Top authorized choice makers have a time-honored code—they’ll advocate the regulation companies who do a much better job than anybody else. Within a number of months after the senior rainmaker’s departure, another, slightly much less senior rainmaker may also leave, again with an entourage of companions and associates in tow.
Legislation companies are notorious for requiring long work hours from their employees in an effort to increase revenues. At legislation companies you interact with senior officers of client corporations and deal with large responsibility at a younger age. Drawing on a assessment of every large regulation agency collapse previously 30 years, I argue that the answer lies within the unusual approach that law companies are owned.
Another puzzle is why the depth of law corporations’ declines was so out of proportion to their monetary misery. Discovering the appropriate boutique law agency at the proper place and time could be a formidable challenge. Because the firm could have few bodily possessions, its major assets will include claims in opposition to others, most notably the previous partners.
Like Apple, which sits on tens of billions of dollars in retained earnings, a legislation firm might, in idea, select not to distribute earnings if it wished. Assured companion salaries alone could not have driven the firm to be incapable of paying its debts because, as now we have already seen, companion ownership provides legislation corporations freakishly sturdy capital structures.