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Is it Bad to Be Part of or Join a Law Firm with High Turnover? [By A. Harrison Barnes] *This is the second part of a two-part series. To read the first part, visit the LawCrossing archives now!
building them may lack good judgment in
of managerial decisions regarding partner
dealing with finances or with the way they
compensation. This is something that
New firms are often exceptionally
acquire and retain new clients. Lack of
has driven hundreds of law firms over
dangerous places to work, and they
judgment can raise the most pernicious
the edge and made them impossible
frequently experience massive turnover in
problems for new law firms.
places in which to work. What typically
The New Firm
happens is that the partners with the most
their early years as their leaders grapple with how to run them. The high turnover
Thus, when you begin to see massive
business-or even outside consultants-
rate can be attributed to a variety of
amounts of turnover at a new law firm,
will make sweeping changes to the firmâ€™s
factors, from financial issues regarding
it is important to ask several questions.
compensation plan. This can cause anger,
compensation levels and the ability of
You will need to understand whether the
factions, and resentment to develop
the firm to make payroll to business
turnover is due to financial uncertainty
amongst the remaining partners. Such
crises resulting from decisions made by
and business problems or due to
anger often causes the firm to implode.
naĂŻve young partners with no business
management issues. If the turnover is
experience to interpersonal conflicts
a result of financial issues, my advice
Small law firms may go psychotic when
stemming from difficult partners who may
would be to avoid the law firm. If the
one or two of the partners no longer
have moved from other firms to assist
turnover stems from interpersonal or
get along or when one partner becomes
with starting the new firm. Regardless of
management issues, the situation may
involved in illegal activity. This even
the reasons for the turnover, significant
require additional examination. New
happens in large law firms from time
numbers of departures from new law firms
law firms may be able to work through
to time. Ultimately, the psychotic law
must be closely examined.
management issues; financial issues, in
firm will be characterized by turmoil and
my experience, generally require a good
One major problem at new law firms, which
deal of time to overcome.
has been mentioned above, is that partners who start and run new firms often have
The Psychotic Law Firm
no business experience. In fact, these partners are often completely clueless
The psychotic law firm is generally
about what it takes to run a business.
characterized by the inability of attorneys
Financial concerns such as making payroll
within the firm to communicate properly.
or budgeting for office expenses are often
Thus, the psychotic law firm generally
secondary or ancillary concerns for busy
has an unworkable social structure
partners who are focused on growing a
and/or interpersonal constructs that make
young law firm. Whatâ€™s more, attorneys
communication between partners within
are generally not the best managers. Their
the firm impossible.
approach to business frequently means farming out work and then micromanaging
Law firms do go psychotic. Psychotic
assignments to make sure they are
law firms are generally small, but large
completed to their expectations. Their
law firms can go psychotic, too. I have
approach does not necessarily involve
seen this happen numerous times, and
nurturing you and making sure you are a
it is not fun to watch. The process can
happy attorney. Finally, a major problem
happen in a number of ways. Typically,
with new law firms is that the partners
law firms end up going psychotic because
Law firms that have gone psychotic resemble people who have gone psychotic. They may get better, or they may not. You need to use your own judgment to determine whether you think the psychotic law firm will stabilize. In most cases, however, you are better off leaving the law firm that has gone psychotic, especially if you are seeing mass turnover. The Acquisition Target Many law firms are good acquisition targets for other law firms. Generally, an acquisition target is a large, very topheavy law firm that is experiencing rapidly declining revenues or a very successful, specialized law firm in a smaller practice area (real estate or intellectual property, for example). continued on back
RECRUITER Q & A SPONSORED BY BCG ATTORNEY SEARCH
Without going into a lot of discussion, I will
acquisition targets. This is because
note a few facts about acquisition targets.
partners in the target firm often have the
Larger law firms that are top-heavy and
opportunity to make more money if they
When you are seeing a rash of departures
experiencing declining revenues may be
move into a larger, full-practice firm where
from your law firm, the chances are very
in that predicament because they have
they can perform work in other areas.
good that there is an underlying social,
too many partners who are not profitable
For example, partners at a firm that does
business, or economic dynamic at work.
(i.e., older partners without business or
all intellectual property patent work can
In order to decide whether you should be
who do not work hard). For a variety of
increase their income if they move to a
alarmed about these departures, you need
reasons, the acquisition target may not be
full-service firm where they will be able
to determine what is driving them and
letting these people go. (Remember, most
to get corporate, real estate, and other
consider whether there are danger signs
attorneys are not good businesspeople).
types of work from their clients. This is
that hint that there is something seriously
Therefore, what often ends up happening is
advantageous for the partners in the target
wrong with the social fabric of your firm.
that when merger talks begin with another
firm. It can also be advantageous for the
If your firm looks like a flash in the pan,
firm, both parties will sit down to ask what
acquiring firm because it can often acquire
a conformist firm, a new firm, a psychotic
the other side offers and to review the
a practice group that it did not have or add
firm, or an acquisition target, you may have
financials of the various partners in both
a more profitable group to its practice.
cause for concern and may want to exit
firms. The least profitable partners are
along with the herd.
often going to be told they have to go. The
In all instances, the acquiring firm will not
same goes for many of the associates.
want the nonproductive members of the
However, remember that there are no hard
Thatâ€™s why prior to or during the process
team. Members are labeled nonproductive
lines that govern mass departures because
of a merger involving a large law firm,
when they are not generating significant
turnover can, in fact, be very, very good
you will start seeing a rash of departures.
revenue or new business. Once merger
for a law firm. If your firm is improving,
More often than not, this is not a good sign.
talks have begun but prior to any
growing, and getting more profitable,
Unless you have a very close mentor in the
formally announced acquisition, you will
that is a good thing. In order for a firm to
firm, you could very quickly be out of a job.
generally see a rash of departures of
improve, sometimes people need to leave.
In merger situations, both sides generally
underperforming partners who leave to
If your firm is attempting to better itself
want to retain only the best partners and
work in-house, teach, or practice at much
and people are leaving in response to this,
associates from each side.
less prestigious firms. This is not a good
my advice is to stay put. The turnover may
sign, for the most part, because it suggests
be the result of efforts to provide a better
that you are at a firm that may be dying.
future for you and others within the firm.
When smaller firms are very specialized and successful, they also make good
Published on Nov 22, 2012
The psychotic law firm is generally characterized by the inability of attorneys within the firm to communicate properly.