imminent.

2. The Firm has a huge payroll, a peak-of-the-market office lease and no clients. This deadly combination has spelled the end of many law firms in recent years.

3. The Firm has a huge payroll, a peak-of-the-market office lease, no clients and merges with another firm that has a huge payroll, a peak-of-the-market office lease and no clients. The merger may postpone the inevitable for six months or so, but not much longer.

4. Peculiar behavior among partners. I don’t mean the usual strange behavior. I mean really strange behavior–even for partners. One telltale sign that The Firm is on its last legs: Client files begin to disappear. This is usually the result of partners in the know preparing to take clients with them when The Firm dissolves.

5. Ordinarily, partners use words such as "urgent," "right away," "ASAP," "rush," "emergency" and "immediately" to explain when they want projects completed. Associates should worry if, for the first time ever, a partner tells them to do the work "whenever you get around to it." This is a sure sign that The Firm won’t be in business long enough to complete the project.

The Rodent lived through the collapse of the branch office of a major firm. Although many of us among the associate ranks knew there were problems, we didn’t realize just how serious the situation was. That all changed when we read the writing on the wall–literally, in the form of posters plastered on the walls of The Firm’s file room, copying center and lunchroom. The posters contained motivational messages such as: "Success is a journey, not a destination," and "It’s amazing how much can be accomplished when no one cares who gets the credit."

These posters signaled the end for us. A law firm simply cannot recover from something like that. All they motivated us to do was to find new jobs elsewhere. A few months after the posters went up, the firm came down.

©2002 ABA Journal