What Are the Warning Signs of a Collapse or Forced ‘Combination’ for Mid-Market Law Firms? [Gina Rubel Published in Law.com Pro Mid Market]
The legal landscape is shifting and complex, and mid-size law firms must be vigilant in pursuing sustained, responsible growth. 2025 saw increased profits, demand and higher rates, but firms that build a heavier cost structure without addressing vulnerabilities are at risk of failure. Firm leaders must identify the risks involved in growing the business and safeguard against collapse arising from accumulated strategic, financial, and governance weaknesses.
Gina Rubel’s article in Law.com examines the factors mid-market firms cannot afford to ignore as they expand. Important considerations include rainmaker departures, compensation that rewards origination, not stewardship, law firm debt, collections, profitability, firm real estate, growth outpacing infrastructure, governance, culture and revenue.
Essential questions every firm leader should be asking.
- What share of revenue comes from the top partners, and what would happen if certain originators or a particular practice group left tomorrow?
- What is the percentage of actual revenue from each practice group?
- How dependent is the firm on its credit facility?
- How old are the firm’s receivables, and what is its lockup?
- If a founding partner or a key practice group retired or left, would the clients, the files and the institutional knowledge stay with the firm?
- How much of the expense structure is fixed?
- Does the compensation system reward anyone for building the firm?
- Could leadership spot a concentration, collection or conflict problem early or only at year’s end?
- Does leadership receive unfiltered financial information?
- Are the hard conversations happening before a crisis forces them?
Law firm failures affect far more than partners, disrupting staff, clients, vendors, referral sources, landlords and the broader community. Most collapses result from a combination of strategic, financial and governance failures that build over time, rather than a single triggering event. Firms that endure are those whose leaders recognize risks early and act decisively before those risks become crises.
You can read the full article in Law.com Pro Mid Market at Warning Signs Mid-Market Firms Ignore at Their Peril Before a Forced ‘Combination’ or Collapse. (Subscription required.)