The Business of Law®
More and more, we are seeing evidence that law firms operate under the principles of The Business of Law®.
In acquisitions, a company can buy assets or the corporate stock of the company. Which method is chosen usually depends on tax and potential liability issues. In a recent article, the writer analyzed why Wolf Block didn’t merge to survive. Reasons given for the failure to merge here included the law firm’s large unfunded pension liability, partners’ substantial tax impact by a change in their fiscal year as a result of a merger and the ego of some of the partners insisting that the new firm name begin with "Wolf."
Ego aside, the economic consequences of a merger were avoided by closing the doors, though there certainly were other economic consequences to the individuals involved. Those partners with a portable book of business went elsewhere and suffered less. Those partners and associates without a "book" suffered more.But, all experience difficulties.
What happened to their pension? Out the window! What happened to the firm’s reputation and goodwill of decades of effort? Out the window! Did the lawyers, especially the "insiders," suffer any stress? You betcha!
And, let’s not forget the issues faced by clients who didn’t know who their lawyer would be in the following days and months. Some of these clients will say "a pox on your house!" They will engage a second law firm for some of their matters … just to make sure they are not left hanging in the wind with the same uncertainty in the future — to have the ability to move quickly if they need to be sure they have legal representation while their lawyer finds a new home.
Perhaps worse, when a lawyer leaves a law firm and both that lawyer and the law firm compete for the business of the client, I’ve seen the client say, "A pox! I’ll get a different lawyer/law firm for all my matters." And both lose.
Business principles control. The ego, the arrogance, the ignorance of business principles notwithstanding, lawyers will suffer in this new economy. Irrespective of the economic betterment for the lawyer, clients may move away, leaving both the lawyer and the law firm in the breach.
Categorized in: Management