Job-Seeking Lawyers Scrutinize Law Firm Finances
Job-seeking lawyers worried that their new employer could dissolve are increasingly asking for more financial information from law firms.
Recruiters and hiring partners told the Recorder that job-hunting laterals, especially potential equity partners, want to know about a law firm’s financial history, capital requirements, debt levels and financing plans.
Former Heller Ehrman partner Michael Charlson said he asked a lot of financial questions before joining Hogan & Hartson. “I’d be crazy not to ask,” he told the Recorder. “You’re making a major investment—for most people it’s the largest except maybe their home—and the notion that you would do a little due diligence on the firm I don’t think is particularly surprising.”
Charlson said he expects to lose between $400,000 and $500,000 as a result of Heller’s collapse.
Potential red flags are a law firm that is borrowing money to pay draws or partners, or a law firm that has seen a drop in profits of 20 percent or more, according to an unnamed partner from a recently dissolved law firm.
But even law firms without any red flags could eventually experience problems. One former Heller partner told the Recorder the firm had no debt when he joined it. He says he learned that Heller’s consensus approach hampered its ability to respond to economic problems. The question, he said, should be: “When a firm has to be nimble, can it be nimble?”
