Friday, March 30, 2012
A friend at a law firm describes how big, apparently successful firms collapse:
"What appears to happen in these places when they go under is that a greedhead partner earns say $1.8 million in one year but only $1.3 million the next. One would think that life would go on somehow. But the greedhead gets angry. He feels "misled" by the Managing Partner who expressed optimism about the year to come at the Partners Retreat in Hilton Head the previous March. The MP may have been influenced by the sunset or the gin and tonic. But he is not forgiven. The angry partner talks to like minded greedheads who joined the firm when he did, just before the 2008 crash, when they all received large two year guarantees. They turn mutineer. Secret lunches are held, then evening meetings around someone's deck or swimming pool. Then they suddenly decamp for another firm, which also takes on debt to pay a new set of guarantees, to be paid for by promised "synergies" which may or may not occur. But their old firm still has to pay rent on their offices and other overhead. The trade and mainstream press covers the story. The headhunters call. The vultures circle. Others panic and leave. A death spiral sets in. Moral (if any): I do know that I consider debt the root of all evil."
This sounds right to me. It's worth considering carefully whom you're going to practise law with.