More law firms may close if recession hits; recruiter: 'Once this party ends, it’s going to end very quickly'
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A recession could be the final nail in the coffin for struggling law firms.
The prior recession was an aggravating factor in the dissolution of several law firms, Bloomberg Law reports. They included Heller Ehrman; Thelen; Thacher Proffitt & Wood; Howrey; Dewey & LeBoeuf; Bingham McCutchen; and Dickstein Shapiro.
Law firms at greatest risk in a new recession are “full-service, destination for nothing special” law firms, according to Janet Stanton and Bruce MacEwan at legal consulting company Adam Smith Esq.
Stanton and MacEwan told Bloomberg that law firms dissolve for several reasons, including partner departures, lack of true leadership, bad bets on geographical or practice areas, and undisciplined lateral hiring.
Jeffrey Lowe, head of Major, Lindsey & Africa’s law firm practice, said law firms in the second hundred category of the Am Law rankings based on revenues have some hidden deficiencies that have been masked by the strong economy.
He told Bloomberg that law firms should be examining the profitability of their practice areas in advance of any recession.
“Once this party ends, it’s going to end very quickly, and it’s going to end very severely,” Lowe told Bloomberg.
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