Transcript
"Why do law firms fail?"
I do have an article on that, Why law firms fail. The main reason law firms fail is because of finances. What happens is typically they fail because they take out lines of credit, and then they exhaust them. The other thing that they do is they often will guarantee compensation to partners that they can't pay. And then those are the primary reasons. Then other things happen. The law firms sometimes will fail for reasons of making kind of strategic mistakes, where they may have numerous cases, settle suddenly and leaving them unable to pay them. There are all sorts of examples, but almost every law firm that I've ever seen fail, it's always been because of money issues. Typically it's because people that have the business leave or economy slow down and they have large lines of credit. Then they have partners they can't pay, those people leave. But those are some of the mainly it's almost always because of money issues. Sometimes the law firm is sued for malpractice. I saw one firm that was fairly well known in LA and Canada.
Those are the main reasons.