This article was first published in Lex Witness May 2015 issue.
Increasing opportunities and high aspirations have led to a situation in the industry that’s gradually becoming a routine, for partners, shareholders or entire law firm departments to change their affiliations overnight. With the occurrence of law firm breakups or lateral departures comes myriad potential problems, many of which may have ethical implications.
In the recent past and very much in the current times, India can cite various publicized law firm break ups. Whether its Fox vs. Little or the Shroff brothers dispute and consequential creation of separate entities of a mighty brand name; the Indian legal industry has been experiencing the changing tides that even the mainstream media finds enticing.
Cause & Effect
Business schools can have a field day trying to analyze the reason(s) law firms and/or key partners part ways. Usually the reasons are more personal in nature when it comes to the legal industry break-ups versus the rest of the industries. Could the reason be perhaps that lawyers are inherently passionate by nature?
While publicized causes may vary from one case to the other, emotional play remains the core reason almost always.
The ripple effect of such breaks usually affects the rest of the industry. India is still a tight knit group when it comes to the practice of law. So any major disruption is bound to create aftershocks.
Aftershocks of major law firm breaks are not generally limited to the legal industry only.
While most of our focus remains on the inevitable shifts amongst the partners and associates, the change in pay structures across competing law firms; what we usually do not take into account is how all these affect the clients.
Fee disputes between firms and departing lawyers usually should not have an economic impact upon the client’s work for the total fees paid. Moreover, clients have little, if any, economic interest in disputes alleging breach of ethical duty by the departing lawyer who sneakily recruits clients prior to his or her departure from the firm. All of these problems involve the interests of lawyers in the first instance and those of clients only secondarily.
Clients Come First
Since most practitioners invest significant personal and financial resources in building their practices and making them successful, they can’t be completely default for becoming preoccupied with these interests when firm breakups and departures jeopardize their significant investment. Law firm breakups and dissolution are often accompanied by acrimonious disputes over financial issues, particularly when the departing lawyers leave to form a new law firm as opposed to leaving to join an established firm.
Nevertheless, even during these difficult times, lawyers should remain cognizant of their clients’ interests. Be candid in your statements about firm breakups and departures. Notify all affected firm clients of lawyer departures and tell the clients who will be handling their file. Departing lawyers should similarly notify all affected clients of their departure.
Move On and Get Started
Alright, so once the dust settles over the frenzy the big break up has created, it is time to focus on setting up the brand new practice. Whether the break up has led to the evolution of two new firms, or major rainmaker(s) to join competitors, strategy and focus is key to get a head start in the new environment.
It is crucial to align thoughts and focus on the planning process and a businesslike approach. One must recognize that it is a business that needs to plan for the future. That means client service and profit motive are central themes, and planning is valued as an important investment of time and money.
However, it is important to remember that the process takes time. Credible planning cannot be accomplished in a one-day meeting. You must allow scope for analysis, discussion, evaluation of options and full debate.
The process involves new thinking. Real planning discusses current realities and new opportunities. The planning process is an opportunity to identify areas of significant business potential.
The plan guides decision making. Having a clearly stated direction and goals should clarify decision making at all levels, from handling merger inquiries to recruiting laterals to allocating the branding and positioning budget. Goals are converted into action.