Law Firm Financial Stress—and Your Exit Strategies
The business of law is not thriving when Bureau of Labor Statistics reports 1000 legal industry jobs lost in May 2011, and the ABA tells prospective law students to re-consider attending law school. Your law firm’s financial stress may be a very well-kept secret, or a secret that is being kept from you. Even without access to a firm’s balance sheet, six signs of financial stress can sound warnings that should spark action on your exit strategies.
Quality of work and work volume
1Do you have to ask for work? Is the work you are doing primarily non-billable? When no new work comes in the door, continued employment prospects for law clerks, junior associates and non-equity partners are bleak.
Freebies and amenities
2Has the firm cut back on free coffee, tea and pop? When the coffee is no longer free, chances are that the vendor has not been paid. A bad sign.
3Has free parking been discontinued? Has the plant-watering service been cancelled? Have the rented plants been returned? Free parking and plants are core amenities, and cutting them signals serious financial stress.
Closed doors and departures
4Do partners who have always worked with open doors, now huddle behind closed doors? While they might be meeting about their personal divorces, a significant rise in closed-door meetings should be noted with alarm.
5Are partners and associates resigning singly, in small groups or in large numbers? Has the partner for whom you previously performed the majority of your work departed without taking associates? Departures alone are not automatic signals of impending doom: attorneys move all the time, either on their own or when sourced by legal headhunters. However, when lawyers representing 75 percent of the revenue leave within a year, something bad will happen to those who are left behind unless a charismatic leader with a vision (three separate characteristics) steps up, calms the lenders and vendors, and energizes the firm with concrete business development actions. No leader? It is time time to head for the door.
Fretting support staff
6Do administrative assistants who work directly for major players look worried all the time? Admins know everything, and, because they talk among themselves, they may have the clearest picture of what is really going on throughout the organization. If they are collectively stressed, you should be, too.
Should two or more of these describe your working conditions, begin to create an escape plan now.
Use all of your tools (career services and alumni offices, personal and electronic contacts and connections, bar associations) to begin a new job search. Secure positive references and create appropriately redacted writing samples because there may be no offer and no firm by the end of the summer. If there is no vacant office space and you have no work to do, the entry-level position you were “promised” probably won’t be there when you graduate. Weigh carefully the substance of conversations with partners who urge you to stay. Are they tinged with quiet desperation or are they full of action plans for new business development?
Associates and non-equity partners
Even in the largest firms, private practice is, at heart, a peculiar kind of individual business in which each lawyer is ultimately responsible for his or her revenue stream. Although no 21st century lawyer should believe it, too many associates are lulled into non-business-development-mode by partners who assure them that they will always be kept busy. Now that you must seek new employment, ramp up your business development activity by networking and connecting with professionals, including clients, classmates, and faculty. This is the time to stake your claim on a niche practice or a practice with your own spin, and to begin to use all of the personal and electronic tools available to you.
Not surprisingly, the collective wisdom of Lawyerist.com’s contributors should be your first stop for ideas, tools, and strategies for legal marketing and business development, and practice management. Join the Lawyerist Lab for peer coaching and mentoring and a clear demonstration that you are not alone.