July 1, 2016
Study Establishes Benchmarks for Law Firm Governance and Risk Management
Brobeck was only the most brilliant explosion in a volcanic chain of failures. Forget what you think you know about the recent disasters. From Why Firms Fail? Why Firms Succeed?™ you’ll learn the real reasons those firms failed and how to use that knowledge to improve the performance of your firm.
No one has provided a full answer—until now
To discover the root causes—why some firms fail while others prosper—we tested
140 hypotheses. We started with theories propounded by law firm management gurus. Only 60 of the 140 factors proved to be significant factors in either law firm success or failure.
But those 60 data points paint a revealing picture of flaws in law firm partnerships as a business model and invite a new approach to law firm management. Neither the experience of legal industry insiders nor the wisdom of business observers provides a balanced or complete answer.
“This study goes beyond autopsies to suggest how all firms can change to survive and thrive,” said Ann Lee Gibson, Ph.D., a well-known consultant to law firm financial management.
Rigorous research—not a collection of opinions
Our in-depth interviews with the leaders of nearly all large firms that failed in the past three years isolated the reasons for their demise. Then we asked the same questions to successful firms (with more than five percent growth in revenue). The differences are striking. We learned that:
- A new model of partnership is required. Neither the relentless democracy of the 80’s partnership model nor the autocratic model of corporations is adequate. The new partnership requires visionary leaders who seek consensus.
- The culture of the individual must be replaced by the culture of the firm. Those firms that encourage client hoarding are dramatically less likely to succeed than those that encourage clients to become clients of the firm.
- Simply taking risks is irresponsible. Taking managed risks is critical to success, including diversification supported by careful tracking and accountability.
A diagnostic for healthy growth
Our findings allow us to provide a diagnostic tool for recognizing the danger signs and setting a course for healthy growth. Law firms, like the human body, do not usually die because of one catastrophic event but because of a systematic set of failures. The bloated lease is only a symptom of a larger problem. This study is not an autopsy of failure, but a prescription for success.
How do you apply these findings to your firm?
Why Firms Fail? Why Firms Succeed?™ provides a complete diagnostic check-up of the organizational and management structure of your firm. We measure your health against the factors that have proven most likely to predict failure or success in firms like yours.
Using research methods developed in our study, we pinpoint the actions that can increase your chances of success—and spell out in detail risks and danger signs you may not fully recognize. More important, we can match the positive aspects of your firm’s culture with predictors for success.
How will you profit from Why Firms Fail? Why Firms Succeed?™
There is no single magic elixir to guarantee success. But we will help you identify management and marketing strategies most likely to help you thrive. And we will narrow your focus to the unrecognized risks that threaten your health.
You should pay immediate attention to these results if your firm is:
- Electing new management
- Developing or refining a strategic plan
- Considering a new office
- Contemplating a merger
- Trying to increase profitability
- Wrestling with tough management questions that affect the future of your firm
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