The only reason for a law firm to invest in competitive intelligence is to help its decision makers prepare to benefit from (or avoid the dangers in) near- and long-term opportunities and threats. Therefore, among their other duties, CI professionals and their clients must track leading, lagging and coincident indicators that identify specific opportunities and threats and that forecast their timing.
Yes, the US economy is recovering from the Great Recession. But like all downturns, it stressed our industry. Some firms, more vulnerable than others, were tested hard. Happily, some of those firms’ leaders took major corrective actions, and their firms are emerging stronger than before. But some firms will not recover.
Below are 20 indicators that your firm—or a competitor firm—probably won’t make it, at least not in its current incarnation. I thank my esteemed colleagues (you know who you are) for suggesting some of these indicators.
Twenty ways to know your firm’s in serious trouble …
1. You dread coming to work.
2. Partners’ doors are closed all the time.
3. The coffee’s gotten worse.
4. Firm revenue and headcount have shrunk, and net operating income has fallen even more.
5. Profits per equity partner are shrinking or flat, kept aloft by partner de-equitizations.
6. The only thing growing at your firm is the number of non-equity partners.
7. Women at your firm are third-class citizens, not firm leaders or full equity partners.
8. You don’t recruit government officials without business because you can’t afford to invest in them.
9. There’s a big donut hole in your firm’s partnership, where future leaders used to be.
10. All the firm’s largest client relationships are controlled (“tattooed”) by the firm’s oldest partners.
11. Clients are viewed primarily as revenue sources, not objects of real affection and service.
12. Partners won't delegate work to other lawyers until they make their own production numbers.
13. Equity partner compensation is decided by a few partners, black-box style.
14. Your firm has downsized marketing and eliminated the CMO position.
15. You’re still using MS Office 2003.
16. You haven’t had a real firm retreat in years.
17. Your firm has recently been sued for malpractice, discrimination and/or sexual harassment.
18. Clients have started to ask you about the firm’s health.
19. You’re open to a combination, but “worthy” firms’ leaders won’t take a meet and greet.
20. You’ve finally started to say the M-word, assuring reporters your firm is not interested in a merger.
What other leading, lagging or coincident indicators do you think identify a law firm that’s in imminent danger of failing?