The Anatomy of Law Firm Failures

Image via WikipediaHildebrandt International : In 2004, Hildebrandt conducted a study of 80 US law firm failures that occurred between 1998 to 2004.

"Looking back on that study – and extending it forward to the firms that have dissolved since 2004 – we believe that the conclusions we reached in our earlier study remain valid and offer helpful guidance for today’s law firm leaders.

In our experience, failed firms typically exhibit one or more major fundamental flaws, and the flaws usually fall into three primary categories:

* Below average financial performance – often including excessive financial leverage, significant deferred obligations, low productivity, and poor realization;
* Internal dynamics – primarily involving leadership issues, partners with incompatible goals, differences over compensation philosophy, and lack of succession planning; and
* External dynamics – primarily involving competitive pressures related to the firm’s historical client base, access to new clients and desirable work, and inability to recruit key talent."

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