Going to work for a new law firm can often be a really good move and may involve a fresh challenge, more responsibility, better prospects and better money. And most of the time it will work out well – but in the current economic climate, there is a risk.
Despite what many law firms are saying, it’s still, despite the pickup in the economy, a really tough time to run a law firm. And the simple fact is that many of them are likely to fail in the next few years. We are talking hundreds, possibly thousands, of law firms in this kind of situation. But what’s that to you?
Well, at worst, if the law firm goes into administration entirely, you and your colleagues simply lose your job – possibly at short notice and without hope of any redundancy payments. The luckier firms who find themselves in this position may find another practice to merge with or take them over – but in this scenario, it’s likely that the new enlarged firm will seek to cut costs – and it could be that your job is one of the positions to go.
So does that mean that it’s too risky to move firm entirely? Of course not. But the canny candidate will do their homework first. So what are the warning signs for failing law firm? Here are four of them from my personal list;
1. No strategic direction – where is the firm actually going? It’s a question that, for some reason, few candidates get round to asking at interview – but it is a good question to ask and can prove a very telling inquiry indeed.
2. Partner profile – over the last few years, the average age of Partners has gradually been creeping up. Unbelievably, it is now 60 – yes, the average Partner is 60 years old! Given that there are, of course, Partners in their 20s, 30s and 40s, it makes you realise how very many Partners, therefore, are well over 65. The thing to watch out for here is a law firm where all of the Partners, or a significant number of them, are approaching retirement age. Why? Firms who are already struggling are going to find it particularly difficult to recruit new Partners. After all, who is going to be daft enough to buy into a law firm that looks likely to fail? So when existing Partners do finally retire, it can sometimes prove an enormous financial burden to pay them out. Get a number of Partners all seeking to retire at the same time, and the result is simple – the law firm goes belly up.
3. Legal aid – there are many firms who continue to be profitable doing legal aid, but one thing is clear - rates of pay are bad and are going to get worse, and don’t be surprised the future governments seek to exclude yet more work from eligibility for public funding entirely. Many firms who still deal with a substantial amount of legal aid work may not have yet felt the full pain of the ongoing cuts. But moving to any legal aid firm has to be risky given the current climate.
4. Living in the 19th century - It’s remarkable how many Solicitors still seem to be detached from the modern world. If a firm doesn’t have a website, or perhaps it’s a very simple website that hasn’t been updated for years, what does that say about them? The one thing that is certain is that the legal profession will, in 10 years time, look very different from the way it does today – there will be more competitors eating up a growing share of the overall market for legal services. Having an unimpressive website is not in itself a guarantee of failure – but it does point to a complete and utter lack of understanding of the need for marketing and client interaction in the 21st-century.
One last bit of advice. If you’re worried about the future of any firm you are considering joining – ask questions in interviews about these kind of issues. Any half decent interviewer will be impressed by that kind of question. It shows confidence, commonsense and clearly demonstrates that you’re interested in a long term career with the law firm in question.
AUTHOR - Tim Bishop, Senior Partner of Hampshire and Wiltshire solicitors, Bonallack and Bishop, who also runs a number of specialist law firm websites, including http://www.leaseextensionuk.co.uk and http://www.how-to-claim-compensation.co.uk.