Perspective
Feb. 6, 2015
Why firms go down the money hole
Law firms typically borrow for one of four reasons. Two can be, but are not always, supportable; one is supportable if limited to being a short term reserve; and one is never supportable. By Edwin B. Reeser
After the financial trauma of 2008, the confidence of partners in the viability of firms needed reinforcement. Partners look to personal distributions as the measure of success and stability of their firms, so maintaining and increasing those is a management focus. With declining revenues and increasing costs, that's difficult. Firms can quickly descend into over distributing cash relative to actual earned income.
Recent failures...
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